Feedstock Supply Insurance

Biomass supply chains are fundamentally risky because they consist largely of small and medium-sized suppliers such as sawmills, forestry companies, farmers, and truckers. Biomass suppliers are rarely investment-grade and often unable to provide the long-term, bankable supply contracts necessary for project financing. Traditional balance sheet financing becomes nearly impossible. Risk is transferred onto investors, suppliers, governments, and the projects themselves.

The consequences are severe. They can be seen in significant project financing barriers for bioenergy projects and millions of dollars of “financial drag” on the projects that are eventually built.

FSI will transform supply chains made up of non-investment-grade components, into bankable, investment-grade supply chains by transferring risk from project developers and capital providers to A-rated insurance markets.

It will enable investment-grade backstops for biomass feedstock risk and guarantee key warranty obligations, such as debt repayment obligations.

We expect a range of positive outcomes, from lower project debt costs, to access to larger pools of capital–  and ultimately, to a more rapid scaleup of the global bioeconomy.

For More Information, Contact:
Aryn Garswood, Head Global Ratings Licensing: [email protected]