Study: Aggressive biofuel policies necessary to drive investment

Ethanol Producer Magazine
November 2010
By Kris Bevill
Posted Nov. 12, 2010

A new study conducted by researchers at the University of California, Davis, suggests that more aggressive federal renewable fuels policies are needed if the U.S. is to replace diminishing petroleum supplies with renewable fuel options.

Study author Debbie Niemeier, a UC Davis professor of civil and environmental engineering, and co-author Nataliya Malyshkina, a postdoctoral researcher at the university, used a market capitalization approach to evaluate petroleum supplies versus renewable fuels replacement technologies. Niemeier said they believe this is the first time this method has been used to quantify aspects of sustainability. Two key elements used for the study were market capitalizations and dividends of publicly owned oil companies and alternative energy companies. “Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities,” Niemeier said. “As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate.”

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