Post Kitty Hawk: 2012 and Beyond: Overwhelming Evidence in Support of Replacing the Whole Barrel of Oil and the Need for Biobased Chemicals Policy Now
by Stephen J. Gatto
Chairman & Chief Executive Officer, Myriant Corporation
Special to the Digest
We in the biobased chemicals industry have had our Kitty Hawk moment.
What that means is: we have proven the thesis that biobased chemicals can be produced, brought to commercial scale and quickly sold to a receptive, growing and eager marketplace. We have also demonstrated that sustainable chemicals can be made here in America at a cost that is lower than anywhere else in the world which results in a product-pricing model that, even without subsidies, is competitive with petroleum-based chemical manufacturing processes.
These factors in the aggregate suggest the time has long since come and gone to ask why biobased chemicals should be included in a national energy policy or why anyone would want to invest in the industry. The question now must be, ‘Why Not?
Given the national and global opportunities presented by biobased innovation, now is the time to recognize the value of policies and programs in support of accelerating commercialization and advancing the nation’s market leadership in the biobased chemicals industry.
Election Year, Rejection Year, Politics
For at least some people with legislative power and influence, election year politics may be justifying rejection year politics. But when it comes to now proven technologies and commercial scale operations coming on line for biobased chemical production, it’s time the associated evidence of the national and global benefits trumps party lines. A clearer or more compelling case cannot be made that now is the time when the right thing to do should transcend the self-interested preferences of regional constituencies. Now is time for a lasting and all-inclusive policy, versus another round of poll-icy-driven actions or worse… inactions.
The Immense Risk of Waiting and Debating the Obvious and Proven
A failure to establish a durable U.S. energy policy that includes incentives for the production and commercialization of biobased chemicals carries significant national and global implications. The international leadership opportunity within our grasp, supported by the fact that we can be, right now, the lowest cost producer of biobased chemicals among all nations will be lost to countries with more resolve and a better understanding of the stakes.
Lost time invites the heightened risk of continued manipulation of petroleum supply and demand. Inaction risks lapsing into yet another century of fossil-fuel-based dependency, resulting in a nation held hostage to its habitual default position in favor of the familiar: fossil fuel. Moreover, a failure to support proven innovations that hold the key to our emancipation from fossil-fuel-based products risks nothing less than planetary non-sustainability.
The 90%-Plus Solution
Approximately 90% of all chemicals produced today from petroleum can be produced biologically in an organism. But that fact alone does not, nor should it, lead to an automatic conclusion in favor of full speed ahead. Prudent people examine the practical matters and raise thoughtful questions associated with innovation. Some answers:
Breakthroughs in synthetic biology, genetic engineering, biomass yield, plant genomics and microbiology are leading the rapid development of high-performing products that can be true drop-in substitutes for petroleum-based chemicals.
The integration, optimization and rapid acceleration from lab to commercial-scale is proving the power of these advanced technologies. Many of these biobased chemical technologies and processes are cost-advantaged over petroleum-based products, even without government subsidies.
The Global Economic Impact
Independent and industry-led analysis and projections point to a marketplace that is on a growth trajectory to achieve more than $500 billion by 2025. The World Economic Forum predicts that the biobased economy has the potential to generate $230 billion to the global economy by 2020. In the United States, bio-refineries that process sustainable biomass can/will generate $88.5 billion in economic activity according to USDA projections. Myriant’s focus alone represents a market opportunity in excess of $40 billion.
The biobased products industry employed more than 50,000 people as of 2010, according to an Iowa State CIRAS study. This same study points to the fact that the biobased industry can generate a minimum of 100,000 jobs annually.
The Existential Threat to Planet Earth via ‘Business as Usual’
Today’s world population is approximately 6.5 billion, growing to an estimated 9.2 billion individuals by 2050—all using and depleting natural resources. This isn’t sustainable or affordable, especially considering the price spikes in oil, particularly over the last three years. It is time to integrate feedstocks processes that are stable, predictable and renewable worldwide.
It’s Time for a Final Up and Down versus Back and Forth
The biobased chemicals industry has justified its case before the legislative bodies. The logic and benefit of a national energy policy inclusive of biobased chemicals could not be clearer. To build a robust bio-based economy, U.S. policies should provide technology-neutral support to all biobased products. Biobased chemicals and products companies need and deserve stable, long-term, forward-thinking policies to bridge the risk gap for investors. Specific policies should include:
A Renewed Farm Bill Inclusive of Biobased Chemicals
A Farm Bill that includes both inclusion of and parity for biobased chemicals with biofuels, as well as mandatory funding of key Farm Bill key energy title programs, including BCAP and Bio-refinery assistance programs. Recent actions in the Senate to move a bi-partisan bill that defines and includes renewable, biobased chemicals and provides $800 million mandatory funding over five years for energy titles is to be applauded.
It’s incomprehensible that the House Farm Bill supports only discretionary spending on energy programs, while cutting $500 million from the funding level in the 2008 Farm Bill. Further, the Bill is silent on the inclusion of biobased chemicals. Is this a signal that the Republican-controlled House does not endeavor to see our Nation reduce its dependence on fossil-fuels, create jobs or drive economic development?
While the House can argue that advanced biofuels has had its day in the sun, why wouldn’t they strive to reduce consumption of petroleum-derived products by promoting the commercialization and use of chemicals and products made from renewable resources? It’s time for the House to focus on replacing the “whole barrel of oil.”
Expanding Public/Private Partnerships
Governments and private industry are partnering to invest in technological processes and strategies that will further advance the low-cost production and wide-spread propagation of economical biomass feedstocks. Federal loan guarantees and grants in support of new refinery construction, as well as plant retrofits, are necessary signals to private investors that the Government will continue to support commercialization of biomass-based products.
Tax Codes that Extend and Support Reward Investment and Innovation in Industrial Biotechnology
Less than 4% of U.S. chemical sales are biobased today but a recent USDA analysis shows that the potential market share could be in excess of 20% by 2025 with adequate policy support. One example is proposed legislation, S.1764, “Make It in America Tax Credit Act of 2011” that serves to extend and modify advanced energy investment project credits and also enables qualifying biobased products and other alternatives to petrochemicals to qualify for investment tax credits.
Now, all eyes are focused on our Nation’s elected leadership and their ability to put progress ahead of politics and get the job done. In short, to use a common, if not soon to be outdated expression, it’s time, in more ways than one, for Congress to step on the gas.
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