Analysis of Government policies, public R&D programmes and private sector strategies to support the non-food use of crops
May 2003 Prepared for: Science Directorate Department for Environment, Food & Rural Affairs (DEFRA) Project Code: NF0515
While every effort has been made to ensure the accuracy of information in this report, SAC and Innovation Management accept no responsibility for any decision or action taken on the basis of the report. The views expressed in the report are those of the authors, not of Defra.
Prepared by: SAC Innovation Management West Mains Road Station Yard Edinburgh Wilbraham Road Fulbourn Cambridge
Garth Entwistle, Dr Kerr Walker Bruce Knight Dr Elaine Booth, Dr Jacquie Middleton
Contacts: Mr Garth Entwistle Mr Bruce Knight Tel: 01224 711047 Tel: 01223 881887 Fax: 01224 711270 Fax: 01223 881553 [email protected] [email protected] 2 Table of Contents
Executive Summary ...... 5 Introduction ...... 5 International RRM Activity ...... 5 The Impact of Government Policy on RRM Activity ...... 7 R&D Strategies ...... 7 Private-Sector Strategies...... 7 A Comparative Assessment of the UK Position ...... 8 Recommendations...... 9 1.0 Introduction ...... 11 1.1 Aims and Objectives ...... 11 1.2 Research Methodology ...... 12 1.3 Report Structure ...... 12 2.0 Public and Private Sector Industrial Crop Activity ...... 13 2.1 Non-Food Use of Crops - a Definition...... 13 2.2 The Historical Significance of RRM ...... 13 2.3 RRM Activity ...... 14 2.4 Public-Sector Activity ...... 15 2.4.1 New RRM Drivers...... 15 Box 1 - An Action Plan on Climate Change - Canada 2000...... 16 2.4.2 Government Policies ...... 17 Box 2 - Current Situation and Future Prospects of EU Industry using RRM RRM Working Group, DG Enterprise, 2002 ...... 18 2.5 Private Sector Acitivity...... 19 2.5.1 Liquid Bio-fuel...... 20 2.5.2 Solid Crop Bio-fuels ...... 21 2.5.3 Bio-polymers...... 22 2.5.4 Bio-composites ...... 23 2.6 Conclusions ...... 24 3.0 Policy Impacts on Industrial Crop Activity, Sustainable Development and the Rural Economy ...... 25 3.1 Introduction ...... 25 3.2 National RRM Policies...... 27 3.2.1 The Netherlands...... 27 3.2.2 Germany...... 28 3.2.3 France...... 29 3.2.4 The European Union ...... 29 3.2.5 USA ...... 31 Box 3 - Environment 2010: Our Future Our Choices ...... 32 3.2.6 Other EU Countries ...... 33 3.3 Policy Impacts on Industrial Crop Activity ...... 33 3.4 Sustainable Development ...... 35 Box 4 - Sustainability ...... 36 3.5 Rural Economy Impacts ...... 37 Box 5 - Industrial Uses of Bio-technology...... 38 3.6 Conclusions ...... 39 4.0 Public Sector R&D Strategies in Support of RRM ...... 41 4.1 An Overview of Activity ...... 41 4.1.1 The Netherlands...... 41 4.1.2 Germany...... 42 4.1.3 France...... 42 Box 6 - AGRICE Charter - 2000 ...... 43 4.1.4 USA ...... 43 4.2 Technology Transfer Policies ...... 42 4.2.1 The Netherlands...... 45 4.2.2 Germany...... 45 Box 7 - Kassel project: Test Marketing of Compostable Packaging ...... 45 4.2.3 France...... 46 4.2.4 USA ...... 46 Box 8 - Solyanyl - mouldable plastic - Rodenburg Bio-polymers ...... 46 Box 9 - USDA Alternative Agricultural Research and Commercialisation (AARC) programme ...... 47 4.3 Provision of Market and Economic Information ...... 47 4.4 Conclusions ...... 49 5.0 Private Sector Strategies that Support the Commercialisation of RRM ...... 51 5.1 The Supply Chain ...... 51
3 5.2 Private Sector Activities...... 52 5.3 Key Success Factors ...... 54 5.3.1 Strengths ...... 55 5.3.2 Weaknesses ...... 56 5.4 The Role of Government in Commercial Developments...... 57 5.5 New and Emerging Major Product Developments ...... 58 5.5.1 Cargill Dow - NatureWorks™ Polylactide (PLA) bio-polymers ...... 58 5.5.2 Du Pont /Tate and Lyle - Sorono® polyester type fibre...... 58 5.5.3 Du Pont/Roquette - isosorbide, bio-based monomer ...... 58 5.5.4 Iogen (Canada)/Shell - bio-mass to ethanol process ...... 59 5.5.5 Metabolix/Monsanto - Biopol® polyhydroxybutyrate - bio-degradable plastic ...... 59 5.5.6 Genetically modified crops...... 59 5.6 The Role of Producer Organisations...... 59 5.7 Conclusions ...... 61 6.0 UK RRM Activity ...... 63 6.1 Overview of UK Position ...... 63 6.2 RRM Activity in the UK ...... 64 6.3 A Comparative Assessment of UK RRM Activity ...... 66 6.3.1 Policy ...... 66 6.3.2 RRM Activity ...... 68 6.3.3 R&D Activity ...... 68 6.3.4 Rural Development Impacts...... 69 6.3.5 Sustainability...... 69 6.3.6 Commercial Strategy ...... 70 7.0 Summary and Conclusions...... 71 7.1 Summary ...... 71 7.1.1 Public and Private-Sector Activity ...... 71 7.1.2 Impact of Government Policies on RRM Activity...... 72 7.1.3 R&D Strategies...... 72 7.1.4 Private-Sector Strategies ...... 73 7.1.5 The UK Position ...... 73 7.2 Recommendations...... 74 7.2.1 Overall Strategy ...... 74 7.2.2 R&D Policy ...... 74 7.2.3 Market Introduction...... 75 References ...... 77 List of Tables Table 2.1 Key market applications for Renewable Raw Materials ...... 14 Table 2.2 Examples of successful RRM adoption in Industrial Markets...... 15 Table 2.3 Estimated EU potential of major RRM-based products ...... 20 Table 3.1 RRM policies and measures - examples by type ...... 26 Table 3.2 Areas of Oilseed Rape and Sunflower crops grown for industrial uses on set-aside land in the EU - 2001 (‘000 Hectares) ...... 34 Table 3.3 Industrial crop areas on set-aside - UK and France - 2001 (Hectares) ...... 34 Table 3.4 Industrial crop areas - USA - 2001 (Hectares) ...... 34 Table 4.1 Specific RRM R&D expenditures by national governments ...... 41 Table 4.2 Policy interventions to improve competitiveness in the market place...... 44 Table 5.1 Companies active in the manufacture of RRM ...... 53 Table 5.2 Case studies of private-sector RRM activity ...... 54 Table 5.3 Levy Board RRM activity - by country ...... 60 Table 6.1 UK area for non-food crops for harvest year 2001 ...... 64 Table 6.2 UK RRM policies and measures - examples by type ...... 67 Appendices Appendix 1 Country Reports ...... 79 1.1 The Netherlands...... 81 1.2 Germany...... 95 1.3 France...... 129 1.4 USA ...... 155 1.5 Italy/Denmark ...... 177 Appendix 2 Private Sector Organisations - Interview Reports ...... 183 2.1 UK company - Interview Notes ...... 183 2.2 Major Companies Marketing RRM ...... 188 4 Executive Summary
