Aon Establishes Group to Manage Renewable Fuel Risks

February 1, 2007

Aon’s Agribusiness and Food Systems Group has created a new unit to focus on the specialized risks associated with the bio-fuels industry.

Aon’s new Agri-Fuels Risk Management Group (AFRMG), based in Kansas City, will be headed up by Senior Relationship Manager Brad Richter and business developer Keith Goodenough. The new unit plans to meet the risk management and insurance requirements for the rapid expansion of the renewable fuels industry. AFRMG members have more than 15 years experience providing insurance and risk management services to the ethanol industry.

The bio-fuels debate is rapidly moving to the center of America’s energy policy. The President’s recent State of the Union message calls for a five-fold increase in the mandatory fuels standard, requiring 35 billion gallons of renewable and alternative fuels by 2017, displacing 15 percent of projected annual gasoline use. Agriculture Secretary Mike Johanns plans to propose $1.6 billion in new funding for renewable energy.

One of the best known renewable energy sources — and often at the center of the food vs. fuel debate — is ethanol. Made from corn and other crops, when blended with unleaded gasoline ethanol becomes a high-octane fuel that proponents have argued for years is the nation’s best option to reduce both fuel costs and the country’s dependence upon foreign oil sources. Opponents worry that over-emphasizing ethanol could put undue stress on corn growers and their customers (e.g., poultry farmers) as well as food prices.

But bio-fuels can come from an assortment of agricultural sources. Developing, processing, supplying and protecting these new fuels and cultivating their sources present a wide range risk management challenges. Rick Shanks, national managing director of Aon’s Agribusiness & Food System Group, says “This is new ground for many established corporations, and there are new companies entering the marketplace everyday,” Shanks says. “Dozens of new ethanol plants are expected to come online this year alone. For the U.S., it’s not whether bio-fuels will be produced, but how much and how fast.”

Source: Aon,

Was this article valuable?

Here are more articles you may enjoy.