Unleashing the Power of the Bio-Economy

Feb 26, 2013

The United States could replace 20 percent of petrochemical consumption with bio-based products over the next decade -- while creating jobs and capturing a large share of the global renewable chemical market. The key is acting soon, before the current technological and agricultural edge is lost to other nations. Among products made with biochemicals are disposable tableware, printer ink and skin-care lotions, along with numerous compounds for industrial use.

To generate ideas for spurring the industrial side of biotechnology, the Milken Institute, in collaboration with the U.S. Department of Agriculture, convened experts from the public and private sectors in a Financial Innovations Lab -- the Institute's signature miniature think-tanks for generating solutions to specific challenges.

Lab participants representing finance, policy and industry identified three significant barriers to the development of new biotechnology in the United States:

• Financing new projects and bringing them to scale: The development timetable for bio-based chemicals is five to ten years, significantly longer than most investors in new technology will tolerate before seeing revenue or profits.
• Perceived market uncertainties: The relative cost difference of bio-chemicals is largely dependent on the cost of oil and competes with established petrochemical companies.
• Policy uncertainty and complexity: The regulation of bio-based chemicals is complex and sometimes seemingly more onerous than the rules for petrochemicals, which are subject to a number of long-standing exemptions. In addition, traditional means of support from tax credits, purchasing incentives, and grants are becoming increasingly less palatable to policymakers.

"With our strong agricultural and manufacturing sectors, the United States can lead the bio-economy and create good-paying jobs," said Joel Kurtzman, executive director of the Center for Accelerating Energy Solutions at the Milken Institute. "It is essential we develop new financial and policy innovations to move this cutting-edge sector forward."

Take a look at the report for details.