Final Notes from BIO’s World Congress

On June 29 at BIO’s World Congress, Steen Riisgaard, CEO of Novozymes, and Stephen Tanda, Board Member of Royal DSM N.V., released a report from the World Economic Forum on The Future of Industrial Biorefineries. The report says that a biorefinery value chain could create revenue for agricultural inputs ($15 billion US), for biomass production ($89 billion), for biomass trading ($30 billion), for biorefining inputs ($10 billion), for biorefining fuels ($80 billion), for bioplastics ($6 billion) and for biomass power and heat ($65 billion) by 2020.

You can download and listen to the press conference Release of report on The Future of Industrial Biorefineries.

The highlight of the final day of the World Congress was a debate between Princeton Visiting Scholar Tim Searchinger and MSU Professor Bruce Dale, moderated by Univ. of Minnesota’s John Sheehan. Sheehan sought to explore both the strongest and weakest parts of the arguments for and against including an indirect land use penalty in the carbon lifecycle of biofuels and bioenergy. For him, the central question in the debate is whether or not the world is running out of land to use — for all purposes, not just agriculture — meaning that any new use, such as biofuels, inevitably causes a shift of use somewhere else.

For Searchinger, the central point is that the traditional lifecycle of biofuels and biomass energy accounts a credit for using carbon stored in crops and trees. Bioenergy, he argues, should only get credit for new sources of carbon that it creates or for using carbon that would have decayed and entered the atmosphere anyway, but never for carbon that is already stored.

Dale took an optimistic view that a switch to bioenergy — and away from petroleum — would spur the creation of additional carbon stores. This could be accomplished through increased productivity and yield on the same amount of land, for instance, and through regrowing of crops and biomass sources so that the credit given to bioenergy is repaid quickly.

Will Congress focus on petroleum replacement alternatives this year?

During the breakout session titled “What is Congress Up To?” on Monday, June 28 at BIO’s World Congress on Industrial Biotechnology, distinguished staff from key Congressional offices addressed World Congress attendees to give an industrial biotechnology legislative update. BIO was fortunate to provide this unique perspective on industrial biotechnology policy to World Congress attendees in Washington, DC. Will there be energy or climate legislation this summer to accomplish the goal of reducing our petroleum use and to take advantage of the desire for alternative fuels in response to the oil leak in the Gulf of Mexico? The answer is a clear… maybe. The House has passed H.R. 2454: the American Clean Energy and Security Act of 2009. The Senate has introduced several energy bills and we have seen at least two different climate change bills drafted in the Senate. The question is, what, if anything, has the 60 votes needed to pass in the Senate? The next work period, the time between the Independence Day and August recesses will be crucial. If the Senate does pass energy or climate legislation this summer, it will still then need to be conferenced with the House legislation. Both the House and Senate could have energy tax provisions to consider as well.

The bottom line is this, the legislation Congress passes this summer or fall should aim directly at lowering our petroleum use. That is the motivation behind enery and climate legislation at this time. While all renewables and alternatives have merit and are necessary for a low carbon future, the biofuels and biobased products industries are the only renewable industries that can impact our petroleum use in the immediate future and are ready to assist in accomplishing the goal of reducing petroleum use through renewable alternatives. Those technologies should be the driver for new legislation.

Ways and Means Should Include Job Creation of Advanced Biofuels and Bioproducts in Green Jobs Leg

On Wednesday, April 14 the House Ways and Means Committee will hold a hearing on Energy Tax Incentives Driving the Green Job Economy. The focus of the hearing is to examine the effectiveness of current energy tax policy and identify additional steps that the Committee can take to ensure continued job growth in this area while at the same time advancing national energy policy focus on a discussion of current and proposed energy tax incentives. Witnesses for this hearing have not been announced and we do not know how much of the hearing will focus on transportation fuels however, energy tax incentives for biofuels and biobased products should be a significant area of focus for this round of green jobs legislation. These technologies are ready to deploy and create near term job opportunities.

Industrial biotechnology is the key enabling technology for producing biofuels and biobased products like bioplastics and renewable chemicals to aid in reducing our dependence on foreign sources of oil, thereby reducing greenhouse gas emissions. They also have the ability to crate jobs, jobs that are currently moving overseas due to their reliance on petroleum as a feedstock or more favorable economic or political environments.

