Building the Bio-economy

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By Patricia Nicholson

Influences ranging from environmental concerns to research capability are driving economic development in a new direction: toward a bio-based economy. Planning the route that new direction will follow is the task of the Innovation Technology Roadmap on Bioproducts.

The Technology Roadmap is a private-sector-driven initiative that takes its basic framework from Industry Canada’s roadmapping program — a planning tool that encourages sectors to pool resources and project future needs and markets. More ambitious than an industry association or a meeting ground where new technologies can find industry champions, the Technology Roadmap’s goals include addressing policy and regulatory needs, developing a strategic framework and anticipating future infrastructure requirements. By aligning industry stakeholders with public-sector initiatives, it aims to provide a foundation for a strong partnership between industry and government to improve Canada’s global bioproducts performance. The Roadmap has organized eight industry-led working groups, ranging from sourcing biomass to guiding policy (see sidebar, p. 16).

A bio-based economy is one that uses renewable bioresources to produce products that are not at odds with environmental goals, and that lead to sustainable economic growth. Well-known examples of bioproducts include ethanol fuel additives and biodiesel, but bioproducts also include industrial enzymes and adhesives, bio-based “plastics” and composite materials made from plant waste.

BioProducts Canada, a coalition of industry leaders that identifies markets and promotes commercialization of bioproducts, is taking a lead role in the Technology Roadmap, with a mandate to set up policy and build momentum in bio-based industry. The coalition has more than a dozen funding partners from both the public and private sectors, and representatives from more than three dozen companies and organizations on its steering committee.

“I think we need to view ourselves as an enabler, as an intermediary, as a flag-waver,” says Rick Smith, chairman of BioProducts Canada and the Roadmap’s industry champion. “We’re a catalyst and a marshal. We’re a nonprofit organization, obviously, but we want to be able to at least help directionally steward the whole concept of the bio-economy.”

Natural Advantages

Canada is particularly well positioned to take advantage of the opportunities presented by a bio-based economy, in terms of both current policy climate and abundance of resources. The Innovation Agenda, the adoption of the Kyoto Accord and renewed interest in funding Canadian research are some of the contributing factors.

“If you look at the federal government’s agenda on innovation,” Smith says, “it has various segments in it, including the environment and the response to Kyoto. And the issue of rural development.”

Smith, who is president and CEO of Dow AgroSciences Canada Inc. (Calgary, AB), says Canada has some exceptional natural advantages for pursuing bio-based products.

“We probably have as abundant and renewable resources called agriculture and farmland, and forestry, as anybody in the world, if not the best,” he says. “The idea of taking advantage of a bio-economy is taking advantage of the natural situation here from a forest and farmland standpoint.”

Support for bioproducts is not limited to Canada, says Gordon McGregor, senior advisor on Life Sciences for Agriculture and Agri-Food Canada’s International Issues team. Interest in the bio-economy is very strong in Europe, but has a different emphasis, with particular focus on biodiesel. In the U.S., there is a strong push to increase energy self-sufficiency and decrease dependence on imported petroleum. The U.S. government is dedicating $400 million per year to increase its use of bio-based products.

Canada has no dedicated federal funding for bioproducts, but BioProducts Canada has recommended that the government commit $161 million per year for five years and provide tax incentives in order to kick-start the bioproducts sector. BioProducts Canada would also like the federal government to make a one-time contribution of $100 million to the development of eco-industrial clusters — clusters of companies involved in bio-based manufacturing that use each others’ byproducts or excess resources in other processes.

In Canada, industry supporters say now is the time to push this initiative.

“I think it’s being done now for a lot of different reasons,” says David Boulard, chair of the Technology Roadmap and executive vice-president of bio-oil producer Ensyn Technologies Inc. (Ottawa, ON). Among those reasons, he cites a tremendous amount of technology focused on bio-based products and growing recognition of that sector.

“The second issue is that there is a tremendous benefit to a bio-based type of economy as it relates to rural development, as it relates to natural resource utilization. And it brings the economies of those types of issues back down to the local framework, rather than possibly even a foreign framework,” Boulard says. Which leads to the third issue: “To try to reduce our exposure to petroleum-based products, and be innovative and use a more sustainable approach to our needs.”

Reaping Benefits

Smith sees opportunities to create value in the agriculture and forestry sectors. Not only does this develop a new industry sector, it builds rural economies.

“If you’re going to fuel this energy sector from biomass — which clearly is where we’re going — biomass by its nature is not easily transportable or it’s not economically transportable,” Smith says. Biomass is organic material — be it forestry or agricultural waste, leaves, cornstalks or even paper fibre from urban areas. “So processing ought to take place close to where you get it from, which says that the opportunity for a rural development strategy for the government is real, is genuine.”

