In a piece for Biofuels Digest, BIO’s Executive Vice President, Industrial & Environmental Section, Brent Erickson (@BErickson_BIO) argues that the biobased economy is at a tipping point. With an estimated $355.28 billion in global economic value, Erickson dives into the biobased economy’s impact to date and the U.S. federal and state policies that must be addressed to keep up with the industry’s rapid growth.
Read the full piece below and be sure to check out Brent Erickson’s presentation on the biobased economy at Biofuels Digest’s Advanced Biofuels Leadership Conference on March 1, 2018 in Washington, D.C.
Also, don’t forget to register for BIO’s World Congress on Industrial Biotechnology in Philadelphia, July 16-19, 2018. BIO’s World Congress is the world’s largest conference on industrial biotechnology.
BIO is the only trade association that advocates for the diverse policies that support the entire biobased economy – the full value chain of technologies and infrastructure to convert renewable, low-carbon, low-cost feedstocks and waste streams into value-added consumer products, including renewable chemicals and biofuels.
The unifying factor among BIO’s members is their use of biotechnology in their drive to commercialize new, advanced and more sustainable technologies. That mission brings together researchers, producers and companies from across the entire biobased economy. And the value chain is constantly growing and changing, driven by the rapid pace of innovation in industrial biotechnology. It seems there are always new, innovative companies emerging to develop first-of-a-kind products, technologies and new feedstocks.
At the same time, after some fits and starts, the biobased economy is approaching a tipping point in its growth and maturation. Already, a number of companies have successfully commercialized technologies for renewable chemicals, built biorefineries and created supply chains – and turned their attention to commercializing their next product. The economic impact is evident. Bioeconomy Capital estimates that renewable chemicals now generate the equivalent of around one half of 1 percent (0.5%) of U.S. GDP, while petrochemicals generate around 3 percent. Put a different way, for every $7 contributed to the U.S. economy by the chemical industry, $1 is coming from renewable chemicals.
Several studies and market analyses have aimed to calculate the economic value of the entire biobased economy. However, no single study captures all of the economic impacts across the full value chain.
Bioeconomy Capital also estimates that the U.S. industrial biotechnology sector – which they define to include renewable chemicals, nutritional ingredients and biotech R&D industries, among others – generated more than $140 billion in business-to-business revenue in 2016. The sector experienced tremendous growth since 2012, when total revenue was $105 billion, according to their report.
A USDA study shows that direct revenue from renewable chemicals and biobased products (those eligible for the BioPreferred® program) grew to $127 billion, providing direct employment to 1.53 million U.S. workers. With a strong multiplier for job creation, the biobased product sector’s indirect economic impact reached $393 billion in 2014. The two studies cover some of the same industries, but not the entire biobased economy.
Looking at several studies that measure various elements of the value chain, BIO calculates that the global economic value of the biobased economy – including industrial biotechnology, renewable chemicals and polymers, biofuels, enzymes and biobased materials – is $355.28 billion. The United States generates 58 percent of the global value of biased manufacturing, or more than $205 billion. And that economic activity supports employment for 1.66 million U.S. workers.
As industry leaders, we need to help policy makers understand that the entire value chain creates economic opportunities – policy should include support at every stage to ensure that the biobased economy reaches critical mass. For instance, the U.S. tax code should recognize renewable chemicals to keep the United States competitive in commercializing this homegrown technology. A top priority for BIO is the Qualified Renewable Chemicals Tax Credit. We have been building congressional support for this critical legislation, which will provide renewable chemicals similar tax credits enjoyed by other alternative energies. Congress must recognize other countries are providing incentives for companies to build commercial production capacity – those countries will capture the jobs and the economic growth from the biobased economy, unless the United States levels the playing field.
BIO is leading the way to secure reauthorization of the Farm Bill energy title programs that will develop and incentivize investment in the biobased economy. Congress should consider changing the name of that title, because it is now broader than just energy. The Farm Bill energy title programs have supported the emergence of the biobased economy here in the United States and compiled a record of success that deserves to be continued.
Reauthorization of these programs will provide crucial access to capital and marketspace for companies developing renewable chemicals; those are key ingredients for building manufacturing infrastructure.
Industrial biotechnology will continue to drive growth in the biobased economy. It’s difficult to predict where innovation will take us. But the economic impact is becoming evident; the biobased economy is a measurable percentage of overall U.S. productivity. BIO is working to ensure U.S. federal and state policy keeps up with this growth.