The Emergent BioProducts Industry

Dr. Jay S. Golden, Director Duke Center for Sustainability & Commerce

Associate Professor of the Practice for Sustainable Systems Analysis

Duke University

The Traditional Is No More

Energy   Materials   Products  

“The 20th century was the age of the fossil-based economy. Cheap energy drove growth and prosperity for much of the world. Now, we need to develop new technologies to sustain the needs of

a growing population. This is the age of the bioeconomy.” (DuPont, 2012)

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Our Database is sortable by: Region/Country; Crop; Year

Morrison and Golden, 2015, An  Empirical  Analysis  of  the  Industrial  Bioeconomy:  Implica;ons  for  Renewable  Resources  and  the  Environment.  BioResources, Vol.  10  #3.

Trade Flows of the Bioeconomy Los flujos comerciales de la Bioeconomía (2011)

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Maize Soybeans

Sugar Palm Oil

Cotton

Europe  West  Asia

 Oceania

 

Africa  

SE  Asia  

Embedded Resources in Global Trade,

2011

Fer$lizer  Embedded  in  Export  

Embedded  H2O  in  Exports  

    Export  (MMT)  (m3  where  indicated)  

Total  Produc$on  (MMT)  

Export  %  of  Total  

Produc$on  

N  (MMT)  

P2O5  (MMT)  

K2O  (MMT)  

Green  Water  (m3)  

 Blue  Water  (m3)  

COTTON   10.9   25.9   42%   1.75   0.71   0.49   8.9E+10   3.2E+10  MAIZE   115.3   887.9   13%   1.90   0.72   0.56   1.1E+11   6.8E+09  

PALM  OIL   41.3   49.3   84%   0.86   0.31   1.67   2.1E+11   1.9E+07  SOYBEANS   138.2   261.9   53%   0.22   1.64   1.67   2.9E+11   6.0E+09  SUGAR   33.0   171.1   19%   0.53   0.19   0.51   4.7E+10   4.9E+09  

INDUSTRIAL  ROUNDWOOD   119  m3   1,082m3   11%   **  Forthcoming  

5  

0%  

10%  

20%  

30%  

40%  

50%  

60%  

70%  

80%  

90%  

1,00E+00  1,00E+01  1,00E+02  1,00E+03  1,00E+04  1,00E+05  1,00E+06  1,00E+07  1,00E+08  1,00E+09  1,00E+10  1,00E+11  1,00E+12  1,00E+13  

CoVon  Lint  

Maize   Palm  Oil   Soybean   Sugar  

 Percentage  of  Total  Produ

c$on

 Exported  

Water  Use  (m

3 )  

Key  Agricultural  Bioeconomy  Crops  

Green  Water  For  Produc;on  

Green  Water  for  Export  

Blue  Water  for  Produc;on  

Blue  Water  for  Export  

Percentage  of  Total  Produc;on  Exported  

Today’s Discussion First, what the United States is doing to promote and grow the BioProducts industry – and why? Secondly, how “Global Industry” is developing programs to respond / promote and grow the BioProducts industry?

Opportunities for Colombian Palm Oil sector.

What is the BioProducts Industry?

•  Congress of the United States required a study to quantify the importance of the BioProducts Industry in the United States BEFORE they authorized the new Farm Bill of 2014.

•   $956 billion over 10 years

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An Economic Impact Analysis of the U.S.

Biobased Products Industry: A Report to the Congress of

the United States of America.

•   > 157,000 downloads •   > 164 million media impressions

Our Report

Goals of the Report Determine the:

1.   Quantity of biobased products sold 2.   Value of biobased products 3.   Quantity of jobs created 4.   Quantity of petroleum displaced 5.   Other environmental benefits 6.   Areas in which the use or manufacturing of biobased

products could be more effectively used, including identifying any technical and economic obstacles and recommending how those obstacles can be overcome.

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U.S. BioProducts Sector Grouping

Included •   Agriculture and forestry •   Biorefining •   Enzymes •   Biochemicals •   Textiles •   Forest products •   Plastic bottles and packaging

Excluded •   Energy •   Livestock •   Food •   Feed •   Pharmaceuticals

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x

The Number of American Jobs

Contributed

4 Millionby the U.S. Biobased Products Industry in

2013

Value added Contribution to the

U.S. Economy

$369 Billionfrom the U.S.

Biobased Products Industry in 2013

The Jobs Multiplier

2.64For every 1 Biobased

Products job, 1.64 more jobs are created in the United States

Figure 1: Key Findings of the U.S. Biobased Products Industry in 2013

Figure 2: Total Employment and Value Added to the U.S. Economy from the Biobased Products Industry in 2013

1.52

1.11 1.39

4.02

$125.75$126.01

$117.54

$369.30

$0

$50

$100

$150

$200

$250

$300

$350

$400

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Employment Value Added

Bill

ion

Do

llars

Mill

ion

Fu

ll-an

d P

art-

Tim

e Jo

bs

Direct Effect Indirect Effect Induced Effect Total Effect

Total Economic Impact National Level - BioProducts

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x

The Number of American Jobs

Contributed

4 Millionby the U.S. Biobased Products Industry in

2013

Value added Contribution to the

U.S. Economy

$369 Billionfrom the U.S.

