Chapter 3. Bioproduction and the bioeconomy1

Secretariat The OECD

Industrial biotechnology involves the production of goods from renewable biomass instead of finite fossil-based reserves. Much progress has occurred in recent years in the tools and achievements of industrial biotechnology. Industrial biotechnology demonstrates that environmental protection can accompany job creation and economic growth. There are, however, several barriers to its deployment over a wide range of products. Some of these barriers are technical and need further research and development. Others stem from the fact that bioproduction is in direct competition with the fossil oil, gas and petrochemicals industries, which are many decades old, have perfected supply chains, large-scale economies, and receive subsidies. Yet another barrier concerns uncertainty about the sustainability of biomass as a feedstock for future production. Many types of policy are needed to realise the potential of bio-based production, from public support for research, to development of sustainability measures for biomass, to product labelling schemes for consumers, to education and training initiatives for the workforce.

  

Introduction

More than ever before, expanding the bioeconomy is critical. Momentum has been building for over a decade, and events in 2015 – such as COP21 and the Global Bioeconomy Summit – have propelled the bioeconomy concept to the forefront of politics. These events, and the development of the United Nations (UN) Sustainable Development Agenda, came about in response to the “grand challenges” of climate change, energy security, food and water security and natural resource depletion. Expansion of a bio-based economy can help to bring economic growth and environmental policy goals closer together, as well as helping achieve such objectives as rural industrial development. Today, at least 50 countries, including the G7 countries, have national bioeconomy strategies, or have policies steering towards a bioeconomy (El-Chichakli et al., 2016).

Industrial biotechnology involves production from renewable biomass instead of finite fossil-based reserves. The biomass can be wood, food crops, non-food crops or even domestic waste. Much progress has occurred in the tools and achievements of industrial biotechnology. For example, several decades of research in biology have yielded synthetic biology and gene-editing technologies (synthetic biology aims to design and engineer biologically based parts, novel devices and systems as well as redesign existing natural biological systems). When allied to modern genomics – the information base of all modern life sciences – the tools are in place to begin a bio-based revolution in production. Bio-based batteries, artificial photosynthesis and micro-organisms that produce biofuels are just some among the recent breakthroughs. And in a striking breakthrough reported in early 2017, discussed later in this chapter, scientists have succeeded in synthesising graphene from soy bean oil.

Despite the advent of remarkable new biotechnologies, the largest medium-term environmental impacts of industrial biotechnology will hinge on the development of advanced biorefineries (Kleinschmit et al., 2014). Essentially, a biorefinery transforms biomass into marketable products (food, feed, materials, chemicals) and energy (fuels, power, heat). Based on a recent OECD survey, this chapter provides evidence on approaches being employed across countries to develop advanced biorefineries.

Underpinning the development of biorefineries is the fundamental question of the sustainability of the biomass which they process. Governments can help to create sustainable supply chains for bio-based production. In this connection, governments should urgently support efforts to develop comprehensive or standard definitions of sustainability (as regards feedstocks), tools for measuring sustainability, and international agreements on the indicators required to drive data collection and measurement (Bosch, van de Pol and Philp, 2015). Furthermore, environmental performance standards are needed for bio-based materials. Such standards are indispensable, because most bio-based products are not currently cost-competitive with petrochemicals, and because sustainability criteria for bio-based products are often demanded by regulators.

Demonstrator biorefineries operate between pilot and commercial scales. Demonstrator biorefineries are critical for answering technical and economic questions about production before costly investments are made at full scale. But biorefineries and demonstrator facilities are high-risk investments, and the technologies are not proven. Financing through public-private partnerships is needed to de-risk private investments and demonstrate that governments are committed to long-term coherent policies on energy and industrial production.

Little policy support has been given to producing bio-based chemicals, as opposed to bio-based fuels (where initiatives have been in operation for some decades). Bio-based production of chemicals could substantially reduce greenhouse gas (GHG) emissions (Weiss et al., 2012).

Governments should focus on three objectives as regards regulations:

• Boost the use of instruments, in particular standards, so as to reduce barriers to trade in bio-based products.

• Address regulatory hurdles that hinder investments.

• Establish a level playing field for bio-based products relative to biofuels and bioenergy (Philp, 2015).

Improvements to waste regulation could also boost the bioeconomy. For example, governments could ensure that waste regulations are less proscriptive and more flexible, enabling the use of agricultural and forestry residues and domestic waste in biorefineries.2 Governments could also take the lead in market-making through public procurement policies.

As this chapter outlines, there are also many targets where governments could support R&D and commercialisation in bioproduction and metabolic engineering (i.e. using genetic engineering to modify the metabolism of micro-organisms in such a way that the micro-organisms make useful products). A case in point would be to support R&D on the convergence of industrial biotechnology with new environmentally benign chemical processes. Another is bringing about a greater use of computation, data analytics and digital technologies in synthetic biology (which involves writing new genetic code) and metabolic engineering.

One of the greatest challenges in bio-based production is its multidisciplinarity. Researchers will need to be able to work together across the disciplines of agriculture, biology, biochemistry, polymer chemistry, materials science, engineering, environmental impact assessment, economics and, indeed, public policy. Research and training subsidies will have to create not only the technologies required, but also a cadre of technical specialists (Delebecque and Philp, 2015). There are some proven ways for governments to help tackle this challenge, as this chapter discusses.

The transition to an energy and materials production regime based on renewable resources will face technical and political obstacles and will take time. Earlier transitions, from wood to coal and then from coal to oil, were not complicated by the need to meet today’s global challenges. But today’s global challenges make the need for this transition all the more urgent.

A policy framework for the bioeconomy

This chapter has two parts. This first part lays out what an overall bioeconomy policy framework would entail, and classifies the forms of support according to whether they are supply- or demand-side measures. The second part of the chapter provides an overview of the scope of industrial biotechnology and bioproduction that allows the policy maker to grasp the possible impact this form of manufacturing could have. Everyday objects such as tyres and bottles are already being made using renewable resources. The overarching problem is that of achieving scale of production.

There are many definitions of a bioeconomy. Consistent with OECD (2009), a working definition for the purposes of this text is “the set of economic activities in which biotechnology contributes centrally to primary production and industry, especially where the advanced life sciences are applied to the conversion of biomass into materials, chemicals and fuels”.

The global nature of the environmental and related economic challenges

When a country’s wealth doubles, its carbon emissions rise by about 80% (UNEP, 2010). At the heart of the environmental challenge is the need to decouple economic growth from environmental degradation: in particular there is a need to drastically cut carbon emissions (OECD, 2009). The G7 has called for as-close-as-possible to a 70% reduction on the 2010 level of carbon emissions by 2050 (G7 Germany, 2015). In common with bioeconomy goals, the climate agreement reached in Paris in 2015 aims to reduce carbon pollution and create more jobs and growth driven by low-carbon investments (UNFCCC, 2015).

For governments and the private sector, it is necessary to see the opportunities implied by resource depletion, not just the threats. Building a bioeconomy offers the chance to rebuild industry and society in a sustainable manner, and create jobs and value-added through exploitation of biomass rather than fossil resources. The United States’ National Academy of Sciences (2015) has described this as “a vision of the future” because “the core petroleum-based feedstock is a limited resource and diversification of feedstocks will provide even greater opportunity for the chemical manufacturing industry” (National Academy of Sciences, 2015).

General considerations relating to a policy framework for the bioeconomy

All bioeconomy aspirations depend on supplies of sustainable biomass (Piotrowski, Carus and Essel, 2015). In the post-fossil-fuel world, an increasing proportion of chemicals, plastics, textiles, fuels and electricity will inevitably have to come from biomass, and this will increase competition for land (Haberl, 2015). By 2050, the world will need to produce 50% to 70% more food (UN FAO, 2009), increasingly under drought conditions (Cook, Ault and Smerdon, 2015) and using poor-quality soils (Nkonya, Mirzabaev and von Braun, 2016). Herein lies a major conundrum for the bioeconomy – reconciling the conflicting needs of agriculture and industry (Bosch, van de Pol and Philp, 2015). Inevitably, food needs must come first (El-Chichakli et al., 2016), so the extent to which industrial production can rely on biomass is as yet undetermined (PBL, 2012).

Another issue concerns the sustainability of bio-based products, including biofuels and bioenergy. All biofuels and bio-based products are not equal in this regard. While bio-based products can offer environmental advantages (such as significant savings on greenhouse gas emissions), this cannot be assumed in all instances (Posen, Jaramillo and Griffin, 2016). The sustainability of bio-based products needs to be treated on a case-by-case basis (e.g. Urban and Bakshi, 2009; Lammens et al., 2011). In fact, there is considerable variability in estimates of environmental impacts (Montazeri et al., 2016), which is a serious impediment to bio-based production. International standardisation is required for the credibility of the industry (Carus, 2017). Serious misgivings have also been raised concerning the use of life-cycle analysis (LCA) as the sole tool in environment impact assessment (ANEC, 2012). This is because LCA only measures environmental dimensions of sustainability, omitting economic and social considerations.

Around 50 countries have bioeconomy goals in their economic and innovation strategies. Some have dedicated bioeconomy strategies, including Finland, Germany, Japan, Malaysia, South Africa, and the United States. Still other countries have policies consistent with the development of a bioeconomy, such as Australia, Brazil, the People’s Republic of China (hereafter “China”), India, Ireland, Korea, the Netherlands, Russia and Sweden. A comprehensive overview of different national intentions is given in Bioökonomierat (2015). Countries differ in their priorities, some focusing more on health, others on bioenergy. Many express the intention to develop a bio-based industry with products that have higher added value than either biofuels or bioenergy. While national bioeconomy strategies demonstrate intent and commitment, they tend to lack policy detail. Furthermore, the policies affecting the bioeconomy are many, ranging from tax, to industry, agriculture, waste and trade, among others. This breadth increases the challenge of developing a single policy framework for the bioeconomy.

Supply-side, demand-side and cross-cutting measures are all required

Several policy areas are critical. These are grouped in Table 3.1 under three categories (technology push or “supply-side” policies, market pull or “demand-side” policies, and cross-cutting measures). These instruments are considered in detail throughout this chapter.