Introduction
1. DEFRA commissioned this report in October 2001 with five objectives:
Objective 1: Review public and private-sector industrial crop activity in Europe and North America
Objective 2: Show the impact of government policies on industrial crop activity
Objective 3: Consider R&D strategies that effectively support industrial crop activity
Objective 4: Identify private-sector strategies that support the commercialisation of non-food crops and crop products and the characteristics of successful examples
Objective 5: Measure the UK’s position in non-food crop activity
2. For the purposes of this report, all crop and livestock products utilised in industrial non-food markets are classified and described as Renewable Raw Materials (RRM). Industrial crop activity is considered to include all public and private-sector programmes which support the development and commercialisation of RRM applications.
3. Chapter 2 reviews public and private-sector RRM activity in countries leading the development of RRM in Western Europe and North America. Important RRM developments elsewhere in the world are also highlighted. Policy impacts on RRM activity are reviewed in Chapter 3. R&D programmes in leading countries are identified and described in Chapter 4. Both public policies and private-sector initiatives to commercialise RRM are characterised in Chapter 5, in order to identify factors critical to their success.
4. These reviews allow for an examination in Chapter 6 of the UK’s position in the RRM sector. Particular attention is given to the impact of RRM on sustainable development and rural development. Finally, Chapter 7 makes a number of policy recommendations to improve the development and commercialisation of RRM in the UK.
International RRM Activity
5. Traditional industrial crop and livestock RRM products - textiles (cotton, wool and hemp), oils and greases (oilseeds and animal fats) and building materials (timber) - continue to maintain strong national and international positions, competing successfully with synthetic products in a wide range of markets. Current RRM policies seek to safeguard the position of these traditional materials against price and quality competition, and to develop new applications for RRM products.
5 6. A wide range of new RRM applications (potential uses) have been identified by national and international research programmes. Of these, applications involving liquid bio-fuels, bio-mass, bio-polymers and bio-composites are expected to have the most significant impact on global and local markets, in terms of raw material prices, trade flows and related policies. Most other applications are expected to involve relatively small quantities, and to be of significance only to local communities and individual businesses, collectively they may however become important to regional or sectoral economies.
7. RRM development has conventionally been driven by the agricultural industry and its policies. Thus, agricultural programmes have for the most part, attempted to “push” crop and livestock products into industrial markets, as opposed to initiatives being “pulled” by unsatisfied demands. Generally, such “push” policies, typified by the “Agrification” policy of the Netherlands, have been unsuccessful, even with considerable public funding support. The exception is the development of bio-fuels in the EU and in North and South America: bio-fuels are now significant industrial sectors in their own right, as a direct result of a variety of policy interventions.
8. The application of biotechnological and industrial bio-processes to RRM applications is expected to have significant market impact. There is increasing recognition by the chemical industry of the potential to change feedstock from fossil-fuel materials to RRM and to switch from chemical processes to the use of enzyme and fermentation systems. Bio-processes are forecast to become increasingly competitive with conventional chemical systems.
9. As awareness develops of the future economic significance of RRM - especially when combined with emerging biotechnologies - agricultural arguments for RRM development and policies are now increasingly superseded by environmental, strategic (e.g. energy import dependency) and commercial interests. Most of these interests are expressed in terms of sustainable development, which is increasingly becoming an integrating component of national and international policy. Thus, national RRM policies increasingly involve Government departments other than those responsible for agriculture and rural communities. Ministries with responsibility for agriculture are still of major significance, but are re-orientating their approach to RRM in line with these new policy drivers.