Biobased Products Industry in 2013

The Jobs Multiplier

2.64For every 1 Biobased

Products job, 1.64 more jobs are created in the United States

Figure 1: Key Findings of the U.S. Biobased Products Industry in 2013

Figure 2: Total Employment and Value Added to the U.S. Economy from the Biobased Products Industry in 2013

1.52

1.11 1.39

4.02

$125.75$126.01

$117.54

$369.30

$0

$50

$100

$150

$200

$250

$300

$350

$400

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

Employment Value Added

Bill

ion

Do

llars

Mill

ion

Fu

ll-an

d P

art-

Tim

e J

ob

s

Direct Effect Indirect Effect Induced Effect Total Effect

What the BioProducts Industry Means to USA

How Big is BioProducts Sector?

BioProducts

Total of 7.25 million U.S. jobs. Generating $500 billion in annual compensation.

4 million U.S. jobs. $369 billion in overall value added

X  

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xi

We also analyzed the relative employment contribution of the bioeconomy at the state level to its national share of the U.S. economy. We calculated the percent of state employment in an industry divided by the percent employment in the same industry in the United States. This measure is called a location quotient (LQ), and if it is greater than 1.0, it means the state is more specialized in the biobased products industry relative to the U.S. A LQ of less than 1.0 means it is less specialized. Figure 3 shows that the LQs for the contiguous 48 states. States with the greatest concentrations of biobased products industrial activities are Mississippi, Oregon, Maine, Wisconsin, Idaho, Alabama, North Carolina, Arkansas, and South Dakota. Figure 3: Location Quotient for the Total Biobased Products Industry in 2013

Note: Darker green and higher numbers indicates increased activity at the state level relative to the U.S. in the biobased products industry. For more information, see section II. Below we provide concise responses to the six questions posed in the 2014 Farm Bill reauthorization. (i) The quantity of biobased products sold While there is no database that tracks the “quantity of biobased products sold,” the BioPreferred program database includes about 20,000 biobased products. This database contains very few forest products or traditional textile fiber products because these products were only included in the program recently. Therefore, we estimate that the actual number of biobased products is dramatically higher than the number in the BioPreferred program database. In terms of jobs created and value added, the forest products segment alone more than doubles the estimates for the remainder of the biobased products sector. Thus, 40,000 would be a conservative estimate of the total number of existing biobased products. Sufficient data to estimate the total number of

Location Quotient (LQ) Total Biobased Products Industry

LQ  is  a  measure  of  industry  intensity  in  rela;on  to  a  na;onal  average  intensity  –  Rural  Areas  Play  a  Major  Role!  

LQ  values  greater  than  1  will  likely  export  bioproducts      

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detail in the segment-specific paragraphs following Figures 16 and 17, and at the end of this report in the sub-section  “Emerging  Trends  in  Biotechnology  Innovation.” Each of these factors will have a measurable impact on the rate of growth of the sector, thus, forecasting a range of growth is challenging and dependent on multiple factors. 1. New venture capital investment has

slowed in recent years, but shows promise of increasing by five to 10% in the next five years provided that the right conditions are in place.

2. New technologies will be tied to readily

available feedstocks, which could be in short supply going forward.

3. Successful technology development must be based on solid execution and business fundamentals.

4. Selection of the right supply chain technology partners is key, along with understanding the right market requirements for success.

5. Easy venture capital funding is no longer a reality, so long-term partnerships and alternative sources of funding are needed.

Figure 16: Estimated Growth in Employment from 2015 through 2020 for the Biobased

Products Sector in the U.S. Excluding Enzymes

4,500,000

4,600,000

4,700,000

4,800,000

4,900,000

5,000,000

5,100,000

5,200,000

5,300,000

5,400,000

2015 2016 2017 2018 2019 2020

Jobs

Year

U.S. Employment Growth Biobased Industries

(Excluding Enzymes)

Applications of

Biofeedstocks First  Genera;on  

Second  Genera;on  

Third  Genera;on  

by 2020

Sources:  Neff  2012;  Cohen  2013  

7%  by  2020  

15%  by  2025  

9%  by  2030  

Global Economic Value by 2020 – Projected Global Valor Económico para el año 2020 - Proyectado

X  

Traditional petroleum-based feedstocks are

harder to access, leading to great

investment and costs

Government policies and incentives that include mandates,

subsidies, tax credits, etc.

Desire for more sustainable products

with lower environmental and

social impacts

Market-Based Regulatory Financial

Demand Drivers Cost Drivers

Drivers of BioProducts

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Example Drivers of BioProducts

BioPreferred Program (2002 & 2008)

Industry Consortium & the use of Life Cycle Assessments (LCA)

National BioEconomy Blueprint (2012) & Executive Order 13514 (2009) $445B/annual govt spend on products

Grenelle II Act (2012)

Voluntary Government Labeling Initiative

•   > 2,200 USDA Certified Biobased Products •   Companies from 43 Countries Participate •   Biobased content is third-party tested &

verified using ASTM D6866. •   Product’s biobased content must meet

standard for product category in US CFR Title 7 part 3201

•   If not in part 3201, minimum biobased content requirement is 25%

Sustainability Consortium

The Future

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Bioplastics Plásticos

•   Bioplastics represent only 1% of the total plastics market today, but are projected to grow to 7% by 2020.