Table 3.1. Policy inputs for a bioeconomy framework
Feedstock/technology push	Market pull	Cross-cutting
Local access to feedstocks	Targets and quotas	Standards and norms
International access to feedstocks	Mandates and bans	Certification
R&D subsidy	Public procurement	Skills and education
Pilot and demonstrator support	Labels and raising awareness	Regional clusters
Flagship financial support	Direct financial support for bio-based products	Public acceptance
Tax incentives for industrial R&D	Tax incentives for bio-based products
Improved investment conditions	Incentives related to GHG emissions (e.g. ETS)
Technology clusters	Taxes on fossil carbon
Governance and regulation	Removing fossil-fuel subsidies
Source: Adapted from Carus, M. (2014), “Presentation at the OECD workshop on bio-based production”.

Demand is a major potential source of innovation, yet the critical role of demand as a driver of innovation is not universally recognised by governments (Edler and Georghiou, 2007). In recent years, however, many OECD countries have more often used demand-side innovation policies. These include measures such as public procurement, regulation, standards, consumer policies, and user-led innovation initiatives (OECD, 2011a). Experience in OECD countries has shown that the use of demand-side policies remains limited to areas in which societal needs are not met by market mechanisms alone (e.g. environment) or in which private and public markets intersect (e.g. energy supply). It is relevant, therefore, for bioeconomy policy goals to be both environmentally driven and energy driven.

Policy is needed at multiple scales

The bioeconomy requires multiple scales of policy action (Figure 3.1). These range from regional development, such as biorefinery deployment, through to national R&D support (e.g. for synthetic biology), to the global issues of biomass and its sustainability.

Figure 3.1. Bioeconomy policy must operate at regional and global levels

One of the greatest challenges to developing a bioeconomy is that the relevant sectors exist in silos and do not necessarily communicate with each other. For example, the commodities chemicals industry does not routinely interact with farmers. This isolation can be equally true of the policy families in question. What follows is an ordering of policy measures into a potential framework for developing a bioeconomy with regional, national and global reach. Evidence for the need for such a policy framework uses examples from OECD countries and partner economies.

Supply-side policy measures

Supporting R&D and commercialisation in metabolic engineering and bioproduction

The central biotechnology for bio-based materials production is metabolic engineering. Metabolic engineering is the use of genetic engineering to modify the metabolism of micro-organisms. It can involve the optimisation of existing biochemical pathways or the introduction of parts of new pathways. Metabolic engineering is most commonly done in bacteria, yeast or plants, with the aim of achieving high-yield production of specific molecules for medicine or biotechnology.

Despite large numbers of research successes in metabolic engineering, very few new molecules have achieved commercial success. It still takes 50 to 300 people years of work and many millions of dollars to bring a metabolically engineered product to market (Hong and Nielsen, 2012). By comparison, chemistry is way ahead in success rates. There are currently over 30 chemicals derived from biomass at TRL 8 or above (EC, 2015), but few come from metabolic engineering. Rather, they are usually the products of chemistry using biomass as a feedstock.

However, there is emerging evidence that success rates would be higher if governments paid more attention to supporting R&D on the convergence of industrial biotechnology with “green chemistry” (Dusselier et al., 2015). Green chemistry involves designing environmentally benign chemical processes, leading to the manufacture of chemicals with a smaller environmental footprint. Greater success could also come if more R&D was directed towards a higher level of information technology (IT)/computation convergence with synthetic biology and metabolic engineering (Rogers and Church, 2016) (Box 3.1).

Box 3.1. IT/computation convergence in bioproduction and a universal serial bus (USB) for biotechnology

Concepts such as interoperability, separation of design from manufacture, standardisation of parts and systems, all of which are central to engineering disciplines, have largely been absent from biotechnology. As a general rule, across industry sectors, around 70% of the costs of manufacturing a product are determined by design decisions, and only 20% determined by production decisions. When the engineering cycle is applied to biotechnology, failure is common.

Manufacturing in the modern economy works because design and testing software can talk to manufacturing hardware via multiple layers of application programming interfaces (APIs). Biotechnology needs to have its own high-level programming language(s) and software to transform the engineering cycle (Sadowski, Grant and Fell, 2016). Interoperability is needed to be able to seamlessly join up the various technologies.

The engineering cycle and biotechnology: the test phase is the bottleneck

When working with vast numbers of genetically engineered micro-orgamisms, evaluating all of their observable characteristics or traits (their phenoptypes) is a major rate-limiting step in metabolic engineering (Wang et al., 2014). When constructing micro-organisms to produce biofuels or bio-based chemicals, design success is measured in the amount of product formed. If this requires the separation of different strains into many separate testing instruments, and the determination of the concentration of the chemical of interest in each, then (only) hundreds of thousands of design evaluations are possible per day. This compares with the possibility of designing and building billions of different genotypes per day (Rogers and Church, 2016). The throughput in the process of evaluating whether the designed organism has the right characteristics is a constraint on overall productivity. Reproducibility in synthetic biology is also a challenge (Beal et al., 2016). This has to be conquered for bio-based manufacturing to become a credible manufacturing platform for the future.

Conquering these challenges will necessitate new data analysis and storage

A rapid drop in the cost of deoxyribonucleic acid (DNA) synthesis has rendered synthesis costs trivial for many laboratories. As described above, the testing phase remains a large bottleneck in production. Mechanical or electronic automation technologies cannot bridge the testing gap: the answers will have to come from biology itself (Rogers et al., 2015; Xiao et al., 2016) with the aid of computational models (Rogers and Church, 2016). Indeed, genetic sensors have now been developed which signal when the modified micro-organism has the sought-for phenotype and is making a desired product. This will enable the evaluation of millions of designs per cycle. However, it will also create an unprecedented amount of data. In the age of machine learning, ultimately the data should inform the next iteration of design without human intervention (Rogers and Church, 2016). For example, AutoBioCAD promises to design genetic circuits for Escherichia coli (E. coli) with virtually no human user input (Rodrigo and Jaramillo, 2013). Algorithms are needed that incorporate machine learning to correlate data from different data sets for the purpose of linking genes, proteins, and pathways without a priori knowledge (Wurtzel and Kutchan, 2016).

Many researchers have called for completely new computational languages for biotechnology. It is argued that variants of natural languages such as English are too imprecise and ambiguous to be useful in tackling the highly complex systems of biology and biotechnology. The time seems right for dedicated programming languages for the life sciences. Sadowski, Grant and Fell (2016) argue that the most crucial need is the development and adoption of high-level machine languages for executable bioprocesses. Antha is perhaps the first bona fide attempt to create a programming language for general-purpose computation in biology. It is built on Google’s Go programming language, but incorporates domain-specific features. It is claimed to enable experiments of new levels of complexity.

Research and commercialisation bottlenecks in bioproduction

The commercial successes in metabolic engineering have been dwarfed by the research successes. In response to a lack of commercial success, researchers at the Korea Advanced Institute of Science and Technology (KAIST) have recently suggested ten general strategies of systems metabolic engineering to successfully develop industrial microbial strains (Lee and Kim, 2015). Systems metabolic engineering differs from conventional metabolic engineering by incorporating traditional metabolic engineering approaches along with tools of other fields, such as systems biology, synthetic biology, and molecular evolution. Many companies are competent in one or more of these specialisms, but few can integrate them all into a production process. In this and other fields of biotechnology there is a need for better collaboration between academia and industrial biotechnology companies (Pronk et al., 2015), and far more rapid transfer of knowledge between the public and private sectors.

At a more detailed level, the literature reveals key biotechnological challenges that need to be further addressed to improve the translation from the laboratory to the market. Box 3.2 describes the most frequently cited biotechnologies that need to be further developed. Co‐ordinated targeted public research funding is particularly required in these areas.

Box 3.2. Several biotechnologies need to be further developed to improve the translation from laboratory to market

Frequently cited biotechnologies in need of further development include:

• Biomass pre-treatment and consolidated bioprocessing (CBP). The US Department of Energy endorsed the widespread view that CBP technology is the ultimate low-cost configuration for cellulose hydrolysis and fermentation (a process that makes cellulose accessible to microbes) (US DOE, 2006). In CBP a biocatalyst that makes a bio-based chemical is also responsible for releasing fermentable sugars from cellulosic biomass (such as wood or sugar cane), thereby removing an expensive dedicated enzyme step. This also reduces the number of reactors required in a bioprocess. There have been research successes (e.g. Salamanca-Cardona et al. [2016]), but as yet no viable commercial process.

• Growth on Carbon1 compounds. Progress has been slow because bacteria known to use C1 substrates can be difficult to work with in an industrial setting. Introduction of genetic carbon utilisation pathways from such bacterial strains into tractable production strains also presents significant challenges (Burk and van Dien, 2016). Nevertheless, many C1 compounds are available in large volumes (e.g. methanol) and others are greenhouse gases that can be harnessed (methane, carbon monoxide, CO₂). The low cost and ready availability of these molecules makes them attractive feedstocks for bioprocessing. LanzaTech, founded in New Zealand, has developed this technology to the point of large demonstration, and is due to build a fermentation plant at a Belgian steel works to convert highly toxic carbon monoxide and hydrogen into ethanol. This effort is partly industry funded, and partly funded through the European Union (EU) Horizon 2020 programme.

• Computational enzyme design. Current approaches to engineering enzymes for improved activity and specificity are semi-rational at best. Although the field is still in its infancy, computational enzyme design has the potential to facilitate rational protein engineering or even design completely novel functions (Privett et al., 2012). The frontier is in integrated computational/experimental metabolic engineering platforms to design, create, and optimise novel high-performance enzymes (Barton et al., 2015).

• Minimal cells for bio-contained microbial factories. The starting point for designing future production strains will be minimal, or chassis, cells (in other words, self-replicating minimal biological machines that can be tailored for the production of specific chemicals or fuels). Ostrov et al. (2016) have developed computational and experimental tools to rapidly design and prototype synthetic organisms. As much as the development of synthetic genomes has already been reported, the required effort is on a scale that has not yet been explored. Biocontainment to prevent the escape of genetically modified microbes into the environment remains another goal in using and developing industrial production strains. Currently there are necessary but insufficient metrics to evaluate biocontainment (Mandell et al., 2015), and therefore the design strategies are as yet incomplete.