10. The mechanisms by which governments influence RRM activity vary considerably from country to country, but can be categorised as follows:
Economic capital grants, crop production support Fiscal taxation policies discriminating in favour of RRM Voluntary codes of practice and labelling Regulatory sourcing and utilisation directives, preferential purchasing arrangements Information market intelligence, networking, demonstrations and education campaigns R&D fundamental science and applied research programmes Other a variety of other programmes encouraging RRM adoption
6 The Impact of Government Policies on RRM Activity
11. Economic, fiscal and regulatory policies provide the most immediate support to RRM activity. Voluntary programmes can be important if programme protocols become core market requirements. Information and education programmes and R&D activity invariably have longer-term impacts, but some are specifically targeted to overcome important barriers to acceptance and adoption.
12. RRM applications contribute to sustainable development by simultaneously protecting the environment, encouraging the prudent use of natural resources and supporting economic growth and employment. Consumers are developing a stronger interest in green issues, and are likely to state a preference for renewable materials. However, functionality (i.e. fitness for purpose, in terms of quality, reliability and application), familiarity and value for money are factors which will continue to drive most spending decisions. Nevertheless, industry is looking at RRM to support the development of more sustainable business practices.
13. Where bio-fuels are effectively supported by Government policy, they have created important new industries and benefited regional and national rural economies by strengthening commodity markets, safeguarding and creating employment and by diversifying income streams. Other RRM applications have had more localised impacts.
R&D Strategies
14. R&D activity is substantial in all countries reviewed, and has generated a substantial body of knowledge, which is of strategic importance. Fundamental research programmes give a clearer understanding of the longer-term potential of RRM applications. However, R&D programmes are being increasingly directed towards the needs of the market, and industry is being encouraged to participate in these programmes to allow market signals to be more clearly recognised. Technology transfer measures and socio-economic research increasingly supports RRM R&D activity.
Private-Sector Strategies
15. No single factor is seen to explain the successful commercialisation of RRM applications. Bio-degradability, renewability and sustainability are by themselves not sufficient to guarantee market access. Companies closest to the consumer or user of RRM products find themselves best placed to exploit RRM markets. A well- coordinated supply chain is important, as is an understanding of market demand.
16. Even though government intervention is often justified by the need to reduce risk, to give support to emerging technologies, and to help generate momentum, many products appear to be getting to market without significant public sector involvement. For the most part, the more advanced RRM technologies are controlled by large multi-national groups, which require little assistance to develop RRM products. Producer groups, though generally not close to RRM consumers, can influence RRM adoption by consistently pushing product into the market and providing venture capital to support commercialisation.
7 A Comparative Assessment of the UK Position
17. UK RRM policy was most recently set out in April 2000 in the Government’s response to the UK Parliamentary Select Committee on Science and Technology report on Non-Food Crops (November 1999). The Government recognises that non-food crops (RRM) have an important contribution to make towards sustainable development and sees a need to encourage development of these crops. A Government/Industry Forum, GIFNFC, was established in 2001 to provide strategic advice on the development of non-food uses of crops.
18. UK RRM activity in terms of dedicated industrial-crop area is however small: a total of 31,474 ha of set-aside land was devoted to industrial crops in 2001, approximately 4% of the total area of set-aside available. The area planted for industrial crops on non-set-aside main-scheme land was estimated at perhaps 30,000 ha - less than 0.7% of the total.
19. In 2003, the total industrial crop area is forecast to grow to perhaps 200,000 ha as significant areas are contracted to support an emerging export market for RRM feed-stocks (cereals and oilseed rape) for bio-fuel production and some increase in domestic RRM demand, principally within the oleo-chemical and starch industries. Relatively small areas support a range of specialised markets, which include cosmetics, pharmaceuticals, fibre and inks. Traditional RRM applications remain important in the pulp, paper, construction and textile markets, with UK industry sourcing renewable materials from both UK and overseas.
20. The important liquid bio-fuel market has not developed in the UK to the same degree it has elsewhere. Recent reductions in duty on UK bio-fuels (20p/litre from April 2002) have proven insufficient to encourage large-scale investment in bio-fuel production. Waste food oils and animal fats are however now being used to produce bio-diesel in the UK, complemented by imports. Bio-mass applications are encouraged by the UK Renewables Obligation Order 2002, with increasing areas planted to willow and miscanthus.
21. The RRM knowledge and skills base in the UK is considerable, and compares well with that found elsewhere. R&D expenditures by all UK government departments is estimated to have increased to around €9.6m/year by 2002. Additional funding is provided for bio-fuels (DEFRA, DTI) and for bio-technology (DTI). Comparisons with national expenditures elsewhere are difficult. Annual average R&D expenditures on specifically RRM are reported to range from €9m in the Netherlands to €31m in Germany while in the USA, the USDA and the DoE are collectively committing €335m/year over the period 2001-03.
22. Rural development impacts in the UK remain small and highly localised, with each individual market development adding to and safeguarding rural economic activity. More widespread benefit will only be realised if commodity markets can be influenced by RRM demand, as they have elsewhere with the development of large bio-fuel markets.
23. With sustainability a key part of government strategy, British industry is increasingly looking to RRM to support the achievement of sustainable corporate goals. Awareness of sustainability issues is nevertheless still low. Government can support a better understanding of the contribution which sustainability can make to business success. Widespread adoption of sustainability principles is however, only likely to come when industry itself realises its economic significance.
8 Government can help by positively discriminating in favour of RRM adoption with such measures as tax relief, procurement policies and guidelines for good practice. This is already happening in other European countries and North America.
24. The private sector in the UK appears as responsive to new business opportunities as are such sectors elsewhere. Awareness of RRM opportunities is promoted strongly by R&D networks such as ACTIN. While some sectors of industry are energetically responding to these opportunities, in general, without a strong lead being shown by government, UK private sector involvement is likely to lag behind developments elsewhere. In the US for example, government procurement policies increasingly favour RRM development; strategic arguments in favour of RRM are well developed and clearly supported by the executive.
