The choice of organizational form as a non-technical barrier to agro-bioenergy industry development

This paper presents arguments for the importance of market organization in the development of agro-bioenergy industries. One organizational theory, transaction cost economics, highlights the proposed perspective and defines organizational problems that can be typical in agro-bioenergy industries. After considering general features of the current US biopower industry, relying on a survey of power plants actively using forestry and food-processing co-products as fuel, two hypothetical examples illustrate the transaction cost perspective and potential problems that can arise. Finally, possible organizational features and organizational forms in the future agro-bioenergy industry, based on crop residue and energy crops in the US, are presented utilizing transaction cost economics as a foundation. The paper concludes that if organizational issues are not adequately addressed by social scientists, new and mature technologies alike may stay under-developed commercially. (c) 2007 Elsevier Ltd. All rights reserved.