Landmark report from BIO charts $770B renewable chemicals and materials market by 2020

In Washington, the Biotechnology Innovation Organization released a landmark report “Advancing the Biobased Economy: Renewable Chemical Biorefinery Commercialization, Progress, and Market Opportunities, 2016 and Beyond,” documenting substantial, ongoing growth in the renewable chemical industry and outlining federal and state policies that support the industry.

Explosive growth in renewable chemicals

BIO reports that “McKinsey & Co. estimates that there were $252 billion in sales of biobased products in 2012, with biofuels and plant extracts comprising more than half. Sales of renewable chemicals represented 9 percent of the $2,820 billion in worldwide chemical sales in 2012. By 2020, McKinsey expects biobased products to make up 11 percent of the $3,401 billion global chemical market. Sales of biobased products would reach $375 – $441 billion  by 2020, with a compound annual growth rate of 8 percent over the preceding decade.”

The Policy Supports

BIO pointed to the Renewable Fuel Standard which “not only helped stimulate innovation in biofuels, but also opened discussions and policy development in renewable chemicals and biobased products.”

BIO also noted the The 2014 Farm Bill that extended loan guarantee eligibility to renewable chemicals and biobased products producers, through Section 9003, the Biorefinery, Renewable Chemical, and Biobased Manufacturing Assistance Program. Other policy drivers include draft legislation, introduced in both federal chambers, creating tax incentives for production of or investment in qualifying renewable chemicals.

Spurred by the federal legislation, BIO applauded Iowa and Minnesota for enactment of state-level production tax credits for renewable chemicals that will speed capital investment availability and commercialization.

Additionally, BIO said that draft legislation introduced in the 114th Congress — the Master Limited Partnerships Parity Act (MLP) – proposes to extend tax benefits currently available only to the oil and gas industry to renewable chemicals and biofuels producers. If enacted, the legislation will provide renewable chemical producers access to low-cost capital and attract investors and lower corporate stock tax liabilities.

The Renaissance in Materials and Manufacturing

BIO pointed to The National Science and Technology Council’s Subcommittee on Advanced Manufacturing, in an April 2016 report, titled “Advanced Manufacturing: A Snapshot of Priority Technology Areas Across the Federal Government,” identifies engineering biology and advanced bioproducts manufacturing as technology areas of emerging priority. The report estimates the size of the U.S. biobased economy at roughly $350 billion annually, citing a National Research Council roadmap to accelerate advanced chemical manufacturing through industrial biotechnology.

The Multi Slide Guide to Companies and Projects

The report profiles Renewable Chemical Commercialization Successes and pilot and demonstration scale projects. It includes a snapshot of nearly half of the active companies in the field, which we have available in a Digested version here.

Reaction from Planet BIO

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, stated, “The biobased economy is alive and well; it is not just about biofuels development. BIO’s new report released today on renewable chemical biorefineries illustrates the range of technologies currently undergoing commercialization in the industrial biotechnology space. Analysts predict rapid expansion of renewable chemical sales based on existing and planned production capacity, which for the first time has been catalogued in this report. Growing competition in the sector will assure manufacturers of a steadily available, high-quality and more sustainable supply of renewable chemical building blocks to replace petroleum in consumer products.

“Continued federal and state policy support can help growth of the 21st century biobased economy. For example, with the support of Congressional leaders such as Senator Debbie Stabenow (D-Mich.) and the Farm Bill energy title’s many champions – including Senators Roy Blunt (R-Mo.), Al Franken (D-Minn.), Charles Grassley (R-Iowa) and Amy Klobuchar (D-Minn.) and Reps. Collin Peterson (D-Minn.), Tim Walz (D-Minn.) and Dave Loebsack (D-Iowa) – the 2014 Farm Bill extended loan guarantee eligibility to biobased product makers and renewable chemical producers through the Section 9003 Program. That program ensures renewable chemical producers can access necessary capital to build large-scale biorefinery projects in rural areas, creating new high value jobs and driving economic growth. The USDA under the leadership of Secretary Tom Vilsack also has been a leading champion for the renewable chemical and biorefinery industry.

“Important policy drivers for the future include legislation that would create tax incentives for qualifying renewable chemical production and investments in biorefineries. Spurred by this draft federal legislation, a number of states, such as Iowa and Minnesota, recently enacted production tax credits for renewable chemicals that will help attract renewable chemical companies, build capital investment availability and speed commercialization.”

The complete Report is here

The new Advancing the Biobased Economy report can be downloaded here.