Hi everyone,
I'd like to ask what you think about the following business idea, which a colleague of mine has come up with several scientists here in France :
1. The problem that needs solving : Fossil fuel prices are spiking up again. The OPEC oil cartel has recently agreed to limit oil production to hike the price ; natural gas, usually imported from Russia, is very expensive in Europe (especially for industries), and coal is also becoming more and more expensive. The rapid economic growth of China and India and their insatiable demand for energy will only put further pressure on fossil fuel prices.
Besides, oil and gas supplies are unreliable. Most of the world's oil (or at least Europe's) comes from the Middle East, where a new war between the regional players (or between the US and Iran) could erupt anytime. Most of Europe's gas comes from Russia, which frequently uses it as a political weapon. This is further bad news for European industry.
Finally, a number of European (incl. French and German) governments intend to take radical steps to curb CO2 emissions in order to slow down global warming. France has a carbon tax, currently standing at 14 EUR/metric ton of CO2 emissions, to be hiked to 50 EUR/ton in 2020 and 140 EUR/ton in 2030.
And, of course, in Europe we have a Cap-and-Trade system for emissions, as does California and some northeastern US states. Buying CO2 emission permits is costly for businesses.
All of this is bad news for energy-intensive industries such as electric power plants or the steel, cement, concrete, and petrochemical industry.
2. The solution : to capture their CO2 emissions (from the chimneys of their industrial plants) using filters, then to transport the CO2 through pipes (with the aid of pumps) to a "bioreactor" (essentially an aquarium full of algae enclosed in a small greenhouse) next to, or on the site of, such an industrial plant. Therein, the CO2 would be transformed into oxygen and carbon, which would then be liquified, enriched with biomass from the algae, and then furnished back to the customer as liquid industrial fuel. There'd also be secondary (agroalimentary) products which would be resold to farmers at 28 EUR/kg.
3. Control : my friend's friends from the university developed this technology and hold the copyright for it; we would start a company together to bring this invention to the market. I would personally be responsible for selling it to customers across Europe (I speak four languages).
4. Scale : This would start with a first contract from a mid-sized entity, such as a cement or concrete plant, but such "bioreactors" could eventually be set up at, or simply sold to, industrial facilities all across Europe (indeed, the industrialized world).
5. Time : we would only need to spend time pitching our idea to investors (banks, business angels, etc.) and then to industrial customers. To operate a bioreactor, we would hire staff.
6. Entry : the barriers for entry are big and twofold : financial and technological. Financial, because building the first bioreactor would require a significant up-front investment before we can bill our first customer. Technological, bc not everyone can develop such technology.
From my POV, there are only two problems, although they are serious problems for me :
A) My friend, who is the project director and studying in the same class at the business school as me, has just told me that we will sell biomass energy to the principal customer at a price below what it will cost us to produce, and that our main revenue, covering all the costs, will come mainly from the sale of those secondary, agricultural products from algae.
B) My friend has really been unwilling (or unable) to provide me with the complete numbers (operating costs, fixed costs, profit margins, prices to charge the customers, etc.) of the future business's finances.
What do you guys think ?
I'd like to ask what you think about the following business idea, which a colleague of mine has come up with several scientists here in France :
1. The problem that needs solving : Fossil fuel prices are spiking up again. The OPEC oil cartel has recently agreed to limit oil production to hike the price ; natural gas, usually imported from Russia, is very expensive in Europe (especially for industries), and coal is also becoming more and more expensive. The rapid economic growth of China and India and their insatiable demand for energy will only put further pressure on fossil fuel prices.
Besides, oil and gas supplies are unreliable. Most of the world's oil (or at least Europe's) comes from the Middle East, where a new war between the regional players (or between the US and Iran) could erupt anytime. Most of Europe's gas comes from Russia, which frequently uses it as a political weapon. This is further bad news for European industry.
Finally, a number of European (incl. French and German) governments intend to take radical steps to curb CO2 emissions in order to slow down global warming. France has a carbon tax, currently standing at 14 EUR/metric ton of CO2 emissions, to be hiked to 50 EUR/ton in 2020 and 140 EUR/ton in 2030.
And, of course, in Europe we have a Cap-and-Trade system for emissions, as does California and some northeastern US states. Buying CO2 emission permits is costly for businesses.
All of this is bad news for energy-intensive industries such as electric power plants or the steel, cement, concrete, and petrochemical industry.
2. The solution : to capture their CO2 emissions (from the chimneys of their industrial plants) using filters, then to transport the CO2 through pipes (with the aid of pumps) to a "bioreactor" (essentially an aquarium full of algae enclosed in a small greenhouse) next to, or on the site of, such an industrial plant. Therein, the CO2 would be transformed into oxygen and carbon, which would then be liquified, enriched with biomass from the algae, and then furnished back to the customer as liquid industrial fuel. There'd also be secondary (agroalimentary) products which would be resold to farmers at 28 EUR/kg.
3. Control : my friend's friends from the university developed this technology and hold the copyright for it; we would start a company together to bring this invention to the market. I would personally be responsible for selling it to customers across Europe (I speak four languages).
4. Scale : This would start with a first contract from a mid-sized entity, such as a cement or concrete plant, but such "bioreactors" could eventually be set up at, or simply sold to, industrial facilities all across Europe (indeed, the industrialized world).
5. Time : we would only need to spend time pitching our idea to investors (banks, business angels, etc.) and then to industrial customers. To operate a bioreactor, we would hire staff.
6. Entry : the barriers for entry are big and twofold : financial and technological. Financial, because building the first bioreactor would require a significant up-front investment before we can bill our first customer. Technological, bc not everyone can develop such technology.
From my POV, there are only two problems, although they are serious problems for me :
A) My friend, who is the project director and studying in the same class at the business school as me, has just told me that we will sell biomass energy to the principal customer at a price below what it will cost us to produce, and that our main revenue, covering all the costs, will come mainly from the sale of those secondary, agricultural products from algae.
B) My friend has really been unwilling (or unable) to provide me with the complete numbers (operating costs, fixed costs, profit margins, prices to charge the customers, etc.) of the future business's finances.
What do you guys think ?
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