Agricultural economist finds possibility of bio-oil factory in state

By Patrick Young

Ken Hood
Ken Hood

While researchers at the Sustainable Energy Research Center (SERC) at Mississippi State University work to create renewable energy solutions, Ken Hood often asks the most important question: How much will it cost?

Since beginning with SERC, Hood has worked to make sure the researchers' findings can pass the test of economic feasibility.

Over the past year, Hood has dedicated a majority of his time to determining whether the prospect of a commercial bio-oil factory could be in the short-term future of Mississippi. According to Hood the factory could become a reality in less than five years."SERC researchers in forest products have been very successful at creating a type of biofuel that can rival petroleum, otherwise known as number four heating oil," Hood said."We are talking right now with a company who is interested in building a factory to producethis oil if we can get the numbers to work out."

But how does one come up with the"numbers" Hood mentions when these solutions often require never-before used machines and ideas created by SERC? This is where Hood's job can become interesting.

"I start by asking what size and types of equipment and facilities are needed to process the sawdust into oil. Once you get all that in place, then I look at the operating cost to make the finished product and how it will be paid for - through loans, community bonds or an investor." Because so many external factors can cause Hood's projections to fluctuate, he must come up with numerous economic forecasts for different outcomes. Hood said the final costs for a factory could be drastically different if high-interest loans or government subsides are involved. By showing every fiscal possibility, Hood can help researchers and companies determine whether their work can become profitable ventures.

While the economic climate does not look promising in the short-term, Hood believes SERC researchers will still be able to make their findings attractive to private enterprise through the help of Uncle Sam.

"The possible environmental policies coming down from the federal government and the savings involved with them will entice companies to pay a little more to get credits from the environmental side," he said."They are definitely interested in a green market place and we've been talking to the companies; it can be done."

Looking to the future, Hood said he will continue to work on the bio-oil projections and would not be surprised to see a factory in the Southeast soon. Hood plans to extend his work into other biomass while also applying his findings to the other SERC thrusts.

"There is still plenty of work to be done, but we've made a lot of progress at SERC, especially with bio-oil and the possibility of an actual factory being built," Hood said."I look forward to what future research will be discovered on this campus."

Ken Hood is an extension professor with the department of agriculture economics at Mississippi State University.

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SERC - Mississippi State University - [Last Updated: 10/15/09 ]