The United States has invested considerable amounts of taxpayer dollars to try to revive our economy. Too often, though, the resulting jobs are being created overseas, as other countries invest in green technology deployment. As a result, the opportunity to improve our economic competitiveness is lost. The United States is a leader in the research and development of green technologies, but to maintain that lead we must invest in the companies that are putting that green technology to work in our economy. These industries have shed hundreds of thousands of domestic jobs over the past two decades, as petroleum producing countries have attracted more capital investment. For example, U.S. chemical and plastics companies have increased capital investment outside the United States by 32 percent over the past decade, while increasing investment within U.S. borders by only 2 percent.

The Renewable Fuel Standard (RFS) enacted as part of the Energy Independence and Security Act of 2007 sets the minimum level of renewable fuel that must be produced and blended into the US transportation fuel supply at 36 billion gallons by 2022. 21 billion gallons of that requirement must be cellulosic or advanced biofuels. Direct job creation from the advanced and cellulosic biofuels volumes in the RFS could reach 29,000 by 2010, rising to 190,000 by 2022. Total job creation could reach 123,000 in 2010 and 807,000 by 2022. Jobs will be across many sectors of the economy. Some projected job creation sectors are: labor/freight, mixing and blending machine operators, shopping/receiving/traffic clerks, truck drivers, chemical equipment/technicians, chemical plant/system operators/electrical, sales etc.

The Ways and Means Committee can aid in accelerating this job creation by incentivizing biorefinery construction here in the United States. In 2008 Congress enacted a cellulosic biofuels production tax credit and enhanced depreciation for advanced biofuels facilities as part of the 2008 Farm Bill, both of which are scheduled to expire on December 31, 2012. Due to an overall downturn in the worldwide economy, this tax credit has not yet been utilized by cellulosic biofuels producers. This credit needs to be extended now in order to signal to investors that a plant being constructed this year, will have certainty in the availability of that tax credit once the plant begins to produce the advanced biofuel. A tax credit that expires before or shortly after production begins, does not create economic security for a yet to be built advanced biofuel biorefinery looking for funding. Furthermore, capital costs for construction of next generation biorefineries, which utilize renewable biomass to produce next generation biofuels and biobased products, are a substantial barrier to commercialization. Congress should provide an investment tax credit to help accelerate construction of next generation biorefineries and speed deployment of next generation fuels, chemicals and products.

Historically, the U.S. chemicals and plastics industry was the envy of the world. At its peak in the 1950s, the industry was responsible for over 5 million domestic jobs and a $20 billion positive trade balance for the United States. Jobs associated with the industry were typically among the highest paid in U.S. manufacturing. However, the petro-chemicals and plastics industries are now hemorrhaging jobs overseas. Conversely, biobased products and chemicals production, like domestically produced biofuels, will stay in the U.S., in close proximity to their biomass feedstocks. Total US employment in the chemicals industry declined by over 20% in the last two decades and is projected to decrease further. The US is a world leader in industrial biotechnology with a wide range of companies pioneering new, renewable pathways to traditional petroleum-based chemicals and plastics.

The potential job creation from bio-products is immense. Consider that the nascent biobased products industry employed over 5,700 Americans at 159 facilities in 2007 and every new job in the chemical industry creates 5.5 additional jobs elsewhere in the economy. Currently the biobased products portion represents only about 4 percent of all sales for the industry. Congress should create targeted production tax credits that can help them to expand their share of the market and grow additional domestic jobs. With an industry with the potential to grow by over 50% per year, bio-products can form the basis for a strong employment growth engine for the US.

Clearly commercializing the advanced biofuels and biobased products industries is an integral solution to creating high caliber domestic green jobs in the United States that will catapult this country to be a leader in successful high tech, sustainable technologies. BIO will be urging the Ways and Means Committee through written comments to recognize that innovations such as these are some of the most promising sources of green jobs and economic growth for the future.

Where is BIO: Amy Ehlers, Advanced Biofuels Technology Trends and Policy Opportunities

Last week, Amy Ehlers, Policy Manager in BIO’s Industrial and Environmental Section, gave a presentation in the Sustainability and the Environment track at the 2010 DOE Biomass Conference in Washington, DC. The title of the panel was: A look at the effect of Federal climate change legislation on the bioenergy sector and the title of her presentation was: Advanced Biofuels Technology Trends and Policy Opportunities. The session was moderated by Liz Marshall, Resource Economist, Biofuels Production and Policy Project, World Resources Institute and other panelists included Brent Yacobucci, Specialist in Energy and Environmental Policy, Congressional Research Service, Nathanael Greene, Director of Renewable Energy Policy, Natural Resources Defense Council and Dr. Adam Liska, Assistant Professor, Department of Biological Systems Engineering, University of Nebraska.