• Robustness. Natural micro-organisms were not intended for the extreme conditions of industrial production, and new characteristics to make them more robust have to be engineered (Zhu et al., 2011). So pervasive is the issue that the United States’ Defense Advanced Research Projects Agency (DARPA) has a research priority dedicated to it. DARPA’s Biological Robustness in Complex Settings (BRICS) portfolio will consist of a set of programmes that aim to elucidate the design principles of engineering robust biological consortia and to apply this fundamental understanding towards specific applications such as on-demand bioproduction of novel drugs and fuels.

• Productivity. Most natural microbial processes are incompatible with an industrial process as the product titres (grammes per litre of product), yields (grammes of product per gramme of feedstock) and productivity (grammes per litre per hour) rates are often too low to be scalable (Maiti et al., 2016). A fundamental constraint on host cell productivity is the metabolic burdens that lead to undesirable physiological changes. Engineering cell metabolism for bioproduction not only consumes energy molecules such as Adenosine triphosphate (ATP), but also triggers energetic inefficiencies in the cell (Wu et al., 2016). Titre, yield and productivity may be perceived as issues for near-market R&D, but the challenges have been so pervasive and intractable that there is probably a need for more funding of basic research.

• Small-scale fermentation models. Fermenters – the enclosed and carefully controlled reactors where micro-organisms make useful products – are the ultimate arbiters of process optimisation. But they are costly to run and typically require expert supervision. Small-scale fermentation is also lacking in a number of areas, such as pH and aeration control and the ability to sample frequently. It is hoped that solutions will lie in microfluidics (Burk and van Dien, 2016). Microfluidics is the science and technology of manipulating and controlling fluids, in microscopic quantities (microlitres to picolitres), in exceedingly small channels. Being able to work with fluids in such small volumes means that the surface area-volume ratio is very large. This helps to speed reactions (heat transfer, mass transfer, gas transfer), and in the process of fermentation would also save on expensive media for growing microbes.

• Gene and genome editing in production strains. Targeted genome editing and engineering have until recently been laborious and costly. Efficient methods of enabling multiplex genome editing are urgently needed (Esvelt and Wang, 2013). Settling of patent issues around the genetic editing tool CRISPR/Cas9 (Ledford, 2016) would be helpful as this technology lends itself to work on genetic manipulation of traditional production strains like baker’s yeast (Stovicek et al., 2015) and E. coli (Jiang et al., 2015) but also to non-conventional strains such as the model diatom Phaeodactylum tricornutum (Nymark et al., 2016) (diatoms are unicellular photosynthetic aquatic organisms).

Tax incentives for industrial R&D

Tax incentives reduce the marginal cost of R&D and innovation spending and are usually more technology neutral than direct support. Over the past decade, OECD countries have increasingly turned to tax incentives (rather than grants or other direct forms of support) to support investment in R&D (OECD, 2014a). The majority of OECD countries use such tax incentives, as do many of the BRICS (Brazil, Russia, India, China and South Africa) economies. In the United States, tax incentives are regarded as an important way to stimulate the bio-based materials industry. A range of such measures was suggested during the United States 112th Congress, with some measures reintroduced subsequently in the 113th Congress.

The existence of a production tax credit (PTC) in the United States covering bio-based products could promote investment, production, and adoption of bio-based products, much as existing biodiesel and cellulosic biofuels production tax credits have done for investment in those industries.

Technology clusters

Most OECD countries promote cluster-based programmes in supporting business innovation. Support for technologically specialised clusters exists in Australia, Belgium, Canada, Denmark, Ireland, Israel, the Netherlands, New Zealand, Poland, Spain, Switzerland, the United States and Singapore. The main rationale for public policies to promote technology clusters – through infrastructure, networking activities, training and other measures – is an increase in knowledge spillovers among actors in the clusters. This spill-over possibility is particularly relevant to industrial biotechnology as the research and production activities required are so diverse, from fermenter engineering to genetic engineering. An example of such a cluster in Europe is BioBased Delta, which has secured the commitment of chemicals industry leaders such as Royal Cosun, Suiker Unie, Dow Chemicals, Cargill and Corbion (Deloitte, 2015).

Small and medium-sized enterprises (SME) and start-up support

All high-technology SMEs face challenges in their specific sectors. SMEs in biotechnology can face many years of high-risk research without revenues (Pisano, 2010), requiring expensive specialist facilities and complex market entry. Additionally, SMEs in bioproduction may have to compete with some of the world’s largest oil and petrochemistry firms. Such large firms have proven markets, stable supply and value chains, proven technology and fully amortised production facilities. And yet governments place high expectations on SMEs.

Technology and regional clusters are a leading support mechanism for SMEs providing a range of services, such as: access to venture capital and other financial services; business advice on the strategic use of standards, labels, certificates, assistance with specific LCA and sustainability tools; and access to demonstration and testing facilities. National government programmes can provide a wide range of support mechanisms, especially exemptions from tax and national insurance payments.

Supporting local access to feedstocks

There are several policy advantages to making use of local feedstocks. First, using local feedstocks is more sustainable than transporting them from further afield or abroad (in terms of energy consumed in transportation). Second, creating local and rural jobs can serve objectives such as smart specialisation (OECD, 2013b) and knowledge-driven reindustrialisation. Nevertheless, there are major challenges ahead.

One major challenge is the complexity of biorefinery value chains (Figure 3.2). One aim of policy is to establish many interconnected local production plants that integrate with other nearby industries to ensure that residues and wastes are fully utilised in different processes (Luoma, Vanhanen and Tommila, 2011). Figure 3.2 is in fact an oversimplification, as it omits the contribution of research organisations and chemistry/biotechnology SMEs, and end-of-life strategies such as composting. Neither does the figure illustrate the cascading use of the biomass concept.3 Nevertheless, Figure 3.2 does show the number of actors involved and the complexity of their interactions. For example, the biorefinery at Bazancourt-Pomacle in France (Schieb and Philp, 2014) involves 10 000 farmers.

Figure 3.2. Generalised supply and value chains in biorefining

Government programmes are promoting R&D across supply and value chains, but supply markets – e.g. for specialised production inputs – receive little attention (Knight, Pfeiffer and Scott, 2015), which can deter investors. This lack of attention to supply markets possibly reflects reluctance by governments to be seen to be intervening in markets and potentially contravening anti-competitive practices (Institute of Risk Management and Competition and Markets Authority, 2014).

The stakeholders concerned are so different that they almost never come into regular contact with each other in the fossil economy (for example, R&D centres and public research organisations tend not to be rural, and therefore need some mechanism to connect them to the other actors in the industrial biotechnology value chain). The stakeholder groups are also very diverse.4 Consequently, there are roles to be played by policy to prevent the communication process from being random, ad hoc and inefficient. Analysis points to the potential importance of buyer co-operatives and other forms of supply market intermediaries (Knight, Pfeiffer and Scott, 2015).

Regional clusters can also be well positioned to evaluate regional development options. One factor in building capacity at the local level relates to the quality of local business networks, e.g. agricultural and forestry machine rings (equipment hire companies) and relationships of trust. Encouraging development of software-based decision support tools for local supply chain development would be a relatively low-cost public sector intervention.5 European countries have frequently used the regional cluster mechanism to build capacity in industrial biotechnology.6

A successful cluster in France with tangible results and benefits is Industries & Agro-Ressources (IAR) in the Champagne-Ardenne and Picardy regions. With over 200 members, the IAR cluster unites stakeholders from research, education, industry and agriculture in France around the goal of optimising added value from the exploitation of biomass. It has regional roots, as it is a location where biorefining has been particularly successful. The IAR cluster also has a global mission of integrating external know-how through international strategic alliances. Performing a classic task of a regional cluster, the IAR assembles stakeholders from the whole value chain around a shared innovation problem.

International access to feedstocks: Biomass potential and sustainability

Large quantities of biomass are already being shipped around the globe, with most destined for OECD countries (BP-EBI, 2014). The use of biomass globally is increasing and will increase further (Schmitz et al., 2014). Biomass potential and its cost could become crucial factors that affect overall climate change mitigation costs (Rose et al., 2013).

A division is developing between advanced economies with little biomass to spare, such as in Europe, and developing economies not constrained by biomass shortages. This calls for internationally harmonised policy to create and preserve sustainable biomass trade but also to prevent international biomass disputes (Bosch, van de Pol and Philp, 2015).

Box 3.3. Examples of innovative approaches to feedstock supply: Japan and the United States

The Biomass Nippon Strategy of 2002 was an early approach to supporting local access to feedstocks. Co-ordinated by three Japanese ministries – the Ministry of Agriculture, Forestry and Fisheries, the Ministry of the Environment and the Ministry of Economy, Trade and Industry – the strategy sets three types of goal: technical, regional and national. Objectives are set for production, collection and transportation, conversion technologies, and stimulation of demand for renewable energy or material use. The marketable opportunities for biomass technologies have been considerably strengthened.

The biomass town is an area where a comprehensive biomass utilisation system is established and operated through the co-operation of stakeholders in the area. Each step from biomass generation, conversion, distribution and use is linked among the stakeholders. Local governments lead the development and implementation of plans to create biomass towns. Approximately 300 biomass town plans have been developed in Japan since 2005. The Ministry of Agriculture, Forestry and Fisheries (MAFF) has also supported forming biomass town plans in pilot areas of four Association of Southeast Asian Nations (ASEAN) countries (Indonesia, Malaysia, Thailand and Vietnam).

