USA l Japan l Developing Countries

What’s happening outside Europe?

The European Union has strength in depth in the biological sciences, in both the public and private sectors. However, our major competitors will not stand by why we exploit this: they too have active biotechnology sectors.

The USA

The United States sees the development of industrial biotechnology as a key strategic objective. The intention is to move towards a bio-based economy, where production and use of energy and industrial products has been fundamentally changed. Initially, the key driver was energy security, to reduce America’s dependence on the supply of crude oil from unstable regions of the world. However, the commitment entered into for one reason has now opened up a range of other possibilities, and the US has now shifted its focus to include bio-based chemicals manufacture and the creation of a domestic bio-industry. The main targets at present are power generation, bio-fuels for transport and bio-products. Specific targets for biomass use are enshrined in the Biomass R&D Act 2000, as summarised in the table below:

These are not targets to be left on the shelf: the USA has a clear commitment to their achievement. There are two key elements which make their success almost certain:

• High-level political commitment and broad R&D support.
• Promotion of market pull by financial incentives and standard setting.

Political commitment has emerged quite rapidly in the last ten years, due primarily to high-level debates about the country’s increasing dependence on foreign oil. The first major policy initiative to emerge from this debate was President Clinton’s Executive Order of 1999 (ref 13), setting a goal of tripling the use of bio-based products and energy from biomass by 2010 and establishing a permanent council to develop a detailed research programme to be presented annually as part of the Federal budget. Legislation was then introduced, including the Biomass R&D Act 2000 already referred to, to create a focus on producing energy and value-added products from a wide range of agricultural  and forestry residues.

Continued commitment has taken this a step further with the recent publication of a “Roadmap for Biomass Technologies in the United States” (refs 14 and 15). This was an initiative coordinated by the government-sponsored Biomass R&D Technical Advisory Committee, a body bringing together a wide range of stakeholders (including academia, industry, government, farmers and NGOs) to provide guidance on how to make the aspirations a reality. While describing the great potential for the use of biomass to produce both energy and a range of products, the report also highlights the challenges and presents a plan for a focused, integrated and innovation-driven R&D effort. It also covers ways in which societal approval can be gained, by public outreach programmes, and gives examples of market incentives likely to be necessary. Finally, it provides policy recommendations to remove barriers (including existing regulatory obstacles) which could impede the economic and sustainable expansion of industrial use of biomass in the USA.

This planning has been backed by an impressive spend on research and development. Starting with a focus on interdisciplinary research and applied R&D, the programme now includes a range of public-private partnerships and large-scale demonstration projects. In 2003, the US Department of Energy (DoE) spent $125 million on biomass utilisation research, and the Department of Agriculture (USDA) contributed a further $259 million.

In addition, the DoE is spending nearly $100 million in support of bio-refinery demonstration projects. These will integrate the conversion of biomass into fermentable sugars and their subsequent use to produce value-added products. At the same time, the necessary logistics of collection, storage, transport etc are being studied. The US government is working closely with industry on these initiatives, involving agro-industrial and chemical companies such as Cargill, Dow and DuPont and specialist biotechnology companies such as Genencor, Novozyme, Diversa. Finally, the DoE has recently commissioned a report entitled “Industrial bioproducts: today and tomorrow” (ref 16), highlighting both the huge opportunities offered by bio-refineries and the obstacles to be overcome.

This effort is already paying dividends: the demand for corn-derived chemical products is predicted to grow at an annual rate of over 13% and total bio-product production is expected to reach 30 million tonnes annually by 2020.

While the government continues to provide a high level of backing for industrial biotechnology research, it also supports market development via a range of incentives. For example, the 2002 Farm Bill mandates federal procurement of bio-based products when they are available and are equivalent to alternatives from a fossil fuel base (the “buy bio” programme). This is being facilitated by the setting of procurement standards and targets for federal government purchase of bio-based fuels, power and bio-products. Other standards (eg the renewable fuels standard) will provide market pull, and farmers are being incentivised to grow crops for industrial use.