Keith Jones, president of AVAC Ltd. and chair of the Roadmap’s working group on commercialization and economic development, sees widespread returns in bioproducts.

“I think the exciting thing about the bioproducts opportunity is there are apparent benefits for everybody in the system,” he says. He cites the example of biogas operations that capture methane from livestock waste, forest product waste or even urban landfill.

“You take waste, convert it to electricity — so you’re generating an economic benefit,” he says. “You’re also containing potential environmental damage that might otherwise occur from those wastes. And thirdly, you’re reducing things that really annoy your neighbours — like high levels of odour. So there’s a whole series of benefits: There’s an economic benefit, there’s an environmental benefit, and then there’s just a community benefit.”

Coming from Alberta — where affected industries such as agriculture, forestry and oil and gas are strong — Jones is familiar with how the western economy will fare in bioproducts.

“The interest from the Alberta side is, knowing that our economy is really strong in traditional resource-based industries, we’ve had a look at the opportunities that exist in bioproducts,” he says. “From the agriculture side we’re looking at things like industrial and non-food applications for biological products, including agricultural commodities.”

But traditional industries don’t necessarily mean traditional approaches.

“We’re actually really interested in some of the different technologies that are emerging in areas of science such as genomics and proteomics and nanotechnology, and how they can be applied to help the agriculture industry, the forestry industry and even the oil and gas industry from a view both of resource reclamation, and from the efficiencies of utilization of both current and alternative energy sources,” Jones says.

Nor is Jones’s western view limited to Canada’s own borders.

“If we’re going to do a really good job of capturing these opportunities, we can’t pursue these opportunities in a vacuum,” he says. He advocates capitalizing on opportunities without placing local or industry-specific limits on them. “We’re talking about trying to access the best emerging technologies from right around the world.”

Bold Approach

Randal Goodfellow, president of BioProducts Canada, also supports a more aggressive approach for Canada on the world stage. Investing in science and research is necessary, but it’s not enough: those investments have to have some followup.

“When you invest in research, you have value creation,” Goodfellow says. “But what is really important, and has become better understood here in Canada in the last year or two, is it’s not just about creating value. It’s about capturing that value.”

Capturing value means ensuring that for all the R&D investments made in Canada, the benefits that are derived from that research are actually reaped here. That, Goodfellow says, is not an area in which Canada has a stellar track record. He describes the scenario with the number scheme 10/1/100.

“You spend 10 bucks on research. You don’t know what to do with it when it becomes a technology, so you sell it to somebody for a buck,” he explains. “When they end up doing something with the technology, you buy it back in the finished product for $100. You spend 10, sell for one, buy it back for 100. If you’re an investor, that’s not a very good strategy.”

The value created by the $10 investment must be captured, and turned into $100 by producing a product.

“That’s why it’s important to make sure that we have the right human resources; the right capital in place for investing in companies and commercialization; making sure that we have the right type of people available and the right type of supportive milieu that will help us capture the value that we have created,” Goodfellow says.

That, he says, is what the Technology Roadmap is all about.

“And that’s why we’re working with people all the way along the stream — not just the researchers, not just the people who are out there farming the farms or managing the forests or harvesting things,” he says. “Not just the people doing the processing, but the people who are taking those product concepts and getting them to a marketplace.”

Canada, he adds, has performed the 10/1/100 transaction for too long. It is not just important to stop selling Canadian technologies at low cost and buying them back at a premium. It’s time to start buying up other technologies.

“What we need to do is not only our own research,” Goodfellow says. “We also have to find out where the best technologies are around the world, where somebody’s already spent the money in getting them to that point, and bring them into Canada to be able then to create the value here as well. So it’s not just creating value off our own science but it’s also creating value off other people’s work too.”

Goodfellow recognizes that this represents a bold new approach. “It’s a different mindset for Canada,” he says. “It’s worth pursuing.”

Capital Confidence

Bio-based products also need to gain the confidence of investors and capital markets.

David Gaultier says the bio-economy is a growth area for investments, and one that has long-term, sustainable potential. Gaultier is vice-president for Central Canada with Foragen Technologies Management Inc., a $42-million investment fund that focuses exclusively on agricultural technologies.

Public sector support and policy initiatives are a big help in getting things off the ground. But in order for a bio-based economy to really fly, it has to play by the rules of the private sector: It’s not enough to be admirable. Bio-based products have to be good.

“The big push is to find new products — high-value products that are going to provide benefits to the consumer,” Gaultier says. “If we can do that in an environmentally sustainable way, then that’s just good for everybody.”

The benefits of a strong bio-economy include energy security and decreasing our reliance on petrochemicals. Gaultier adds that if those goals can be reached using something that is currently being given away or thrown away, then all the better.