For over a decade studies in the United States have examined the feasibility of acquiring 1 billion dry tonnes of biomass for the bioeconomy domestically. The first “Billion Ton Report” was completed in 2005 (US DOE, 2005), with updates in 2011 and 2016 (US DOE, 2011; US DOE 2016). The basics remain the same throughout these reports: that the United States, depending on assumptions made, may be able to produce 1 billion tonnes of dry biomass per annum, with the potential for significant substitution of fossil gasoline with renewable biofuels. The authors estimate that the United States currently uses 365 million dry tonnes of agricultural crops, forestry resources, and waste to generate biofuels, renewable chemicals, and other bio-based materials. The culmination of this work is an estimation that developing biomass resources and addressing current limitations to achieve a 1 billion tonne bioeconomy could expand direct bioeconomy revenue by a factor of five, contributing nearly USD 259 billion and 1.1 million jobs to the United States economy by 2030 (Rogers et al., 2017).

The stark reality of the current situation regarding biomass sustainability is that there are currently no comprehensive or standard definitions of sustainability, no ideal tools for measuring it, and no international agreement on the set of indicators to derive the data from which to make measurements. The metrics used to classify biofuel sustainability are still non-binding on biomass. However, major concerns exist over the sustainability of expanding the global bioeconomy, such as potential impacts on water and soil security, biodiversity, emissions and carbon footprint, net energy values, and land-use change, especially indirect land-use change (BR&D, 2016). Production of biomass needs policy to address these issues (Knudsen, Hermansen and Thostrup, 2015) along with the related development of standards. Genomics can also make large contributions to biomass sustainability, a fact which many governments fail to fully recognise.7

Production facility support: financing demonstration and full-scale biorefineries

Biorefineries at demonstration scale are difficult to finance because the volume of production is not large enough to influence a market price (Philp, Guy and Ritchie, 2013). Full-scale biorefineries are also difficult to build for reasons mostly relating to uncertainties of technology, supply and policy (BR&D, 2016). The private sector is unwilling to shoulder the entire financial burden of these large investments, and this has necessitated public-private partnerships (PPPs) to de-risk private investments. The largest such PPP currently in operation in Europe is the Bio-based Industries Joint Undertaking (BBI JU).

The demonstrator phase is a critical stage on the way to commercialisation. Larger than pilot scale, economic and technical limitations often make themselves evident during demonstration. Rather than having to correct these limitations at full-scale production, they can be corrected in a much less costly way at the demonstration scale.

The most common form of financing for such technologies in the United States is a hybrid of equity with either federal grants or federally backed loan guarantees (Box 3.4). A government loan guarantee is a promise by the government (the guarantor) to assume the debt obligation of a private borrower if that borrower defaults. Loan guarantees are similar to traditional project finance, but the government accepts the technology risk and backs the loan. This streamlines the approval steps and the control.

Box 3.4. Loan guarantees and the US Department of Agriculture (USDA) Farm Bill, Program 9003

For the Farm Bill of 2014, Program 9003, the USDA Biorefinery Assistance Program was renamed the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program. The USDA was directed to ensure diversity in the types of projects approved and to cap the funds used for loan guarantees to promote bio-based product manufacturing at 15% of the total available mandatory funds. The important point to note, however, is that the same policy mechanism is now being used to support both biofuels and bio-based products and materials. It provides loan guarantees up to USD 250 million.

Funds may be used to fund the development, construction and retrofitting of:

• commercial-scale biorefineries using eligible technology

• bio-based product manufacturing facilities that use technologically new commercial-scale processing and manufacturing equipment to convert renewable chemicals and other bio-based outputs of biorefineries into end-user products on a commercial scale.

Refinancing, in certain circumstances, may be eligible.

Importantly, the programme makes a distinction between biorefineries, and bio-based manufacturing facilities. Federal participation (loan guarantee, plus other federal funding) cannot exceed 80% of total eligible project costs. The borrower and other principals involved in the project must make a significant equity contribution.

The InnovFin-EU Finance for Innovators was launched by the European Commission and the European Investment Bank (EIB) Group in the framework of Horizon 2020 to provide guarantees or direct loans to research and innovation projects. Among other project types, InnovFin finances industrial demonstration projects (Scarlat et al., 2015). This is a major step in Europe as loan guarantees had previously been missing from the portfolio of funding mechanisms for bioeconomy projects.

Governments should focus on integrated biorefineries

Overcoming feedstock and product price volatility may be best accomplished by making a range of fuels and chemicals at the same facility (Box 3.5). Such “integrated” biorefineries are technically very complex. The concept of an integrated biorefinery has become synonymous with the cellulosic biorefinery, of which there is a handful worldwide producing a trickle of cellulosic ethanol.

Box 3.5. The concept of the integrated biorefinery

An integrated biorefinery converts biomass to fuels, chemicals, materials and electricity (Keegan et al., 2013). Truly integrated biorefineries, which fully convert all the biomass, do not as yet exist, although some approach this level of conversion. At present, biorefineries are not set up for multiple feedstocks and multiple chemical products. Single-feedstock/single-product biorefineries are at economic risk owing to changes in feedstock price (especially for food crops). Having multiple feedstocks and products allows for operational changes when economic conditions require.

Figure 3.3. Schematic representation of integrated biorefining

There are particular advantages to the integrated biorefinery model. Integrated biorefineries afford the ability to switch between feedstocks and products when, for example, one feedstock is too expensive. Switching between feedstocks also helps cope with seasonal availability (Giuliano, Poloetto and Barletta, 2016). The economies of scale provided by a full-size biorefinery lower the processing costs of low-volume, high-value co‐products. Common process elements are involved, lowering the need for equipment duplication, with subsequent decreases in capital cost. Co-production can provide process integration benefits (e.g. meeting process energy requirements with electricity and steam co-generated from process residues).

A summary of biorefinery types

There is a small number of biorefinery types (see Box 3.5 and Federal Government of Germany [2012]). First-generation biorefineries typically use a food crop of some sort as the feedstock. In terms of economic sustainability, Brazilian sugar cane is the favoured feedstock for biorefineries at present (e.g. Government of the United Kingdom [2012]). As of 2011, there were 490 sugar cane ethanol plants and biodiesel plants in Brazil (Brazil Biotech Map, 2011), and around 300 such plants as of mid-2016.

Widespread concern over the use of food crops as feedstocks has driven the development of various types of second-generation biorefinery. The most important model is the biorefinery that uses lignocellulosic feedstocks for integrated biorefining of fuels, chemicals/materials and even bioenergy generated from residues. Lignocellulosic biomass can be grouped into four main categories (Tan, Yu and Shang, 2011): agricultural residues (e.g. corn stover and sugar cane bagasse); dedicated energy crops; wood residues (including sawmill and paper mill discards), and municipal paper and fermentable solid waste. Other emerging models of great potential are those in which waste industrial gases are fermented to make useful products. Once only conceptual, this type of biorefinery is becoming a reality but is far from common.

Biorefineries using wood as a feedstock are attracting more attention in the light of changes to world paper production patterns. Wood biorefining makes sense in many countries that have a long history of pulp and paper-making. The relatively high energy density of wood is attractive for transportation purposes. The most popular product lines are generally produced from wood fibres (biofuels, pulp/paper, bio-based materials and chemicals). However, the bark and other tree residues, like foliage, that constitute forest wastes remain an under-exploited resource (Devappa, Rakshit and Dekker, 2015). The most advanced wood biorefineries are found in Scandinavian countries.

Box 3.6. Summary of an OECD survey of biorefinery types

A survey was designed to be completed by biorefinery operators. Five operators replied and the respondents included the main biorefinery types:

• first generation (France) using food crops as feedstock (especially sugar beet, wheat and alfalfa)

• second generation (Norway) using wood as feedstock and producing ethanol and bio-based chemicals

• second generation (Italy) using lignocellulose (wheat straw, rice straw and giant cane [not sugar cane])

• second generation (Canada) using non-recyclable and non-compostable municipal solid waste

• second generation (Italy) using non-edible thistles as feedstock to produce bio-based chemicals.

Commonalities

With such a range of feedstocks and process technologies, there are many differences between these biorefineries. Nevertheless there are commonalities, among the most significant for the policy maker being that there is a local supply of biomass through arrangements with farmers, co-operatives, and cities (for municipal waste); all the biorefineries rely on proprietary technologies (none is using a licensed technology) even if partnerships have been involved; and, all receive some form of funding support from public authorities (at least for R&D and pilot projects).

Lessons to learn

• In a sector where the financial risks are very high, the principle “first mover takes all” does not apply: biorefinery types are evolving and feedstock/conversion technologies/products are diverse. The different feedstocks, technologies and business models can be attractive to a range of investors.

• Co-operative or family-owned business models seem to be a way to promote longer-term, risky projects.

• The issue of acceptability of biorefineries should not be difficult to overcome: some biorefineries have been in operation for 60 to 70 years in local communities.

• Local supply of biomass has to be implemented through special arrangements with local farmers, co-operatives, and cities. These arrangements will be essential to economic, environmental and social sustainability.

• Within integrated biorefineries, the business model makes low-value products (biofuel, ethanol, building block chemicals), a prerequisite for producing small volume speciality chemicals or ingredients for cosmetics, drugs and textiles of higher value.

• All of the biorefineries receive, or have received, some form of funding support from public authorities (at least for R&D and pilot projects). All have prospects for duplication of the biorefinery or licensing of their technology.

• Proof of the technologies should now allow a larger number of investors and operators to feel more secure about new projects. However, there will still be some dependence on oil and gas prices.

• The investments in the sample of biorefineries range from EUR 100 million to EUR 300 million. These amounts are significant but not large compared to oil refineries.

Impediments to future prospects

• The competitiveness of biorefineries is highly dependent on a level playing field between renewable biomass/feedstock and fossil fuels (see Philp [2015]).

• Public policies in Europe should be consistent over time. For example, there has been an issue of changing European policies regarding the fuel mandate and rate of incorporation of biofuel into transportation fuels. Investors fear government u-turns which can leave investments stranded.

• Uncertainties related to the volatility of global prices in domains such as energy (oil, gas, coal as competing feedstocks) and agricultural commodities make business plans for new projects extremely hazardous.

