Last week the Milken Institute, a nonpartisan economic think tank, released a Financial Innovations Lab Report: Unleashing the Power of the Bio-Economy. The Milken Institute hosted a Financial Innovations Lab on industrial biotech in April of 2012 to explore ideas to spur the industry, bringing together leading scientists, senior government officials, industry executives, institutional investors and venture capitalists.
Tremendous potential for economic and environmental benefits exist with using biobased chemicals instead of petrochemicals. Thanks to biotechnology, many petrochemicals currently used in plastics, textiles, building materials and more everyday products can be replicated using ag-based feedstocks.
According to the report, 96 percent of all U.S. manufactured goods use some sort of chemical product and supporters say if oil prices remain above $60 per barrel, many renewable-based plastics can be cost competitive. For the United States, biobased chemicals promise less dependence on foreign oil, cut down on greenhouse gas emissions and create job opportunities for farmers and the communities that need them. If U.S. companies can capture a percentage of the $3.5 trillion global chemicals market, they will create hundreds of thousands of employment opportunities and shift the balance of trade in the chemical sector.
“The technology is here, it’s ready,” said William Tittle, director of strategy at Nexant, a software and consulting firm focused on renewable fuels and chemicals.
The April Bio-Economy Lab laid out the industry barriers and presented financial and policy recommendations for the promise of biobased chemicals to reach their potential.
- Bridging the Readiness Gap – Most investors cannot tolerate the length of time (5 to 10 years) it takes to commercialize new biobased chemicals without any revenues or profits. It doesn’t help that the most expensive R&D costs happen at the beginning of the supply chain.
- Perceived Market Uncertainties – Investor excitement was high and hundreds of millions of dollars were raised in 2010 and 2011, but that is showing signs of fading based on concerns about the actual environmental benefits and ability to be cost competitive.
- Policy Uncertainty and Complexity – Regulation of biobased chemicals is complex and frequently more onerous than it is for petrochemicals. While tax incentives, loan guarantees and programs like the USDA’s BioPreferred program are helpful, they are limited in scope, funding is becoming increasingly scarce and their lack of predictability scares away investors.
- Have Concrete and Consistent Government Policies
- Create Green Banks
- Expand Public and Private “Market Pull” Programs
- Level the Regulatory Playing Field
- Coordinate Agricultural and Rural Development Programs to Enhance Industry and Social Infrastructure
- Take Advantage of Existing Infrastructure
Read the full Innovations Lab Report for more information.
In a recent Industrial Biotechnology Journal article, A Policy Template to Support the Emergence of the Bioeconomy, Brent Erickson – BIO’s Industrial & Environmental Section Executive Vice President – expresses similar views on consistent, stable policy, “A coordinated framework of policy initiatives is needed to attract innovative industrial biotech companies and to help build biorefineries that convert biomass to value-added biofuels, biobased plastics, and renewable chemicals. Policy support of industrial biotech innovation at national, state, and local levels will help spur significant investment in local economic zones in both the agriculture and manufacturing sectors, a nexus that forms the basis of the bioeconomy.”
The potential of renewable chemicals is undeniable, and it will also be a major focus of BIO’s 2013 World Congress on Industrial Biotechnology this June 16-19 in Montreal, Canada. Two breakout tracks designed to fill you in on the latest industry advancements and future opportunities are dedicated to the topic: Renewable Chemical Platforms and Biobased Materials and Feedstock Crops and Biomass Supply. The sessions will take an in depth look commercialization, financing, new chemicals, enzymes and the markets for biobased materials.
At the World Congress Wednesday morning plenary session, Biomanufacturing at Commercial Scale, large scale chemical producers will discuss their experiences in commercializing renewable chemicals. The discussion will encompass what steps major companies are taking to integrate biotech innovation into their platforms and what process technologies have achieved success in the commercial market thus far.