Ms. Ehlers highlighted industrial biotechnology as the key enabling technology for producing biofuels and biobased products like bioplastics and renewable chemicals to aid in reducing our dependence on foreign sources of oil, thereby reducing greenhouse gas emissions. Industrial biotechnology is the application of life sciences to improve traditional manufacturing and chemical synthesis manufacturing processes by using micro-organisms like bacteria and fungi as well as enzymes to improve manufacturing processes and make new “biobased” products and materials, including biofuels, from renewable feedstocks. Our member companies are using this technology to improve the yield, efficiency and energy inputs in first generation biofuels production, develop new feedstocks such as purpose-grown energy crops, broaden the use of algae technologies, make advancements in end molecule diversification for fuels and increase focus on renewable chemicals and bioproducts.

Currently there are over 40 planned or pilot production biorefineries all over the United States. The total job creation potential for the biofuels industry could reach 123,000 in 2012, 383,000 in 2016, and 807,000 by 2022 if the 36 billion gallon renewable fuel standard is met. In addition, industrial biotechnology can save the world up to 2.5 billion tons of CO2 per year. EPA’s analysis for the renewable fuel standards found that cellulosic biofuels reduce emissions by 110% compared to the gasoline baseline.

However, to realize the potential of this technology, there are serious issues that need to be addressed. For example: The issue of indirect land use change needs a conclusive policy approach; cap and trade legislation needs carbon accounting for advanced biofuels; financing policy needs programs that de-risk invest and tax incentives; and to advance the technology and product diversity we need a variety of feedstocks, conversion technologies, and products to achieve relevance and sustainability.

The benefits on all fronts reach far beyond ethanol, even beyond biofuels. The integrated biorefinery is the goal. Similar to a petroleum refinery, the integrated biorefinery has one feedstock going in, multiple products coming out. The benefits are numerous: an economic business model, energy efficient facilities, lowering dependence on foreign oil, lowering fuels, products and chemicals prices, boosting regional/rural economies, creating thousands of new permanent jobs and significantly reducing green house gas emissions compared to petroleum counterparts.

Finally Ms. Ehlers recommended that as the federal and several state governments contemplate and draft comprehensive climate change legislation and regulations, it’s important to keep in mind the benefits of industrial biotechnologies, biofuels and bioproducts and not inadvertently deter commercialization of some of the most promising greenhouse gas reduction technologies ready to be deployed. Specifically, biofuels should not be reregulated in a carbon regime as they are already regulated under the renewable fuel standard and biobased products need to be recognized and treated equally as these products provide green house gas emission reduction benefits by replacing petroleum use. Also, with regard to bio-power we need to consider how biomass feedstocks used for electricity be regulated in climate legislation, will biopower feedstocks be held responsible for indirect land use change like biofuels and how this could affect feedstock pricing for biofuels and biobased products. In closing, Ms. Ehlers reminded the audience that you can’t have a low carbon future without significant contributions from the biofuels and bioproducts industries.

Industrial and Environmental Biotech Weekly Blog Roundup

In industrial biotechnology this week the Wall Street Cheat Sheet says algae is the next great thing.

“Algae could be the most promising candidate yet for the future of the biofuels industry.

Although algae-based fuels won’t be commercially available for several years, algae offers several advantages over other first-generation renewable fuels, such as corn and soybeans. For example, algae grows faster, requires less resources, can be used as jet fuel, can use existing distribution systems, and absorbs carbon dioxide and other greenhouse gasses.”

The post closes with,

“All of this syncs up neatly with a White House concerned with climate change and looking to develop “green energy” technologies with long economic coattails.

While it may be too early to call algae the clear winner in the biofuels race, at least for now, the future of algae-based biofuels looks bright.”

The Biofuels Digest

writes about BIO’s recent Pacific Rim Summit,

“In Hawaii, at the BIO Pacific Rim Summit, Joule Biotechnologies announced that it has achieved direct microbial conversion of CO2 into hydrocarbons via engineered organisms, powered by solar energy.

Joule’s Helioculture process mixes sunlight and CO2 with highly engineered photo synthetic organisms, which are designed to secrete ethanol, diesel or other products.

However, unlike algae and other current biomass-derived fuels, the Helioculture process does not produce biomass, requires no agricultural feedstock and minimizes land and water use. It is also direct-to-product, so there is no lengthy extraction and/or refinement process.”

Sounds interesting, guess we’ll have to stay tuned.

Yesterday the DOE and the USDA announced,

“projects selected for more than $24 million in grants to research and develop technologies to produce biofuels, bioenergy and high-value biobased products. Of the $24.4 million announced today, DOE plans to invest up to $4.9 million with USDA contributing up to $19.5 million. Advanced biofuels produced through this funding are expected to reduce greenhouse gas emissions by at least 50 percent compared to fossil fuels.”