In conclusion, when contrasting the positive lessons learned from a sample of case studies of biorefineries and global challenges, it should be possible in the coming decades to remove hurdles and barriers and move much more quickly towards a bioeconomy as long as there is dialogue between actors (private, public, citizens). More case studies are needed along the way but the industrial bioeconomy has passed the stage of proof of concept.

Source: Schieb (2017), “OECD survey of biorefinery types”.

For the future, marine biorefineries offer some important solutions, but also present technical challenges (Golberg and Liberzon, 2015). Perhaps the greatest benefit from using algae as both feedstock and biocatalyst is that this relieves pressure on land and food crops. Another advantage is that algae contain vast amounts of oil compared to terrestrial crops.

Market pull (demand-side policy measures)

Mandates and targets

Mandates and targets exemplify the different approaches to the introduction of biofuels in Europe and the United States. Incorporation targets (i.e. targets for the percentage of biofuels to be blended into gasoline and diesel) have been approved voluntarily by several EU member states as national initiatives (not an EU obligation). Biofuels policy in the United States has specified absolute production quantities through a mandate rather than a less-binding incorporation target (Ziolkowska et al., 2010). Mandates operate by the government setting a target volume for production for the private sector. Mandates and targets for biofuel production have become standard for the introduction of biofuels in OECD and BRICS countries (see OECD [2014b]).

Arguably the best-known mandate in bioproduction was created in the United States Energy Independence and Security Act (EISA) (2007) (Federal Register, 2010). This set high production volume mandates for biofuels. Together with blending mandates, a comprehensive policy support regime for biofuels has come into being in the United States.

However, if mandates do not distinguish among biofuels according to their feedstock or production methods, despite wide differences in environmental costs and benefits, governments could end up supporting a fuel that is more expensive than its corresponding petroleum product and with poorer environmental protection credentials (Global Subsidies Initiative, 2007). A key to preventing such a mistake in production support is, in the short term, harmonising LCA within the industry, and in the longer term developing robust and internationally coherent sustainability assessment.

Public procurement

Public procurement accounts for some 13% of gross domestic product (GDP) on average in OECD countries (OECD, 2012b). While possibilities exist to use public procurement to facilitate market entry for innovative bioeconomy products, challenges exist on both sides of the market.

On the supply side, only a small proportion of all bioeconomy products concern the business-to-consumer (B2C) market in which public procurers normally operate (e.g. fuel and consumer products). The largest share of bio-based products is chemicals and intermediates, which are only interesting to private industry in a business-to-business (B2B) market.

On the demand side, public procurement is a fragmented institutional landscape: in the European Union at the central governmental level only, more than 2 100 procuring authorities are listed. The total number of public procurers in the European Union (including regional and municipal level) is estimated at 250 000. This fragmentation inhibits co-ordination, and industry-specific knowledge and capacity building.

Moreover public procurers tend to be very price-sensitive, which is a barrier for any innovative product. Various governmental schemes address this issue. For example, the USDA BioPreferred Program specifically aims to increase the purchase and use of bio-based products, and has a catalogue of around 14 000 bio-based products. In the European Union, the 2014 legislation for innovative public procurement facilitates innovative solutions and the development of innovative products, but does not mention specific innovative products or product groups. However, projects like the Forum for Bio-Based Innovation in Public Procurement (InnProBio) aim to enhance uptake of bio-based products in public procurement in Europe.

Standards and certification for bio-based products

Stringent standards and certification give confidence to consumers and industry as they provide credibility to claims of performance and sustainability (such as “bio-based”, “renewable raw material”, “biodegradable”, “recyclable”, or “reduced greenhouse gas impact”). Standards and certification help verify claims such as biodegradability and bio-based content that will promote market uptake (OECD, 2011b). Claims should be verifiable by consumers, waste management authorities and legislators. Third-party verification is a means to prevent unwarranted environmental claims.

Standards have strategic importance and provide a solid basis for introducing new products and technologies onto the market and a basis upon which further R&D can be built. They also help to remove the uncertainties that companies face. Standards are developed in close co-operation between industry, research and policy makers, which is essential to create the right environment for new products and technologies to grow to full-scale deployment.

Standards provide the necessary scientific basis for implementing legislation by demonstrating compliance with legal requirements. They can also be used to verify that policy goals and targets are being met.

To help to develop the market for bioplastics, the Japan BioPlastics Association (JBPA) started a certification programme for products containing biomass-based plastic. The association has established standards as well as a methodology for the analysis and the evaluation of these plastics. The programme includes a logo easily recognisable by consumers. The JBPA certification, called BiomassPla, specifies that products with the logo must contain 25% of bio-based plastic, and is calculated by weight.

Product labels should give clear and reliable information about the environmental performance of bio-based materials. This applies especially to bioplastics as these are the most likely to be contentious in society as a result of negative outcomes and perceptions coming from the use of petro-plastics. Today many different “eco-labels” are used globally, and definitions and certification procedures differ widely. Significant efficiency gains may be had from promoting a harmonisation of eco-labels in the medium term.

Fossil carbon taxes and emissions incentives

OECD analysis shows that the most cost-effective way to mitigate climate change is to gradually build up a global price signal on carbon through the use of market mechanisms (OECD, 2013a). The purpose of carbon pricing policy frameworks today should be to send clear and credible price signals that foster the low-carbon transition over the medium to long term (OECD, 2015a). Explicit carbon prices can either be set through a carbon tax, expressed as a fixed price per tonne of emissions, or through cap-and-trade systems, where an emissions reduction target is set through the issuance of a fixed number of permits, and the price is set in the market through supply and demand.

Once politically unpopular, the number of countries, states, regions and cities developing carbon price mechanisms now encompasses about 12% of global emissions, tripling coverage in a decade (Rydge, 2015). Fears that a carbon price will damage industrial competitiveness seem to be receding. Over 40 countries now have carbon pricing on energy. However, carbon prices are often set very low. Around 90% of emissions from energy use are priced at less than EUR 30 per tonne (the low-end estimate of the cost of carbon), and 60% of emissions are subject to no price whatsoever.8

Governments can use carbon price revenues in a number of ways that should all be guided by efficiency. Perhaps the most appropriate use would be to finance the energy and manufacturing transition that climate change is necessitating. A proportion of the revenues could be used for R&D projects targeting the bioeconomy (e.g. Box 3.7).

Box 3.7. Climate Change and Emissions Management Corporation (CCEMC) and CO₂ Solutions, Canada

In April 2007, Alberta became the first jurisdiction in North America to pass climate change legislation requiring large emitters to reduce greenhouse gas (GHG) emissions. Two years later the CCEMC was created as a key part of Alberta’s Climate Change Strategy and movement towards a stronger and more diverse lower-carbon economy.

The Government of Alberta administers the collection of all compliance funding each year and pools those funds in the Climate Change and Emissions Management Fund (CCEMF). The funds are sourced from industry and made available to the CCEMC through a grant from the Government of Alberta.

Alberta’s Specified Gas Emitters Regulation identifies that facilities that emit more than 100 000 tonnes of CO₂-equivalent per year must reduce emission intensity by 12% below a baseline. Organisations that are unable to meet their targets have three compliance options: make facility improvements to reduce emissions below the required threshold; purchase Alberta-based carbon offset or performance credits; or pay CAD 15 into the CCEMF for every tonne they exceed the allocated limit.

The CCEMC manages its resources as a portfolio of projects with a wide spectrum of investments. The organisation funds projects at all levels of the innovation chain, with the bulk of its investment in projects at the demonstration and implementation phases.

For example, in 2012 and 2013, CO₂ Solutions (Quebec) secured CAD 5.2 million in grant funding from the Government of Canada’s ecoENERGY Innovation Initiative and CCEMC towards a CAD 7.5 million project to optimise and pilot the technology for biological CO₂ capture from oil sands production (CCEMC, 2015).

The Government of Alberta outlined a plan in November 2015 for cutting the province’s GHG emissions. The proposals included an end to coal-fired power generation as well as a carbon price of CAD 30 per tonne to 2018, rising in real terms after that. The plan has been backed by environmental groups and oil companies.

Fossil-fuel-subsidies reform

Not only do fossil-fuel subsidies undermine efforts to mitigate climate change, but they are also costly and distortive. By distorting costs and prices, fossil-fuel subsidies generate inefficiencies in the production and use of energy economy-wide (OECD, 2015b). Fossil-fuel subsidies differ in magnitude according to the method of calculation. The International Energy Agency (IEA) and the International Monetary Fund (IMF) use the price-gap approach, which is the difference between domestic fuel prices and a reference price, in this case international fuel prices. The IEA estimate differs year-on-year, but tends to be around half a trillion USD per annum. The differences between pre-tax and post-tax estimates are very large.9 According to an IMF estimate, fossil energy received a staggering USD 5.3 trillion, or 6.5% of global GDP, in post-tax subsidies in 2015 (IMF, 2015).10 The IMF estimated that eliminating post-tax subsidies in 2015 could raise government revenue by USD 2.9 trillion (3.6% of global GDP), cut global CO₂ emissions by more than 20%, and cut premature air pollution deaths by more than half.

In the OECD countries over 550 fossil-fuel consumption subsidies have been identified (OECD, 2012a). These had an aggregate value of some USD 55 billion to USD 90 billion a year over the period 2005-11. Phasing out wasteful fossil-fuel consumption subsidies is politically difficult and unpopular, no matter how necessary (The Economist, 2014). The environmental and social costs of fossil-fuel subsidies (Whitley and van der Burg, 2015) are unlikely to be obvious to the public and may even be unclear to finance ministers (Edenhofer, 2015). But governments could use the money saved, among other things, to fund decarbonisation projects and technologies (Martin, 2016), such as those required by the bioeconomy.

Cross-cutting (mix of supply- and demand-side policy measures)

Developing metrics, and agreeing definitions and terminology

Robust data are needed to build metrics for the performance of a bioeconomy. The term “bioeconomy” itself means different things in different countries (Viaggi, 2016). A definition of “bio-based product” is needed as a standard for public procurement and business development. The debate over “waste or resource” (i.e. whether something is simply a waste material of no value or could be used as a productive resource) (House of Lords, 2014) is important for the bioeconomy. A mixture of terms and a lack of agreed definitions make it difficult to assess the volumes of different waste materials that can be used in biorefining. For example, gathering data on “agricultural residues” suffers from this definition problem. Such lack of clarity compares with the easily identifiable volumes available from crop feedstocks, such as sugar cane, where figures are collected internationally and are readily comparable.

