Maximizing the Biofuels Cooperative Opportunity

This is part two of a three-part blog designed to explore opportunities for cooperatives to thrive in the newly emerging sustainable energy sector. In Part 1, I discussed the basic principles of cooperative formation and outlined an initial niche-based value-opportunity for cooperative activities as equity-ready organizations. In Part 2 I discuss more specifically a focus for cooperatives as local manufacturers and distributors of biodiesel solutions services.

The bioenergy industry is in its infancy.  That is not to say that the technologies that will make up the first generation of widely adopted energy solutions are new or yet to be created.  Many of the techology sets experiencing greater exceptance are simply variations on old themes, for example windmills for wind power generation, solar panels, and alternative fuels like ethanol and biodiesel.

I will assert, without burdening myself with detailed supporting argument, that a cooperative organization could serve as a valuable industry participant in any of the sustainable energy production sectors mentioned above, as well as in the future next generation fuels currently being researched, such as biobutanol or cellulosic ethanol.

For example, there are a variety of biodiesel cooperatives currently dispersed throught the nation. Many are focused strictly on distribution, while others are focused on production from straight vegetable oil (SVO) or waste vegetable oil (WVO). Very few producers, in either the commercial corporation or cooperative stratas, are focused on using grease or renderings, in part because of the challenges related to collecting and processing grease in sufficient quantities to yield worthwhile amounts of biodiesel. Some great examples of these are Piedmont Biofuels, a well-known producer and distributor, as well as Biofuel Oasis which serves as a distributor of high-quality biodiesel. 

Of course there are others, but I mention these two because they are ready examples of how differing models can sustain themselves. ( To learn more about these two feel free to visit their respective web sites and/or give them a call. True to form they are courteous and friendly, and willing to answer questions if time allows.) 

So what exactly is the niche opportunity for cooperatives in the bioenergy sector? A cooperative can serve as both catalyst and agent of change in the emerging bioenergy industry. It can champion and act on specific agendas. In reality the latter is no different than the capabilities of an individual or other forms of business organizations. What differentiates the cooperative is its basis in the egalitarian support of its membership and its necessary reliance on the community of consumers to sustain it.

Traditional corporations are driven by maximizing returns (profits) to shareholders. Cooperatives are driven by maximizing value to membership, and the members are able to decide what they value at a given moment. There is perhaps an inherent tension here, because decisions made in the moment are often counter to sustainability.

The above is the advantage and the potential bane of a cooperative organization. In the emerging markets it is increasingly necessary that for cooperatives to sustain themselves and create winning results, they must operate with greater rigor, both in the decision-making process and in the execution of plans and initiatives.  In essence, it is my opinion that the cooperatives of the future need to conduct themselves in such a way as they can manage to become sophisticated businesses.

In Part 3 of this discussion I will continue to discuss how tomorrow’s cooperative might function to maximize sustainability while maintaining the core identity of its membership.

Todd