Recommendations
25. The UK government is encouraged to develop a clear and forward-looking RRM strategy within which public-sector interventions can be directed and private-sector actions encouraged. This strategy should involve, and meet the objectives of, several Government departments, most notably Environment, Food and Rural Affairs (DEFRA), Industry (DTI) and Energy (DoE). The US “Technology Roadmap for Plant/Crop Based Renewable Resources 2020” provides a useful guide to the development of a national RRM strategy. The UK government is recommended to develop a similar “roadmap” for the UK.
26. Government needs to promote RRM benefits more widely to potential producers, users and consumers, in order to encourage adoption of RRM products and processes.
27. R&D programmes need to be supportive of fundamental strategic research, to include socio-economics and to bring supply-chain participants together to allow market signals to be more clearly understood. These programmes should include a speculative element to encourage new ideas to emerge, be sustained, with long- term strategic goals and near-market activity when necessary to support private- sector R&D effort during critical developmental stages.
28. The support and participation of individual supply chains is vital. Programmes similar to the Dutch “AKK” R&D programmes, which recognise the role supply- chains have in passing market signals through to primary producers and processors, are recommended for the UK.
29. The UK has a strong science skill base, which can be channelled towards RRM. Emphasis needs to be given to the application of biotechnology as a means of gaining competitive advantage. This should include the application of novel microbial fermentation systems, the use of industrial enzymes, separation technologies, plant biotechnology and genomics.
30. A key strength of the UK’s RRM position is its diversity of R&D capability distributed across different disciplines and well established centres. While the concentration of RRM R&D activity at one UK centre is not recommended, there are benefits in building up a national critical mass of expertise and knowledge. This has been achieved in the Netherlands within the Renewable Division of ATO, Wageningen, and to some extent at the US National Center for Agricultural Utilization Research, at Peoria, USA. However, it appears more important to establish collaborative programmes based on the best use of scientific expertise rather than be dictated by location.
9 31. The UK Government needs to discriminate in favour of RRM technology products where their development is considered important. The role of UK levy boards in supporting more traditional RRM applications needs to be re-examined, or Government has to take on this task as part of their overall RRM strategy. Government support can come in many forms including tax relief, regulation, codes of practice and sustained highly focused R&D programmes to remove technical barriers to progress and market acceptance. A number of specific actions are recommended for action by Government:
• establish procedures and protocols for RRM labelling or logo branding
• define procedures and protocols designed to encourage RRM purchase by Government procurement agencies
• examine more fully the success of the Kassel test-marketing project in Germany with a view to setting up a similar project in the UK
• establish a mechanism whereby the environmental, societal and economic importance of RRM is communicated to policy makers, industrialists, educationalists and the media as part of a sustainable development policy
10 1.0 Introduction The utilisation of crop products in non-food markets is seen to offer increasingly important opportunities to both the rural sector and down-stream processing and manufacturing industries. The development and commercialisation of non-food crop products has however been slow despite increasing levels of public and private sector activity.
DEFRA supports the development of an industrial sector based on the non-food use of agricultural crops in the context of sustainable development and the fostering of a viable rural economy. In furthering this aim, DEFRA is interested in looking more closely at policies and strategies, including research, that have proved successful in establishing industrial sectors based on the non-food use of crops.
1.1 Aims and Objectives
SAC in partnership with Innovation Management was commissioned in October 2001 to prepare a report with the following objectives:
Objective 1. Review public and private-sector industrial crop activity in Europe and North America
Objective 2. Show the impact of government policies on industrial crop activity
Government and other public-sector policies that impact on industrial crop activity will be examined in all leading countries to allow for a comparison across countries. While all policy interventions will be considered, those considered to most effectively stimulate industrial crop activity, encourage sustainable development and support rural economies will be highlighted.
Objective 3. Consider Research and Development (R&D) strategies that effectively support industrial crop activity
R&D programmes in leading non-food crop countries will be identified and documented together with associated funding. The impact of R&D on non-food crop activity will be carefully considered and its role clearly identified.
Objective 4. Identify private-sector strategies that support the commercialisation of non-food crops and crop products and the characteristics of successful examples
Leading private sector initiatives to commercialise non-food crops will be identified and successful examples characterised. These initiatives will be developed as case studies in order to identify factors critical to their success.
Objective 5. Measure the UK’s position in non-food crop activity
Results from objectives 2-4 will be brought together to show clearly the position of UK public and private sector institutions measured in relation to other leading countries, in terms of public policy, R&D and private sector commercialisation activity.
Recommendation for changes in public sector policy that improve the UK’s position in a non-food crop activity will be developed.
11 1.2 Research Methodology
SAC and Innovation Management’s research programme involved:
(i) Literature review of industrial crop activity - by country and by sector.
(ii) Selection and analysis of key industrial crop countries - by research team and commissioned country specialists.
Key industrial crop countries were considered to be:
Germany Netherlands France USA
Specific reports on industrial crop activity were prepared on each of these 4 countries (Appendix 1). Country specialists were contracted to report on Germany (NOVA Institute) and the Netherlands (ATO-DLO). Additional country activity considered in this report includes: Japan, Australia, Malaysia, Denmark, Italy, Canada.
(iii) Selection and analysis of key private-sector examples of commercialisation activity. Several private-sector organisations involved in the commercialisation of non-food crops were interviewed. These interviews were supplemented by case study reports of private-sector activity by the OECD and INFORRM.
(iv) UK non-food crop activity was compared with activity found elsewhere in the world to show the UK’s relative position.
1.3 Report Structure
Chapter 2 provides a global overview of current RRM activity and its future potential. The impact of government policy on RRM activity is reviewed in Chapter 3. Country-specific reports describe national RRM programmes and their impact on industrial crop activity, sustainable development and rural economies.