As described in earlier sections of this chapter, a key objective of biorefining, especially for second-generation biofuels and bio-based materials, is the creation of value from waste (Fava et al., 2015). “Biowaste” is acquiring greater importance in biorefining, and tonnages should be known when formulating biorefinery roadmaps. However, any definition that excludes agricultural or forestry residues drastically changes available estimates. The definition of “waste disposal” could be changed to allow collection, transportation, and sorting in view of its possible conversion in biorefineries. Effectively, if a material is to be converted in a biorefinery, then it should no longer be regarded as a waste but as a resource.

Skills and education initiatives with industry for workforce training

The bioproduction industry and the bioeconomy generally pose challenges for higher education that need to be solved quickly. For example, a demand for 10 000 bio-based experts is expected in the next ten years in the Netherlands alone (Langeveld, Meesters and Breure, 2016).

For many, synthetic biology is a field of engineering, not of biology (Andrianantoandro et al., 2006). Synthetic biologists must be trained in one or several core disciplines: genetics, systems biology, microbiology, or chemistry. But they must also draw on engineering to be able to break down biological complexity and standardise it into parts, or to design new biological systems and components, drawing on the quantitative approach of engineering. Competence in engineering requires skills in mathematics, computing, and modelling (Delebecque and Philp, 2015). Multidisciplinarity is a recurring theme in industrial biotechnology education. For example, to solve the complex problems associated with increasing the number of bio-based polymers, “researchers will need to work together across the conventional disciplines of agriculture, biology, biochemistry, catalysis, polymer chemistry, materials science, engineering, environmental impact assessment, economics and policy” (Zhu, Romain and Williams, 2016).

It is difficult for the young bio-based industry to find automation engineers specialising in high-throughput strain production. It has for a long time also been difficult to find fermentation staff. Perhaps hardest to find of all are employees well versed in experimental design and statistics (Sadowski, Grant and Fell, 2016). Addressing this issue is especially important now that dealing with large data sets is becoming more common. All such employees are necessary in bio-based production. The essential problem today is that skilled employees are not required in large numbers, because this is currently a small niche sector in manufacturing, so it is difficult for governments to prioritise education in these directions.

Scotland faces a series of challenges in maximising its development of industrial biotechnology, which includes skills shortages. In direct response to industry need, the Industrial Biotechnology Innovation Centre (IBioIC) has created bespoke educational programmes to meet this need across all educational levels: Modern Apprenticeships and Higher National Diplomas (HND) in industrial biotechnology, the United Kingdom’s first collaborative Master of Science (MSc) in industrial biotechnology, and doctoral (PhD) studentships with universities across Scotland and industrial partners across the United Kingdom. IBioIC has been tasked with generating GBP 1 billion to GBP 1.5 billion of gross value-added (GVA) to the Scottish Economy by 2025 from the industrialisation of biology, and it requires a pipeline of talented people to deliver this. Here is the recognition of the need for a workforce, not just a research capability.

Including managerial and transferrable skills in curricula, and using massive open online courses (MOOCs)

The typical masters of business administration (MBA) programme is not suited to the biotechnology industry generally. The industry is typified by rapid change, and change management is an important issue. There have already been examples of short programmses for managers in industrial biotechnology that allow them to keep up with developments without leaving their post for long periods (e.g. a so-called “3-Day MBA”). In 2015, SynbiCITE in London ran a four-day MBA to cover the main strategies required to establish, build and manage a biotechnology company based around synthetic biology.

For decades there have been discussions about making research degrees more flexible (National Academy of Sciences, 1995), with the inclusion of training in transferrable skills. Today’s researchers need skills relating to communication, problem solving, team work, networking and management know-how. The literature identifies several benefits of formal transferrable skills training (e.g. OECD [2012c]).

The traditional on-campus experience could be revolutionised by the explosion of MOOCs, which will enhance, if not partially replace, classroom and laboratory work. A specialist MOOC for industrial biotechnology is being offered jointly by the Technical University of Delft (Netherlands) and the University of Campinas (Brazil). It provides the insights and tools for the design of sustainable biotechnology processes. The basics of industrial biotechnology are used by students for the design of fermentation processes for the production of fuels, chemicals and foodstuffs. Throughout this course, students are challenged to design a biotechnological process and evaluate its performance and sustainability.

PPPs for creating and maintaining specialist training facilities

For early-career scientists, gaining access to bio-based production experience is difficult. Universities do not normally have the relevant facilities. An interesting training model is the National Institutes model in Ireland. One of these is a dedicated facility for training in bioprocessing (the National Institute for Bioprocessing Research and Training, NIBRT). For a relatively small country, Ireland has a large pharmaceuticals sector. The institute builds tailored training solutions for clients, ranging from operator through to senior management training, and training can be delivered in a realistic manufacturing environment. This type of environment is not one found typically in universities, and is more appropriate for the training of industry professionals. Such a facility could also be used to give students exposure to industry working conditions.

Another possibility is to offer placements in industrial research organisations such as Fraunhofer in Germany and VTT in Finland, or in research institutes like the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Australia, RIKEN in Japan and the Korea Research Institute of Bioscience & Biotechnology (KRIBB) and KAIST in Korea (Box 3.8). This allows opportunities to learn hands-on skills without attending to academic requirements such as publication in journals.

Box 3.8. Research organisations and industrial biotechnology

Several well-known research organisations offer services diversified from research in industrial biotechnology. These could prove pivotal in capacity building for national bioeconomies. A selection of these includes:

CSIRO, Australia. CSIRO works with a wide range of industries: agriculture and food; health and biosecurity; the digital, energy, land and water sectors; manufacturing; mineral resources; and oceans. Research is done in industrial and environmental biotechnology in the areas of: bioprocesses for sustainable resource management; biological catalysts for sustainable industries, and; understanding metabolic processes.

The organisation is working on using eucalyptus waste streams at timber or paper mills for manufacturing bio- polyethylene terephthalate (PET) bottles and packaging. These bio-based aromatic chemicals can be further converted to high-value derivatives to replace petroleum-derived additives in packaging materials. Expertise developed in biocatalysis and enzyme engineering is being extended to the development of synthetic biology capability. CSIRO has developed and patented an efficient enzyme nano-factory system, comprising several different nano-machine reactors that can convert glycerol into high-value molecules such as pharmaceuticals. CSIRO has also developed a technique for the production of graphene from soy bean oil (Seo et al., 2017).

RIKEN, Japan. RIKEN is the largest research organisation for basic and applied science in Japan. It combines basic research with a focus on innovation. The RIKEN Biomass Engineering Program combines several research areas, such as bioplastics, synthetic genomics, enzyme research, cellulose research, and cell factory research. It also has a business development office that promotes collaboration based on the needs of industry.1 The RIKEN Junior Research Associate (JRA) programme provides part-time positions at RIKEN for young researchers enrolled in Japanese university PhD programmes. This gives PhD students the opportunity to carry out research alongside RIKEN scientists and also strengthens the relationships between RIKEN and universities in Japan.

KRIBB, Korea. KRIBB has dedicated centres that respond to the needs of bio-based production at the Industrial Bio-materials Research Center; the Biochemicals and Synthetic Biology Research Center; the Cell Factory Research Center; and the Biotechnology Process Engineering Center. It also has an SME Support Center that supports capacity building and growth of bio-based SMEs.

KAIST, Korea. KAIST is a world-class centre for metabolic engineering with a strong focus on bioproduction of industrial platform chemicals and biopolymers (Lee et al., 2011). There are at least three centres at KAIST that contribute to work in industrial biotechnology: the Center for Systems and Synthetic Biotechnology; the BioProcess Engineering Research Center; and, the BioInformatics Research Center.

← 1. For example, the cell factory research team has biosynthesised 4-vinyl phenol, the monomer of a plastic with similar properties to polystyrene (Noda et al., 2015).

Poor regulatory policy can do harm

Regulation refers to the implementation of rules by public authorities and governmental bodies to influence the behaviours of private actors in the economy. The primary purpose of regulation in innovation policy should be to stimulate innovation, although the opposite effect is undeniably possible. Complex and time-consuming regulation is far more damaging to small bio-based companies than it is for large companies. Governments could act to reduce this impact.

A study for the government of the Netherlands (Sira Consulting, 2011) identified around 80 regulatory barriers to the bio-based economy. These were assigned different categories:

• Fundamental constraints. These call for a political and policy approach (e.g. import duties, level playing field, certification, and financial feasibility).

• Conflicting constraints. These barriers cannot be removed, but governments can help companies to meet the regulations (e.g. REACH regulations11).

• Structural constraints. These require adjustments to regulations, but do not demand policy or political action.

• Operational constraints. Here the regulation itself is not the problem but its implementation by e.g. local authorities is the problem. Especially for SMEs, these lead to substantial barriers to investment in the bioeconomy.

In the bioeconomy a frequently mentioned example of successful regulation to stimulate innovation is the single-use plastic bag ban in Italy (e.g. OECD, 2013c). In January 2011, Italy promoted a first-of-kind regulation aimed at replacing traditional plastic carrier bags with biodegradable and compostable bags (compliant with the harmonised CEN Standard 13432) and reusable long-life bags. This is considered to have triggered various desired effects in Italy including new investments in bioplastics production, with positive cascade effects along the value chain. The regulation created improvements in waste management, while Italian citizens adopted behaviour that has a positive impact on environmental sustainability.

Putting it all together: Systems innovation for a joined-up bioeconomy

Systems innovation is a horizontal policy approach to use combined technologies and social innovations to tackle problems that are systemic in nature. Systems innovation involves many actors outside of government (as well as different levels of governments) and takes a long-term view. Therefore, in any systems innovation policy, governance is a key factor for success.