From Pacific Rim Summit: Specialty Crops, Renewable Feedstocks & Sustainability

This panel on the second day of the Summit consisted of Richard Gustafson from the University of Washington, Gillian Madill, an independent consultant representing views of the environmental NGO community and John Sheehan, from the Institute on the Environment at the University of Minnesota.

While Mr. Gustafson and Mr. Sheehan gave informative talks on lifecycle assessment modeling and sustainability issues, Ms. Madill lit up the room with her talk titled, “Environmental Concerns with Energy Biotechnologies.” Ms. Madill started the conversation with the assertion that the environmental community and the biofuels community have the same goal, to supply energy in a new way that preserves the environment and our earth. Renewable energy and technology are tools to get to that end.

The environmental community has several valid concerns over widespread biofuels production. They see biofuels as a transition technology on our way to an energy future less dependent on liquid fuels, some would say zero liquid fuels. Zero because of the belief that no biofuels are carbon neutral. The question asked by environmental groups is, Why incentivize an unsustainable industry? Some concerns raised by Ms. Madill on behalf of the environmental community include deforestation of sensitive lands such as rain forests, environmental degradation, incorporation and containment of genetically engineered crops and organisms and intellectual property protection.

The biofuels industry plans to be a sustainable industry, but it is a new industry on the verge of commercialization with a formidable competitor. Ms. Madill’s point was that the environmental community and industry, while striving for some common goals, are currently at odds.

As I expressed to Ms. Madill, at the heart of this debate is the fact that most of the controversy centers around land use and protecting sensitive ecosystems. If biofuels went away tomorrow, other industries would compete for those same sensitive areas. After all, solar and wind farms require significant acreage as well, not to mention building schools or highways or the new grocery store that just opened in your neighborhood. Any industry that has a footprint will at some point, one can only assume in a future low carbon world, be mandated to quantify their lifecycle assessment, including land use and potentially indirect international land use, as biofuels are today.

My suggestion would be to partner to serve the common goal, protection of our vital and sensitive areas and resources which are important and treasured by all.

Wrong Question: Can Biofuels Be Carbon Friendly?

The Science Insider blog last week hosted an interesting debate between Tim Searchinger, Princeton visiting scholar, and John Sheehan, of the Institute on the Environment at the University of Minnesota, regarding the recent policy proposal in the pages of Science by Searchinger et al. to “fix” the carbon accounting of biomass for bioenergy and biofuels in U.S. legislation and the successor to the Kyoto protocol, by giving credit only to biomass that can be managed in such a way as to sequester additional atmospheric carbon in the soil. As Searchinger puts it in the recent debate, “bioenergy only reduces greenhouse gases if it results from additional plant growth or in some other way uses carbon that would not otherwise be stored.”

To be sure, use of bioenergy can only reduce the overall level of greenhouse gases in the atmosphere by sequestering carbon in the soil (in root systems). And yes, individual biofuel or bioenergy producers could use only new biomass that has recently pulled carbon from the atmosphere (although other environmentalists may differ on that) or biomass that would otherwise be left to decay and emit the stored carbon anyway. The question then is whether there is enough of this type of biomass to meet energy needs.

But that is not the point of the current Kyoto protocol or of U.S. cap-and-trade legislation. Their shared goal is to reduce overall GHG emissions, over time, ideally lowering the cap until emissions reach equilibrium.

Searchinger cites recent modeling studies to say that not employing his fix to global carbon accounting “would lead to the loss of most of the world’s natural forest because clearing those forests for bioenergy becomes one of the cost-effective means of complying with laws to reduce greenhouse gas emissions.” However, the fossil fuel industries are certain to receive allowances under the U.S. legislation. Employing a carbon accounting model that treats biomass as equivalent to fossil fuel would definitely make continued reliance on fossil fuel the cost-effective alternative.

Another interesting response to the Searchinger et al article comes from Geoff Styles of the Energy Collective, who extends the carbon accounting argument to electric vehicles. All alternative energy sources can be opened up to particular scrutiny. What is needed is a truly accurate and balanced accounting of fossil fuel use to compare these arguments.

The only other political option would be to drastically cut use of all energy. Models do project that the current worldwide economic recession has brought about a reduction in climate emissions by cutting energy use.

Searchinger does note that biomass and biofuels have the potential to balance greenhouse gas emissions – depending on land management. A better question here is whether his models can show that fossil fuel use also has the potential to balance greenhouse gas emissions with proper land management.