Chapter 4 describes in detail R&D programmes across all the countries targeted by this report. Public-sector R&D expenditures on industrial crops are annualised to allow for a comparison by country.
Private-sector commercialisation strategies are considered in Chapter 5. Characteristics of successful industrial crop developments are listed and the impact of public-sector interventions identified. This analysis draws on a number of case studies of industrial crop/biotechnology development within the private-sector. These case studies, a review of literature and the specialist country reports allow a list of the top 20 companies involved in industrial crop activity to be prepared.
Any discussion of UK activity is specifically avoided in Chapters 2, 3, 4 and 5. UK industrial crop activity is described in Chapter 6 and compared with global activity - as described in the preceding chapters.
This comparison or benchmarking allows the research team to present a set of conclusions as Chapter 7 along with recommendations for the UK government.
12 2.0 Public and Private Sector Industrial Crop Activity The non-food use of crops is defined in Section 2.1 and the historical significance of these materials reviewed in Section 2.2. The current level of activity is described in leading countries (Section 2.3). Public sector (Section 2.4) and private sector (Section 2.5) activity in these countries is presented and some perspectives given of the future development of non-food crops.
2.1 Non-Food Use of Crops - a Definition
DEFRA defined the non-food use of crops to include all crop and livestock products utilised in industrial “non-food” applications.
Elsewhere in Europe, such materials are considered as Renewable Raw Materials (RRM) while North Americans (USA / Canada) refer to them as “bio-based” products. The OECD in their 2001 review of biotechnology (OECD 2001) clearly considered biotechnology to involve the use of crop and livestock products. Biotechnologies were considered to fall into two distinct groupings:
• the replacement of fossil fuel raw materials by renewable (bio-mass) raw materials
• the replacement of a conventional, non-biological process by one based on biological systems (bio-processes) such as whole cells or enzymes, used as reagents or catalysts
For the purposes of this report, the non-food use of crops is considered to involve the utilisation of RRM. All crop and livestock products directed towards non-food industrial markets are classified and described as RRM.
2.2 The Historical Significance of RRM
Crop and livestock products have always entered non-food markets. Up to the 18th century crops provided man with most of his food and non-food requirements. Forests provided timber as construction material for housing and shipping. Fibre crops - cotton, hemp, flax, etc. - provided material for clothing, ropes and canvas. Vegetable oils and animal fats provided greases and oils for lubricants and soaps for the nascent oleochemical industry. However within 150 years, society changed from a mainly plant-based economy to an economy based on non-renewable fossil fuels. For example, in 1870 70% of fuel demand was supplied by wood, by coal in 1920 and by 1970 more than 70% by mineral oil (van Bekkum & Okkerse, 1999).
Renewables have nevertheless maintained a strong position in many markets because of superior functionality, cost and consumer preference. Approximately 15% of global oleo- chemical production normally enter non-food markets (Kaminga, 2000). Vegetable oil fatty acids are feedstocks for intermediate chemicals - esters, ethoxylates and amides - used, for example, in the manufacture of specialised surfactants, and such products as alkyd resins, some nylons, plasticisers, cosmetics, lubricants, greases, paper and pharmaceuticals.
Cereal and potatoes also continue to find wide application in non-food industrial markets. Approximately 50% of the EU market for crop starch is in the non-food sector. Of this, paper and cardboard are most important, representing almost 40% of the industrial market. Plastics and detergents (mostly detergents) represent 30%, with a similar share taken by fermentation products.
13 Wood and wood-based products - clearly renewable products remain the material of choice in many situations. Other renewables such as leather, wool and cotton maintain market positions because of clear consumer preference.
Industrial markets for RRM are therefore not new discoveries. Their requirements are already factored into commodity markets and influence supply and demand balances. Current RRM policies seeks to safeguard the position of these traditional materials and to develop new markets for RRM products.
2.3 RRM Activity Global RRM activity involve markets which range in size from 1.0m tonnes (bio-diesel, bio- ethanol and in the near term bio-polymers) to very small highly specialised extremely low volume niche markets such as semiochemicals - naturally occurring substances used in nature to allow communication between living organisms.
IENICA (Interactive European Network for Industrial Crops and their Application) has categorised RRM activity by market application for specific raw materials types (Table 2.1). Five raw materials types were considered - vegetable oils, plant fibres, carbohydrates and starches, speciality products and protein isolates and concentrates. These products were found to have a very wide range of non-food applications.
Table 2.1 Key market applications for Renewable Raw Materials
Source: IENICA 2000 14 RRM activity which supports the development and commercialisation of these applications is found throughout the world. Activity is most pronounced in the industrialised world, within the European Union (EU), North America, Japan and Australasia (OECD 2002). In all of these countries, both the public and private sector seek to take advantage of new RRM opportunities, to add value to indigenous RRM supplies, to develop new RRM materials and use these materials to support economic growth.
2.4 Public Sector Activity
Government policy regarding the further development of RRM has conventionally been driven by agricultural concerns. The agricultural lobby is keen for governments to support the development of profitable new markets for conventional agricultural crops and profitable new crops in what are often unconventional markets. For example in The Netherlands, their “agrification” policy sought to find a profitable “4th” crop for Dutch agriculture, while in the USA, bio-ethanol programmes and, more recently, bio-diesel programmes have been supported to strengthen market demand for corn and soybean.
With the clear exception of the bio-fuel industry, RRM development programmes have however, failed to create new, large-scale industrial markets for agricultural produce. RRM innovation has either added to existing product offers or involved relatively small niche market applications. Table 2.2 lists a number of these applications.
Table 2.2 Examples of successful RRM adoption in Industrial Markets
Source:Chapter 5.2 Private Sector Activities.