“The big glowing example that everyone talks about is Cargill Dow and its production of PLA from corn,” Gaultier says. The Minnetonka, Minn.-based company manufactures NatureWorks™ PLA (polymerized lactic acid), a corn-based, highly functional, biodegradable plastic product with many applications.

Gaultier points out that the product’s true selling points are not its environmental merit or its renewable-resource pedigree.

“The key, again, is not to just produce these things because they’re biodegradable or they’re produced from a natural source,” Gaultier says. “The whole goal is to find highly valuable products — and if it has all those other attributes, those are additional selling points. But the product has to be able to stand on its own. It has to have the function that other products have and it has to be available at a cost-competitive price, or even at a better price than current sources of these types of products.”

Given the technologies emerging from research, there are plenty of potential products. According to Smith, the field is wide open.

“We’re really at the imagineering stage, as opposed to the engineering stage,” Smith says. “Because with technology that’s been developed over the last 15 years, including the evidence of a real accelerative biotechnology industry, it’s not a case now of what can we create — it’s what do we want to create.”

There is no shortage of ideas. Bioproducts include Dow BioProducts Ltd.’s (Midland, MI) Woodstalk™, a composite building material made from wheat-stalk waste; Calgary, Alta.-based SemBioSys Genetics Inc.’s technology for producing recombinant proteins in oilseeds; and Iogen Corp.’s (Ottawa, ON) cellulose-derived ethanol fuel.

Navigating the Route

“The bio-based initiative is a relatively new initiative,” Boulard says. “I think what the Roadmap provides is the ability to focus the attention of industry as well as the policy-makers and the economic development agencies as to what the bio-based or bioproduct economy means.”

That includes its significance to industry, the directions the industry sees it going, methods, collaboration, policy and regulatory environment, and what support may be required to foster a bio-based economy. In order to accomplish that, the Roadmap has been set up to enable essential cross-industry contact and consultation.

“The major means of organizing it is to get the key influences in industry — the people who have the ability to provide a great deal of leadership and influence within their individual industries — to come together to have a look at some of these opportunities,” Jones says. That, he says, is where BioProducts Canada comes in. “Driven by industry but enabled with some support by both industry associations and non-governmental organizations, and some government departments.”

The goal, Jones says, is not to merely identify the best projects and rush off to implement them in seclusion, but to take a broader look at the whole sector.

“I think what’s most important is we’ve taken some of our thinking to the next level strategically,” he says. “I think the power of that kind of strategic focus is we’re going to be taking on the most exciting opportunities, the ones that can provide the greatest benefits and make sure we do the best job of allocating resources to those opportunities. And that’s exciting because that hasn’t always been the way these kinds of initiatives have been pursued in the past.”

But in some ways, a bio-based economy is a throwback to the past, and a tribute to the agricultural economies that have historically contributed so much to Canada.

“We’d like to think we’re pioneers to some degree, but from a social and political and economic perspective it makes a lot of sense — and some people would say we’re going back to our roots,” Boulard points out. “Back to where a lot of our chemicals and our compounds came from historically. We’re coming full circle, and we’re revisiting those old feedstocks with new technologies, helping to achieve the innovation that we once had.”.


Technology Roadmap Working Groups and Objectives

Biomass Availability and Quality: Identify biomass (forest, agriculture, municipal, aquaculture) by region and type (virgin/residue).

Biomass Harvesting and Supply Systems: Identify and document methods and equipment necessary to gather, transport and preprocess different sources and locations of biomass.

Biomass Conversion A: Chemical, Physical, Thermal & Advanced Combustion: Identify bioproducts from biomass (e.g., fuels and chemical feed stocks) that use conversion technologies employing chemical, physical and thermal processes.

Biomass Conversion B: Bioprocesses and Green Chemistry: Identify bioproducts from biomass that use conversion technologies employing bioprocesses and green chemistry, such as enzymes, yeasts, bacteria, new solvent systems, ionic solutions, etc.

BioProduct Markets and Opportunities: Identify bioproducts from biomass, and estimate and analyse markets for those products.

Commercialization, Economic and Rural Development and Venture Capital: Focusing on the private sector, investigate strategies and incentives to foster commercialization and the creation of economic and environmental opportunities from projects and ventures to process biomass into bioproducts.

Policies, Skills and Regulations/

Incentives: Focusing on the public sector, investigate policies, skills needs and regulatory/incentives to promote the commercialization of projects and the value-capture of research.

Outreach/Implementation Strategy: Inform the public about the bioeconomy and publicize bioproducts and how they can be integrated into the marketplace and daily life. Develop strategies for governments, industry and the public to increase their use of bioproducts.