The US bio-ethanol industry is continuing to grow at a rate of over 10%, aided by tax breaks to petrochemical companies which blend ethanol with their petrol. The country now produces over seven million tonnes of bio-ethanol annually, 92% of which is used as fuel. It is mainly produced from corn, now consuming 7% of the domestic maize harvest.

All the signs are that this is a long-term commitment by the USA to develop a large, sustainable, biomass-based sector of the economy by development and application of the tools of industrial biotechnology.

Japan

The Japanese were amongst the earliest adopters of industrial biotechnology, due no doubt to the familiarity of processing with micro-organisms in a country with a long tradition of making fermented food. They have established a world-class fermentation industry, particularly in specialised markets such as amino acids. However, they Japanese companies were also among the first to use bio-catalysts, and Mitsubishi Rayon was the first company to introduce enzyme technology to produce acrylamide. This is produced in a purer form using only 20% of the energy of the conventional chemical synthesis, and the technology is now in use round the world. Other Japanese companies, for example Kaneka, pioneered the manufacture of pharmaceutical building blocks using biotechnology.

Overall, Japanese bio-industry was estimated to have a turnover of $15 billion in 2003, 26% being in the chemicals sector. Clearly, Japan has a strong position in industrial biotechnology. However, the country does not have a strong agricultural base and does not have the capacity to supply home-grown biomass to industry at a competitive price to fuel future growth in the bio-processing sector. This is an important consideration, because most agricultural products are bulky and costly to transport; economically viable bio-refineries rely on a ready supply of biomass locally. This may tend to focus growth in bio-processing in Japan towards higher-value, niche sectors rather than bulk chemicals and bio-fuels.

An action plan covering biotechnology strategy guidelines was published by the government-sponsored Biotechnology Strategy Council in 2002 (ref 17). This deals with three strategic strands:

• Achieving health and longevity
• Food safety and functionality
• A sustainable society

In the five years to 2007, Japan aims to double its funding of biotechnology research and triple the number of researchers involved. A significant proportion of this will be directed towards industrial biotechnology: in contrast to the situation in Europe and the USA, Japan puts significantly more research money into biotechnology for health-oriented foods, the environment and power generation than for healthcare biotechnology.

Developing Countries

China has a similar tradition to Japan of producing fermented food, although not on the same scale. On the industrial side, production using biological processing is increasing, albeit from a low base. The China Centre for Biotechnology Development estimates total sales of products from biotechnology to be $1.2 billion. However, China has great potential for future expansion of this sector. Not only does it have the requisite agricultural infrastructure, but its economy is growing rapidly.

The government is investing in major research in biotechnology, coordinated by the Ministry of Science and Technology. On the production side, there has recently been significant addition of large-scale fermentation capacity for bulk chemicals such as citric acid and ascorbic acid, largely for export. A number of large-scale bio-ethanol plants have also been built, to mix with petrol for the rapidly-growing market for cars. The Jilin plant, commissioned in 2003, is the world’s largest, with a production capacity of 600,000 tonnes a year.

Although currently far behind Europe, the USA and Japan in use of white biotechnology, China’s rapid growth and agricultural base are likely to make it a very significant player in the sector in years to come.

Most developing countries simply do not currently have the resources to develop and use industrial biotechnology on their own. But, in the longer term, it is these countries which may be some of the greatest beneficiaries. Many of them have a large agricultural base which could become much more productive in future. Biomass from this could be the feedstock for a range of new industries, by-passing completely the way industry developed in Europe, and avoiding many of the environmental problems associated with this. Extra world demand for agricultural produce – driven by population growth, increasing affluence and greater use of biomass by industry – will also tend to drive up commodity prices and directly benefit developing country farmers.

The world’s poorest people rely almost totally on renewable resources for both energy and materials, but their efficiency of utilisation could be improved considerably and their harvesting made more sustainable. For example, in addition to the numerous benefits in terms of health and labour, replacement of individual wood fires by energy generated more efficiently from biomass in local power stations would reduce the current level of deforestation.

Greater self-sufficiency in energy and industrial raw materials would encourage economic growth and reduce many countries’ vulnerability to currency fluctuations and supply problems for imports. If Europe continues to develop its strong base in industrial biotechnology, it will be in a good position to share technology with developing countries help bring many of their people out of abject poverty.