This failure to develop significant new “non-fuel” markets discourages further public investment in industrial crops and diminishes the influence of the agricultural lobby. Agricultural arguments in favour of RRM are necessarily being re-evaluated and RRM policies re-considered. The agricultural lobby nevertheless remains important. Within the EU agricultural interests continue to encourage public support for industrial crops in some member states - Germany and France for example. In the US the farm lobby continues to press strongly for the development of new markets for agricultural products.
2.4.1 New RRM Drivers
New arguments for industrial crops are however, emerging and supersede “agricultural” arguments for alternative profitable cropping opportunities. These policy “drivers” can be categorised as environmental concerns, strategic interest and commercial pressures.
15 Box 1 An Action Plan on Climate Change - Canada 2000 The Government of Canada’s Action Plan 2000 on climate change commits the investment of C$ 500m (€775m) over the five years to 2005. This commitment is additional to a 2000 budget allocation of C$ 625 (€970m) to give over C$ 1.0bn (€1.55bn) for actions to reduce GHG emissions by 65 megatons per year. This would take Canada one-third towards the achievement of Kyoto Protocol targets. Canada considers transportation - currently at an estimated 25% of the total, the largest source of GHG emission in Canada, as a key sector for action. GHG emissions from this sector are estimated to rise by 2010 to a level 32% above 1999 levels. Annual petrol consumption is estimated at 25-30 billion litres of which 5% is E-10 (10% ethanol + 90% petrol). The Action Plan will encourage ethanol production to increase from 250m litres to 1 billion litres. To allow 25% of the total petrol supply to contain 10% ethanol (E-10). The Canadian province of Saskatchewan is estimated to have sufficient bio-mass, approximately 22m tons, to produce annually 8.7 bn litres of fuel ethanol. The use of hybrid populars and other agricultural sources of cellulose could lift ethanol production to 50 bn litres without any reduction in food grain production. The OECD considered ethanol produced from either corn or from cellulose to be uncompetitive with petrol when conventional technologies are applied. During the 1980’s - before the introduction of organisms capable of fermenting multiple sugars, ethanol production costs were estimated at US$ 1.58 per US gallon (€0.42/litre). During the 1990s this cost fell to US$ 1.16 per gallon (€0.31/litre). Further falls are expected as the scale of production increases, sufficient to allow ethanol costs to compete with petrol at US$ 0.60 per gallon (€0.16/litre). The US DOE estimate ethanol production costs could be reduced to US$ 0.75 per gallon (€0.20/litre) if enzyme costs can be reduced to US$ 0.10 per gallon (€0.03 /litre). Genencor believe enzyme costs can be reduced to US$ 0.05 per gallon (€0.01/litre) bringing ethanol costs very close to conventional petrol costs.
Extracted from “Industrial Uses of Biotechnology” OECD 2001.
Environmental concerns which encourage an interest in RRM by governments, industry and the general public are the increasing requirements for a cleaner environment, safe products and sustainable industrial processes. Associated national Climate Change programmes, aiming to reduce Green House Gas (GHG) emissions and meet Kyoto Protocol targets, require substantial investments in RRM (Box 1).
Strategic interests encourage - in the US in particular; a reduction in energy import dependency with the production of bio-fuels from domestically produced raw materials. These interests require nations to safeguard their position with regard to emerging technologies. The UK House of Lords Select Committee on Non-Food Crops, for example, considered it appropriate to encourage the development of technologies where the UK had world leadership positions in research and which presented opportunities for new industries (House of Lords, 1999).
Commercial interests recognise the growing consumer awareness of environmental issues and look to RRM to support product development and their overall position in the market place.
16 A review of RRM “drivers” concluded that the commercial needs of industry had the most significant impact on RRM utilisation (OECD 2002). Industry was recognised to be continually looking for more cost-effective solutions to manufacturing problems. Uniqema, for example, considered industrial RRM users to be interested in new business opportunities and the reduction of both variable and fixed costs (Kamminga 2000).
Downstream consumers were interested in functionality. Safety, health and environmental benefit was not included in Uniqema’s list of key issues. Consumers were not expected to pay for “green” benefits alone. Even where such issues are important they quickly become a standard non-premium issue.
2.4.2 Government Policies
Government policy towards RRM now involves departments other than the Ministry of Agriculture. The US Department of Energy is now influencing much of the development of industrial crops with a RRM R&D budget slightly greater than that of the Department of Agriculture. The US Department of Commerce is already active, funding in 1995 a $30m five-year research programme to develop continuous bio-catalytic systems for the production of chemicals from renewable resources.
Within the EU, the Directorates of Enterprise, Transport and Energy influence policy towards RRM while in the Netherlands, for example, the Department of Economic Affairs, under the influence of the chemical and bio-processing industries, increasingly supports the development of industrial markets for agricultural crop and livestock products and co- products.
Ministries with responsibility for agriculture are re-evaluating and re-orientating their approach to RRM. In 2000, the French government re-commissioned AGRICE (their agency with responsibility for RRM) to take RRM research forward for a further six years with a more sharply focused research strategy. In the Netherlands, the Dutch re-evaluated their support for RRM in 2002, especially funding for the Renewable Division within ATO- DLO. In both instances a more focused strategy emerged with a closer concentration on market needs.
In the US, RRM (Bio-product) research has been intensively considered by a multi-industry task force and a new national policy is emerging with Presidential Decrees emphasising the importance of RRM across a wide range of fields. It is appropriate the UK is also reconsidering their approach to RRM.
Government policy appears now to be more pragmatic with a clear desire to encourage industry to “pull” product out of the agricultural sector in response to a perceived need; rather than help the agricultural sector “push” product forward in the hope it will win market acceptance.
