Risks affecting the biofuels industry: A US and Canadian company perspective

Policymakers face the challenge of finding a mix of policies that are effective in growing the biofuels industry. We argue that a missing component of biofuel policy is consideration of the risks faced by companies in the biofuels industry. The purpose of this paper is to address the research question: What are the most important risks facing companies in the biofuels industry? We identify 22 risks in our analysis of 652 narrative risk factor descriptions disclosed by 26 publicly traded biofuel companies in the US and Canada. The results show that the most important risks are related to management and management processes, and to market conditions and profitability. Biofuel companies view technological risks, including those related to intellectual property protection, as less significant. These results suggest that, in order to be responsive to the risks companies face, biofuel policy needs to support the development of managers and management processes; to support market conditions and industry profitability; and to strike an appropriate balance between policy support for technology development and for business development. Further, we suggest a risk informed approach to setting government policy for the biofuels industry may support the industry's development. •Risk factors disclosed by 26 publicly traded biofuel companies were analyzed.•22 risks were identified and assessed.•Key risks involved management, market conditions and profitability.•A risk focused approach to biofuel policy may support the industry's development.