Robust Economic Opportunities in the U.S. Biobased Economy

October 21, 2014 |

ericksonBy Brent Erickson, EVP, The Biotechnology Industry Organization
Head, Industrial & Environmental section

A report released a couple of weeks ago by the USDA’s BioPreferred Program, “Why Biobased?,” provides a very positive overview of economic opportunities in the emerging biobased economy. Those opportunities include a revival of U.S. manufacturing and new job creation, economic growth in rural agricultural communities, and production of new environmentally preferable consumer products.

We at the Biotechnology Industry Organization (BIO) have been promoting the growth of the biobased economy for more than a decade now. So it is gratifying to see the federal government embark on a comprehensive accounting of the economic impact of biorefineries that produce renewable chemicals and biobased products. We believe the USDA should continue to monitor and track the economic impact of this emerging sector over the long-term and should publish a yearly report benchmarking the progress of the biobased economy.

Back in 2010, BIO published a white paper outlining biobased products’ potential to drive new job creation and economic growth. Similar to the “Why Biobased?” report, we noted that the United States had lost hundreds of thousands of jobs in the chemical and manufacturing sectors since the height of these industries in the 1950s.

Many of those jobs had moved overseas, to areas where the oil industry was flourishing and cheap natural gas was available. But because the United States has abundant and renewable agricultural feedstocks and manufacturing know-how, biobased product manufacturing and renewable chemical production offered a historic opportunity to reverse the job loss. We made a conservative estimate that if renewable chemicals captured just 20 percent of the U.S. chemical market, their production would create more than 200,000 new jobs in the United States by 2025.

A USDA report from the consulting firm Nexant earlier this year provides some evidence that our early estimate of the job creation potential was conservative. That report found biotechnology applications for renewable chemical production are already commercially competitive with fossil fuels and are entering the marketplace.

More than 3,500 U.S. jobs already have been created in the emerging renewable chemicals sector, with the potential for 20,000 by 2025, according to Nexant. The broader bioeconomy offers the potential for economic growth and job creation beyond this one emerging sector.

Many of these jobs and economic opportunities are being created in rural and agricultural communities, reversing decades-long trends of population loss. Younger generations are returning to farming and related services, attracted by the new opportunities in biofuels, biobased products and renewable chemicals. In addition to new, diverse and competitive markets for agricultural products – including agricultural residues – these industries provide incentives for sales of new farming and harvesting equipment, opportunities for additional services, and markets for additional products. Every job created in the renewable chemicals or biofuel industry generates another 5 employment opportunities in the rural economy.

But the benefits of the bioeconomy extend beyond the agricultural sector. Every consumer benefits from the availability of cleaner, safer products for the home, made from renewable materials or through inherently more efficient processes. Renewable chemicals can replace many of the petrochemicals used in everyday products. The biotech processes developed to generate them are more energy efficient and eliminate many of the toxic byproducts of petrochemical production.

Recently, two industrial biotechnology companies – Solazyme and Amyris, both headquartered in San Francisco – received Presidential Green Chemistry Challenge Awards, recognizing the environmental benefits of their products. About a third of the awards given out by EPA since the start of this program in 1996 have gone to the biotechnology industry. Consumers should have confidence that renewable chemicals provide a more environmentally conscious alternative for home and personal care products.

The chemical industry too benefits from the emerging biobased economy. Innovation in the chemical industry was stagnant for many years. But with the advent of new renewable chemical platforms, we are seeing resurgence in innovation in the chemical space. Innovation is happening in pure-play bio-renewables and also in combining biobased processes with traditional chemistry and engineering.

Several factors have sparked this growth in the biobased economy, those factors include: maturation of genomic and metabolic engineering pathways, increased fossil fuel prices and supportive government policy. The RFS was meant to help grow biofuels production but it has also spurred investment and innovation beyond fuels. The Farm Bill BioPreferred program and other grant and loan guarantees have helped spawn new commercial biobased ventures. BIO is working hard to insure new Farm Bill programs are properly implemented and that Congress considers new renewable chemical tax credits as well.
USDA is now embarking on a lengthier, more comprehensive report on the economic impact of the bioeconomy, utilizing the model proposed by the authors of “Why Biobased?”

This is a positive development for the industry, one that should grow into a consistent effort to track economic indicators for the bioeconomy. America is leading the world in industrial biotech innovation and biobased economy growth trend looks very robust for the coming decades. The USDA should be commended for its efforts to quantify and support this growth.

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