Governments seek to address market failure. Where markets signals appear insufficient to “pull” product out of agriculture, intervention can be justified especially if it is in the nation’s perceived strategic interests.
The OECD seek to encourage policy makers to encourage biotechnology and support the development of national R&D and technology transfer programmes for sustainable development. Governments are expected to help biotechnology adoption by reducing risk with:
17 (i) a sustained, stable legislative base
(ii) financial incentives for improved sustainability
(iii) providing R&D funding to bridge enabling disciplines
While written specifically in relation to biotechnology, these recommendations apply equally to RRM development (OECD 2001). Policy makers are encouraged to:
(iv) translate environmental benefits for society into economic benefits for companies by rewarding good or punishing bad environmental performance
(v) establish a clear and stable legal and political environment in which the bio- technological alternative has an equal opportunity to be taken up
(vi) educate the general public to understand the risks and benefits of industrial biotechnology
EU policy measures as recommended by the DG Enterprise RRM Working Group are set out in (Box 2). The expectations of this group for RRM are, like those of the OECD for bio- technology, ambitious and perhaps overstate RRM benefits. Policy recommendations seek an almost risk-free future for RRM. Few recommendations are likely to be supported by Member States. Representatives of the Dutch Ministry of Agriculture1, for example, considered only “Best Practice Protocols for LCA” and “Common EU standards for RRM derived products” as viable options.
Box 2 Current Situation and Future Prospects of EU Industry using RRM RRM Working Group, DG Enterprise, 2002
Summary of Recommendations
Renewable raw materials as industrial feedstock for the manufacture of chemical substances and products, such as oils from oilseed crops, starch from cereals and potatoes, and cellulose from straw and wood, have recently received attention from policy makers in some Member States. By employing physical, chemical and biochemical processes these materials can be converted into chemical intermediates, polymers, lubricants, solvents, surfactants and speciality chemicals for which to date fossil fuels have traditionally been used as feedstock.
The benefits for EU industry, consumers and the environment arising from the use of renewable raw materials are:
• tailor made performance compared to, or in combination with, conventional materials, leading to increased competitiveness of EU industry
• the provision of a stable and secure source of supply from EU-produced renewable raw materials
• environmental benefits in terms of improved air, soil and water quality, new and growing markets providing economic benefits to industry as well as employment opportunities in processing industries and the agricultural sector
18 1 Personal Communication - May 2002 Box 2 Current Situation and Future Prospects of EU Industry using RRM RRM Working Group, DG Enterprise, 2002 (continued)
EU policies and measures would be required to establish a more supportive political framework for this industry sector to prosper in the future. In general this should include: • continued funding of research into RRM and their applications, to encourage new technical solutions and high performance products, co-ordinated at an EU level • integrated product design, as already incorporated in the EU Integrated Product Policy, to promote the development of sustainable products in a comprehensive approach • adaptation of the Common Agricultural Policy (CAP) to provide specific support for non-food crops • specification of Best Practice protocols for Life Cycle Assessment (LCA) for use with existing decision supporting tools in industry’s Responsible Care programmes • introduction of EU-wide market penetration programmes to create more attractive (for users) cost/performance ratios and improve consumer awareness • encouragement of industry to commit itself to voluntary agreements • new incentives to encourage the wider use of RRM, such as reduced rates of VAT on RRM based products and public procurement • support for the establishment of common EU standards for RRM-derived products • development of approved EU Eco-Labels • an awareness campaign to promote RRM, involving support for conferences and concerted actions
• EU co-ordinated measures for waste management of polymers DG Enterprise, 2002
2.5 Private Sector Activity
Industry is continually looking for cost-effective solutions to manufacturing problems and business development opportunities (Kamminga 2000). The OECD reports that the international market for bio-products and bio-processes is increasing rapidly (OECD 2001). In the late 1990s bio-processes were responsible worldwide for more than 15m tonnes of product2 – mostly produced in relatively low volumes. Next-generation bio-processes are, however, expected to target large volume chemical and polymer markets. Bio-processes are increasingly competitive with conventional chemical routes. Their competitive edge will come from the development of bio-processes that use inexpensive bio-mass feedstocks such as agricultural wastes as opposed to, for example, dextrose which is the currently preferred raw material. A number of recently reported (2000/01/02) developments which encourage RRM adoption are reviewed in Section 5.5 as part of the analysis of “Private Sector Strategies” that support RRM commercialisation.
Du Pont, the world’s No.1 chemical company, clearly recognises the importance of bio- technology and expects to have non-chemical bio-based processes accounting for 25% of their manufacturing activity.
2 The OECD list these products to include: organic and amino acids, antibiotics, industrial and food enzymes, fine 19 chemicals, active ingredients for crop protection, pharmaceuticals and fuel ethanol The most significant impact on global and local commodity markets, raw material prices, trade flows and policy is likely to result from private sector activity involving bio-fuels, bio- mass, bio-polymers and bio-composites (OECD 2002). Other RRM applications (Table 2.1) will also continue to develop, becoming significant to individual businesses and local economies alike.
The RRM Working Group co-ordinated by the European Renewable Resources & Materials Association (ERRMA) and DG Enterprise of the European Commission3, forecast potential EU RRM consumption by Sector for 2010. These estimates (Table 2.3) assume no additional policies and measures to support RRM. Growth rates are significant with surfactants produced from RRM, for example, achieving a 52% market share.
