Renewable fuels have long been held to be the most direct way to wean America of its addiction to imported oil.

But at a Tuesday afternoon REFF Wall Street session dedicated to looking at investments and finance of biofuels, panelists noted that the fragmented and still immature market is unappealing to investors.

You really have to demonstrate that you can “get from ‘a’ to ‘b’

“It’s still a very fragmented industry,” said Vice President of Corporate Finance at POET, Denny DeVos. “People say it’s going to consolidate, but I’ll probably be saying that in three to five years from now.”

“In my opinion, it’s a little bit of an anomaly. You’re in a business where scale matters, and its not consolidating,” DeVos added.

“It all goes back to scalability,” said Michael Proskin, managing director of investment banking for Credit Suisse. “There is some low-hanging fruit there in terms of products, and I think there are some advances being made in technology that would suggest that we are getting there.”

Now a national utility-scale biofuel company, POET began operating in 1987 from a family farm in the Midwest. The finance experts on the panel said new biofuel companies should partner with groups like POET to both strengthen their positions and be more attractive candidates for financing.

“The market is looking for advanced biofuels companies and is absolutely open,” said Proskin. But, he said, investors are afraid of new projects that seem unable to produce at commercial-scale or that have high technological risk. He suggested that small biofuels company gain strategic partners for success.

“Investors really look to that added credibility,” Proskin said. The leap from early state to public mainstage is the challenge for many of these companies, he said. You really have to demonstrate that you can “get from ‘a’ to ‘b’.”

Picture: A farmer is pictured in a corn field. Corn ethanol is one of the most popular forms of biofuel.