The bioeconomy automatically implies a need for systems innovation when the complexity of its supply and value chains is understood. For example, the production of transportation fuels is a system that goes from exploration and drilling through oilfields to vehicles and beyond. Such interconnected areas of policy action can be derailed by extraneous factors. An example of such complexity, and risk, comes from Sweden. Sweden has had the experience of trying to introduce ethanol as a transport fuel (Box 3.9), in a policy-driven effort to eliminate crude oil imports (Commission on Oil Independence, 2006), with the government’s efforts being frustrated by various factors, including a lack of public acceptance (Sprei, 2013).

Box 3.9. Sweden, ethanol, systems innovation and public acceptance

To transition from petrol to ethanol requires flex-fuel vehicles that can use E85 fuel (85% ethanol/15% petrol). At first these were imported to Sweden. Ford introduced the first flex-fuel model in Sweden in 2002. From 2005 Saab and Volvo chose to enter the market. In the years that followed, the number of flex-fuel models continued to increase and by 2010 there were 74 models to choose from. Each year sales shares increased, in 2008 reaching almost 25% of the total market. But afterwards, sales dropped to 5% of new sold cars in 2011.

In the new system, the cars are part of the demand side, but a flex-fuel vehicle can also use straight petrol. Therefore it is necessary first to provide infrastructure to be able to purchase E85, and also to incentivise its purchase if it is more expensive than regular petrol. Ethanol (and alternative fuels) thus received considerable support from the Swedish authorities, from mandating an alternative fuel at fuel stations to subsidising sales of vehicles. The range of measures includes:

• a SEK 10 000 (over EUR 1 000) rebate for buyers of flex-fuel vehicles

• exemption from Stockholm congestion tax

• discounted insurance

• free parking spaces in most of the largest Swedish cities

• lower annual registration taxes

• a 20% tax reduction for flex-fuel company cars

• since 2005, Swedish fuel stations selling more than 3 million litres of fuel annually have been required to sell at least one type of biofuel (Swedish Parliament, 2009).

Fuels in Sweden are subject to both a carbon and an energy tax. Biofuels have, however, been exempt from these taxes to make them more price competitive and thus increase the uptake.

For private owners in April 2007 the rebate of SEK 10 000 was introduced for so-called “green” vehicles. Flex-fuel vehicles with petrol consumption below 9.2 litres per 100 kilometre (km) were included. The rebate was given until the end of June 2009. It was then replaced by a five-year exemption from the annual circulation tax. This tax is based on the CO₂ emissions of the vehicle, which thus varies from model to model. Part of the reduction in sales among private owners can be explained by the change in the rebate structure. However, the total sales of green vehicles have continued to increase, thus it seems that sales of conventional vehicles with emissions under 120 grammes of CO₂ per km have not been as affected by the change in rebate structure, especially new diesel vehicles (Sprei, 2013).

Many advantages were seen with the E85 fuel: it could reduce CO₂ emissions; it had the potential for national fuel production through wheat ethanol and lignocellulosic ethanol; and it provided the owner with an economic benefit when petrol prices increased. By the end of 2007, however, more negative voices started to be heard, questioning the environmental advantages of the fuel, and when food prices started to increase globally the connection to increased biofuel use was swiftly raised in public discourse, rightly or wrongly. Emissions connected to indirect land-use change and other production-related emissions were highlighted and weakened the image of ethanol as a green fuel. Public opinion started to turn against ethanol.

At the same time, diesel vehicles that met the criteria of being green started entering the market and offered a possibility to substitute for the flex-fuel vehicles. The price of E85 has not been low enough to compete with diesel, despite high subsidies. There were few compelling arguments left for choosing a flex-fuel vehicle compared to a low-emissions diesel vehicle. Subsidies may manage to create a market at first, but this cannot be sustained for a long time and there needs to be a more appealing policy in the long run.

A clear message is that systems innovation requires the co-ordinated efforts of several ministries or departments, including agriculture, trade, energy, environment, transport, and industry. This co-ordination is needed to limit wasteful duplication of work, and to prevent expensive policy lock-ins. A system breaks down if not all its parts are working. So it is with a systems approach to innovation policy.

The scope of bioproduction: The increasing diversity of products and expanding the scale of production

The goal of this part of the chapter is to introduce the reader to the growing range of bio-based products and to reflect on a number of policy and other implications of this growth.

Commodity products such as bioplastics that can be used for plastic bottles are high-volume, low-value products. Substituting petro-based plastics could achieve significant emissions savings. Biopharmaceuticals are very high value but are more difficult and expensive to bring to market. However, pharmaceuticals companies are already looking at sustainability in production processes (Watson, Cramption and Dillon, 2017), and bio-based production will be part of this. The specific example of synthetic spider silk, discussed below, is interesting due to the silk’s very high strength and bio-compatibility, allowing it to enter a specialist market for artificial joints and tissues.

The day is foreseeable when light and medium transport can be electrified, thereby eliminating the need for liquid road transport fuels. As early as 2017, there has been a call in Scotland to consider a ban on petrol and diesel vehicles.12 Scania of Sweden is introducing a hybrid truck for city use that can be driven electric-only or with renewable fuels. Indeed, it is a Swedish government ambition to have a fossil-independent vehicle fleet by 2030 (Hellsmark et al., 2016). For shipping and aviation, alternatives to liquid fuels are hard to envisage. But Los Angeles and Oslo are the first airports in the world that have incorporated biofuel into the regular refuelling process (Il Bioeconomista, 2016a). Several airlines are now purchasing bio-aviation fuel, including KLM and United Airlines. In May 2016, Cathay Pacific commenced a two-year programme of flights from Toulouse to China using renewable jet fuel. In September 2016, Gevo announced that it has entered into an agreement with Deutsche Lufthansa AG for the supply of up to 8 million gallons per year of alcohol-to-jet fuel (ATJ).

The high standard of living attained in OECD countries is not imaginable without the vast number of chemicals in everyday use. As 96% of all manufactured goods contain at least one chemical (Milken Institute, 2013), it is clear that petrochemicals will be much harder to replace than fossil fuels. The chemicals sector is the largest industrial energy user, accounting for about 10% of global final energy use (Broeren, Saygin and Patel, 2014). The chemicals sector represents the third largest industrial source of emissions after the iron and steel and cement sectors (IEA, 2012).

Approximately 8% of world oil production is used in plastics manufacture: 4% as raw material for plastics and 3-4% as energy for manufacture (Hopewell, Dvorak and Kosior, 2009). Therefore, by mid-century, crude oil consumption to make plastics could increase to 28% to 32% of today’s levels of production of crude oil, which would put plastics in competition with fuels for crude oil use. Such growth is completely out of step with new oil discoveries, which are at their lowest in 60 years.

The most compelling route to drop-in (exact equivalent) or same-function (different molecule that has the same function) sustainable chemicals is through using renewable feedstocks. The idea of biotechnological routes to entirely unnatural chemicals only took hold with the emergence of metabolic engineering in the 1990s (Wong, 2016). Despite many challenges, there are several advantages to a biotechnological route compared to a strictly chemical route. Microbial metabolism is extremely diverse, and therefore there are very large numbers of biochemical reactions to choose from (one database contains 130 000 hypothetical enzymatic reactions). Microbial processes occur at low temperatures and mostly at ambient pressures, therefore making the biotechnological route attractive in environmental and economic terms.

To date renewable chemistry remains far ahead of industrial biotechnology in the production of commodity chemicals. Many chemicals have been produced to date using micro-organisms. Most of these remain as research successes. Many may never reach commercialisation. There are technical and financial reasons for this, and the two are interlinked (i.e. more efficient biotechnologies would bring down production price and make bio-based chemicals and materials more cost-competitive with petrochemistry). Fundamentally, bio-based production without public policy support faces a mountainous challenge given the economies of scale that exist in petrochemistry.

However, taking a closer look at what constitutes the modern petrochemicals industry, a relatively small number of chemicals represent a large proportion of total organic chemicals production. US DOE (2004) identified 12 building block chemicals that can be produced from sugars via biological or chemical conversions (building block chemicals are molecules with multiple functional groups that possess the potential to be transformed into new families of useful molecules). Saygin et al. (2014) estimated that a total of seven polymers could technically replace half of total polymers production in 2007. The significance of this is that it reflects how plastics have become the material of choice in a vast number of applications.

One significant development has been the arrival of bio-based equivalents of the thermoplastics that dominate the market: polyethylene (PE), polypropylene (PP) and PET. Bio-PE and bio-PP are produced chemically from monomers which are produced by fermentation. They have identical performance characteristics to the petro-based equivalents and, importantly, can directly enter existing recycling systems. They can be categorised as bioplastics as their carbon content comes from renewable resources, and they therefore have a potential contribution to make to GHG emissions savings. It has been predicted that the global trend in bioplastics production will change significantly, coming to be dominated by durable bio-based thermoplastics (OECD, 2013c), rather than biodegradable plastics.

Biotechnological routes to producing aromatics (chemicals which give off an aroma) are particularly challenging. The aromatics are very high-volume chemicals with a large range of functions that cannot easily be replaced. Benzene production alone will amount to tens of millions of tonnes in 2017. Benzene has specific uses in its own right, but has very valuable value chains linked to other more valuable chemicals. However, commodity aromatics have proven extremely challenging to manufacture via bioproduction. There have been several studies focused on microbial aromatics production from biomass (Kawaguchi et al., 2016), but not aimed at commodity aromatics.

On the other hand, there are clear environmental drivers for producing bio-based aromatics (Eriksson, 2013). The largest renewable reservoirs of aromatic materials are lignin and hemicellulose. Lignin creates the greatest challenges for renewable sources of aromatics, but it is not a resource that can be ignored. There are about 50 million tonnes of lignin available worldwide per annum from pulping processes alone. The total lignin availability in the biosphere exceeds 300 billion tonnes and annually increases by around 20 billion tonnes (Smolarski, 2012).

Anellotech of the United States is one company with renewable chemistry solutions to the aromatics challenge. In their process, non-food biomass such as wood, sawdust, corn stover and sugar cane bagasse is rapidly heated, and the resulting gases are immediately converted into hydrocarbons by a proprietary, reusable catalyst. The resulting mixture of benzene, toluene and xylenes (bio-BTX) is identical to the petroleum-derived counterparts.