•   Projected to grow from 3.36 Mt of plastic in 2007 to 6.45 Mt in 2020.

•   >90% of total plastic production is feasible to be substituted with bioplastics.

•   Consumption of bioplastics by the packaging industry will amount to 1.3M tons in 2013.

•   Packaging expected to hold a majority of the market share of bioplastics through 2020.

•   Production is shifting to Asia and South America.

•   By 2020, 80% of bioplastics production will be produced in these regions. What opportunities are there for Americas?

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World  Bioplas$cs  Demand  (1000  metric  tons)  

%  Annual  Growth  

2005   2010   2015   2005-­‐2010   2010-­‐2015  

Global   130   300   1,025   18.2%   27.9%  

North  America   34   80   242   18.7%   24.8%  

Western  Europe   60   125   347   15.8%   22.7%  

Asia/Pacific   33   83   320   20.3%   31.0%  

Other  Regions   3   12   116   32.0%   57.4%  

Sources:  (Freedonia  Group  Inc.,  2011)  (Nanomarkets,  2012)  (European  Bioplas;cs  and  University  of  Applied  Sciences  and  Arts  Hanover,  2012)  (Newes  et  al.  2012)  

Bio-­‐PE  26%  

Bio-­‐PET  17%  

PLA  13%  

PHA  9%  

Biodegradable  Polyesters  

9%  

Biodegradable  Starch  Blends  

7%  

Bio_PVC  7%  

Bio-­‐PA  4%  

Regenerated  Cellulose  

2%  

PLA-­‐Blends  2%  

Bio-­‐PP  2%  

Bio-­‐PC  1%  

Others  1%  

Biopolymer  Produc;on  Capacity  -­‐  By  Type  (2015)  

Biochemical Sector Growth •  Production of chemicals and materials from biobased

feedstocks will increase substantially from 5% (~12.5 billion lbs.) of the current production of chemical commodities in the U.S. in 2001 to 12% in 2010, 18% in 2020, and 25% in 2030.

•  Globally, only 3% (~$100 Billion) of all chemicals were bio-based in 2009.

•   Could swell to 15% by 2025 ($3 Trillion)

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Sources: Golden & Handfield (2015). Journal of Industrial Biotechnology August Edition

Intermediate Products Intermediate Ingredient or Feedstock •   Undergone value added processing

•   thermal •   chemical •   biological •   mechanical

•   Sold by manufacturer/vendor to make a more complex compound or finished product

Complex Assembly Distinct materials and components assembled to create a finished product with specific functional intent

Colombian Palm Oil Do NOT let Palm Oil’s environmental impacts in OTHER regions dictate the sustainability story of Colombian Palm. Colombian Palm is “Palm Oil of the Americas” – develop and tell the positive story.

Opportunities for Colombia •  Building internal demand is important but, •  With a surplus in supply Colombia should

identify export opportunities. •   Commodity (Palm Oil) vs. Finished Good •   “Made in Americas” is a great story – sell it. •   As shown opportunities exists for both global

customers & consumers-especially in the United States.

•   Independent, transparent and credible analyses of environmental and health values of Americas palm.

An Important Beginning Un inicio importante

Product category LCA’s

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Final Products •   An economic

opportunity vs. selling just a commodity

•   “Made in Americas” •  Health Benefits •   Leverage the Right

Retailers •  Don’t Depend on

Existing 3rd Party Brands-Build your own

Palm Oil in Americas Fedepalma and Cenipalma are essential to improving farming practices and productivity. Building on this strength, I strongly suggest research be done on the following to develop business development strategies. •  Baseline Life Cycle Assessments include “dynamic /

attributional and consequential LCA’s. •  Logistics Analysis for getting products to global market. •  Marketing approaches for Palm Oil of Americas

BioProducts Industry Consortium

In  November,  there  will  be  the  first  gathering  of  companies  to  discuss  the  crea;on  of  a  global  BioProducts  industry  consor;um  to  advance  and  increase  the  market  for  BioProducts.  If  you  are  interested,  please  email  Dr.  Golden    

En  noviembre  ,  tendrá  lugar  la  primera  reunión  de  las  empresas  para  discu;r  la  creación  de  un  consorcio  mundial  de  la  industria  BioProducts  para  avanzar  e  incrementar  el  mercado  de  BioProducts  .  Si  usted  está  interesado  ,  envíe  un  correo  electrónico  a  Dr.  Golden    

To Obtain “Free” Copies of the 3 Reports:

Para obtener copias ” gratis " de los 3 informes

www.researchgate.net/profile/Jay_Golden

Contact Dr. Jay S. Golden

Duke University

Email: Jay.Golden@duke.edu

Web Site: http://center.sustainability.duke.edu 33