The BTX compounds are integral to the production of a wide range of plastics including polyurethane, polycarbonate, polystyrene and nylon. Aromatics are also widely used in the automotive industry, and the Toyota Group has championed the use of renewables in vehicles (OECD, 2011b).

Bio-based production and its visibility

For the public and policy makers, visible bio-based production has been lacking. In Table 3.3 the selected examples show that in the last few years this visibility has increased dramatically. Nevertheless, this revolution in production could remain unrecognised because a bio-based product looks identical to a fossil fuel-based equivalent (whether e.g. a tyre, smart phone screen or drinks bottle). Certification and labelling would help to improve visibility, giving confidence to manufacturers and helping with public perception and acceptance. The increased political impetus from 2015 onwards, especially COP21 and the drive towards a circular economy, could be used as levers to increase this visibility.

Table 3.2. Bio-based products are becoming more familiar
Product	Background
Latex from dandelions	Prototype tyres containing bio-based latex were showcased in December 2009 at the UN Climate Change Conference in Copenhagen. The Fraunhofer Society and the tyre company Continental have built a pilot plant to produce rubber from dandelions. The Russian dandelion thrives in soils unsuitable for agriculture.
Bottles from sugar	Both the Coca Cola and PepsiCo companies have plastic bottles that are at least partly bio-based. The Coca Cola bottle contains mono-ethylene glycol derived from fermentation of sugar. It is mixed with other components to make bio-polyethylene terephthalate (bio-PET). The long-term aim is to replace petro-based PET.
Graphene from soybean oil	Graphene is more than 200 times stronger than steel, and conducts electricity better than copper. About 1% of graphene mixed into plastics could turn plastics into electrical conductors. Graphene is, however, expensive compared to other materials. Researchers at CSIRO, Australia, have created a new method of graphene synthesis from soybean oil (Seo et al., 2017).
Castor nuts to wall plugs	DuPont extracts a chemical building block from castor oil from which is made a 68% bio-based polyamide (the synthetic polyamides are known as nylons). The polyamide is as strong as the nylon normally used to make wall plugs.
Bioplastics in cars	One of the earliest uses of bioplastics was in replacing metal or petro-plastics components in vehicles, saving greenhouse gas emissions and/or weight. Among others, Ford and Toyota are investigating and using bioplastics for uses such as textile car interiors. Daimler and Royal DSM worked together to create an engine cover that is a 70% bio-based plastic.
Sugar to carpets	Dupont and Mohawk combine bio-based propanediol and a petrochemical building block to make a carpet fibre that is soft, durable and easy to clean. The textile is 37% bio-based.
Yeast to face creams	Korres grows yeast cultures which produce hexapeptides (short peptides of six amino acids) when treated with ozone or irradiated with ultraviolet (UV) light. The compounds are added as anti‐ageing active ingredients in face creams.
Biopharmaceuticals	Antibiotics have been traditionally produced from microbes. Synthetic biology has been used to manufacture a potent anti-malarial drug. Sanofi delivered the first large-scale batches of anti‐malarial treatments manufactured with a new semi-synthetic artemisinin derivative to malaria endemic countries in Africa in 2014.
Nutrition and food/feed supplements	Cargill makes a sweetener using a synthetic biology yeast to convert sugar molecules to mimic the properties of stevia, with no need for the plant itself. Calysta specialises in the production of microbial proteins for the commercial fish feed and livestock markets.
Enzymes in detergents	Biological detergents contain a range of enzymes that allow washing to be done at lower temperatures, such as 30°C, thus saving energy, emissions and money.
Spider silk to medical implants	Spider silk is an exceptionally strong material. Silk material is now also being used for sutures, scaffolds, grafts and some medical implants. Oxford Biomaterials, Orthox Ltd and Neorotex Ltd are investigating a range of biomedical applications of genetically engineered spider silk. The United States army is testing protective garments for soldiers made from spider silk. An E. coli variant of spider silk could replace Kevlar in air bags.

Concluding remarks

This chapter demonstrates the beginning of the transition to a new model of bio-based production (Il Bioeconomista, 2016b). Several countries are strong in bioeconomy research and relatively poor in deployment (via biorefineries and chemical production plants). However, the cellulosic biorefineries, upon which great hopes are pinned, are proving worryingly susceptible to technical failure. To date, the volumes of cellulosic ethanol production are small, and still dependent on government support (Peplow, 2014). Research progress is far ahead of full-scale deployment, which is not a surprise in such a young industry. This chapter points to the major policy needs to redress the balance between R&D and commercial success.

Schieb et al. (2015) forecast that, in order to make the industrial bioeconomy a success, the number of biorefineries, both in the United States and Europe, would have to be increased to between 300 and 400. That represents a very large investment, most of which will need to come from the private sector. In many engagements with the bio-based private sector the most consistent message is that policies have to be stable and long term so that the private sector has the confidence to invest in risky projects.

The sustainability messages are reaching the fossil industry. Change is evident when the Rockefeller Family Fund trustees say: “While the global community works to eliminate the use of fossil fuels, it makes little sense – financially or ethically – to continue holding investments in these companies” (Cunningham, 2016). Even Saudi Arabia plans to diversify its economy and end its reliance on oil in the near future.13 The oil industry must also be aware of the potential of electric vehicles to disrupt its business. About 2 million barrels a day of oil demand could be displaced by electric vehicles by 2025, equivalent in size to the oversupply that triggered the biggest oil industry downturn in a generation, which has occurred over the past three years (Bloomberg, 2017).

The biggest stimulus may now come with the ratification of the Paris Agreement in 2016. There is a concentration of effort in policy circles on carbon pricing, and this has the potential to raise large revenues for governments. It remains, then, for policy makers to spend their new bounty on technologies to decarbonise energy and production. This chapter has suggested a number of areas in science and technology where such resources could be channelled. It is essential that the bioeconomy be part of future energy and production landscapes (Szarka et al., 2017).

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Notes

← 1. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

← 2. To date, synthetic biology is covered by the regulations that pertain to genetically modified organisms (GMOs). There is probably no need for major modification to the system already in place in the medium term, but a watching brief is required from governments. Biosafety issues appear to be the same between GMOs and synthetic biology, except that the multidisciplinary nature of synthetic biology means that there is a need for greater awareness and training for stakeholders not familiar with the field. However, synthetic biology raises specific biosecurity concerns:

With synthetic biology, DNA can be readily designed in one location, constructed in a second location and delivered to a third. The use of the finished genetic material can therefore be de-coupled from its origins.

Synthesis might provide a route to those seeking to obtain specific pathogens for the purpose of causing harm, thereby circumnavigating national or international approaches to biosecurity (at present, however, genetically modifying a pre-existing pathogen is much easier than using synthetic biology to create a pathogen).

It is widely agreed that there is a need for a screening process for synthetic DNA manufacture and sale. The main aspects that deserve consideration for control are: screening to avoid synthesis of known pathogens or toxin-related DNA; screening to avoid shipment to dubious customers; and licensing of equipment and substances required for the synthesis of oligonucleotides.

← 3. In the cascading use concept, high-value, low-volume products are made from biomass, then higher-volume, lower value products until most value has been extracted. At this point residues may be used to generate electricity, hot water or district heating.

← 4. Regional stakeholders include farmers, foresters and their trade associations and co-operatives, buyers, agricultural and forestry machine rings, hauliers and other logistics professionals, chemicals and fuels companies, biorefiners, venture capitalists, food companies, R&D organisations, technology SMEs, waste management companies, regulators, recycling and waste management organisations.

← 5. For example, a database developed by Black et al. (2016) for the assessment of biomass supply chains for biorefinery development covers origin, logistics, technical and policy aspects. Improved decision making is assuming greater importance as the need to establish bespoke biomass supply chains becomes a reality. Industrial developers will face many business-critical decisions on the sourcing of biomass and the location of biorefineries. Software of the type described could simplify decision making. It could be developed in an open-source manner with regional cluster organisations.

← 6. This has happened e.g. in Belgium, France, Germany, Italy, the Netherlands, and the United Kingdom, all countrieswith large and strategic chemicals sectors. In 2006 the German Federal Ministry of Research and Education initiated a cluster competition to strengthen industrial biotechnology in Germany. Five industrial biotechnology clusters were selected and received funding a total of EUR 60 million.

← 7. While not widely recognised, genomics has started to revolutionise food production without genetic modification. Advances are being made in using genomics in breeding programmes to speed success across a wide range of crops and animals. Production of most animals and crops can benefit from genomics. This includes some critical economic considerations, such as feed efficiency and disease resistance, which can benefit food security now and into the future. Genomics can also make large contributions to biomass sustainability. For example, energy crops will be part of the future of biomass production, and the impact of genomics in plant breeding is in its infancy. This message is not well understood in many policy circles. Many governments need to better understand the advantages of genomics in agriculture, and could more efficiently steer relevant research programmes, e.g. by sponsoring programmes that train farmers in genomics (the Irish Beef Data and Genomics Programme is a good example).

← 8. The “carbon pricing gap”, a synthetic indicator showing the extent to which effective carbon rates fall short of pricing emissions at EUR 30 per tonne, sheds light on potential ways of strengthening carbon pricing (OECD, 2016).

← 9. Pre-tax subsidies exist when energy consumers pay prices that are below the costs incurred in supply.

← 10. Post-tax consumer subsidies arise when the price paid by consumers is below the supply costof energy plus an appropriate “corrective” tax that reflects the environmental damage associated with energy consumption and an additional consumption tax applied to all consumption goods for raising revenues.

← 11. Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) is a European Union regulation dated 18 December 2006. REACH addresses the production and use of chemical substances, and their potential impacts on both human health and the environment.

← 12. See www.thetimes.co.uk/edition/scotland/energy-experts-call-for-ban-on-diesel-and-petrol-vehicles-jfghn0qdz.

← 13. See http://vision2030.gov.sa/en/media-center.