Table 2.3 Estimated EU potential of major RRM-based products
(‘000 tonnes) Market Sector Total RRM RRM RRM Potential Consumption Consumption Potential Market Share % EU 1998 EU 1998 EU 2010 EU 2010
Polymers 33,000 25 500 1.5 Lubricants 4,240 100 200 5.0 Solvents 4,000 60 235 12.5 Surfactants 2,260 1,180 1,450 52.0
Source: ECCP RRM Working Group “Long Report” April 2001. Extracted from: “Current Situation and Future Prospects of EU Industry Using Renewable Raw Materials” DG Enterprise February 2002.
2.5.1 Liquid Bio-fuel
Liquid bio-fuels for transport applications are manufactured from sugars, starches, vegetable oils and lignocellulosic substrates such as woody materials and straw. The principal arable crops involved are oilseeds, cereals and sugar beet. The bio-fuels produced from these crops are used as fossil fuel substitutes, fuel extenders or oxygenates. They include bio-diesel, bio-ethanol, bio-methanol, straight vegetable oil and bio-oil. In practice it is the first two, bio-diesel and bio-ethanol, which dominate the international market.
Bio-diesel is made by the esterification of vegetable oil with an alcohol (usually methanol) in the presence of a catalyst (usually potassium hydroxide). Most vegetable oils can be converted into bio-diesel. In Europe, rapeseed is the preferred product producing rape methyl ester (RME). In the United States, soya oil is the source for bio-diesel producing soya methyl ester (SME), whilst in South East Asia the readily available palm oil is the preferred raw material. Each raw material produces a bio-diesel of differing specification. Palm oil, for example, produces an ester with a very high freezing point and fails to meet European specifications.
Bio-ethanol can also be produced from a range of raw materials. In Europe wheat is the preferred cereal (though Scandinavian countries use some lignocellulosic raw materials). In the US maize is the preferred product whilst in South America sugar cane is used. These preferences reflect the availability of competitively priced raw materials. Unlike bio-diesel, the effect of raw material on ultimate bio-ethanol quality is minimal.
The development of bio-diesel production in Europe has been remarkable. The first industrial-scale bio-diesel plant was constructed in Austria in 1990 producing 15,000
20 3 Unit E.1: Environmental Aspects of Industrial Policy tonnes per annum (tpa). From this level European production advanced quickly with 200,000 tonnes produced for transport by 1997 (with a further 350,000 tonnes produced for heating oil) rising to over 0.5m tonnes for transport by 2001. A good example of the rate of expansion is shown by Germany. German bio-diesel production was 4,000 tonnes in 1991 rising to 50,000 tonnes by 1995, 103,000 tonnes in 1999 and 229,000 tonnes in 2000. Forecasts for Germany are 625,000 tonnes for 2002 and almost 1m tonnes (approximately 1.1 billion litres) for 2003.
In the US, liquid bio-fuel production has concentrated on ethanol from maize. The bio- diesel industry is not nearly as well established as in Europe. However, with the formation of the National Bio-diesel Board in the mid-1990s, US interest in bio-diesel grew from zero to approximately 60-80m US gallons of dedicated production by 2000, involving ten separate companies. This capacity is modular and could be doubled or tripled within a year. In addition, a further seven companies have indicated their intent to become operational. Capacity is increasing rapidly. Surplus esterification facilities within the oleochemical industry provide further production capacity estimated at up to 200m US gallons of bio-diesel. Bio-diesel in the US is principally a 20% blend of fatty acid methyl ester and mineral diesel fuel.
In the US, bio-ethanol has been the major liquid home-produced bio-fuel, with bio-diesel considered a new development. Bio-ethanol was first promoted in the 1970s as a “renewable domestic alternative to gasoline made from foreign oil.” The US is the world’s second largest bio-ethanol producer after Brazil. Consumption amounted to 770m gallons in 1990 and has since risen to 2 billion gallons in 2002 (5.9 billion litres) with a number of new plants opening in 2002.
In Brazil, the alcohol programme was launched in November 1975. The aim was to reduce oil imports, and consequently alleviate balance of payments problems by blending ethanol with petrol in amounts that would neither disturb engine efficiency nor require any adaption to engines. Production peaked at 10.7 billion litres in 1985. The Australian Government plans to promote the production, distribution and transport use of ethanol and bio-diesel to provide new industries and jobs for Australia and to improve air quality in inner cities. An initial objective is for fuel ethanol and bio-diesel produced in Australia from renewable sources to contribute at least 350m litres to total fuel supply by 2010. Capital grants of $(Aus) 0.16/litre of capacity and secure fuel excise exemption of $(Aus) 0.38/litre on ethanol and bio-diesel is expected to support at least five new ethanol distilleries and 1100 permanent jobs (NPA 2001). In Canada, production is planned to reach 16 billion litres by 2010 as part of their Climate Change Programme (Box 1).
2.5.2 Solid Crop Bio-fuels
Solid crop bio-fuels or bio-mass is consumed in its solid state as opposed to the liquid transportation fuels described in 2.3.1. A number of raw materials are being used or are under investigation. These include crops grown specifically for energy production, such as coppiced tree species and fuel grasses, forestry and agricultural residues.
Willow (Salix spp) is the main species used for cultivation in short-rotation coppice. Experience with commercial cultivation is limited. Sweden has the greatest area of coppice, with over 15,000 ha planted (Bauen, 2001). In the UK the area is now expanding from a 2002 level of around 2,000ha as new bio-mass projects come on stream. The giant grass Miscanthus has created some limited commercial activity as bio-mass and for environmental benefit. Several other giant grasses are also under evaluation for bio-mass production in Europe and North America. The most promising candidates include reed canary grass (Phalaris arundinacea) and switchgrass (Panicum virgatum). Much of the bio-
21 mass used for energy production, particularly in industrialised countries, is however currently derived from the forestry industry. Sources include managed and unmanaged woodlands, urban forestry and residues from wood processing. Forestry and agricultural by-products supplies, will vary depending on location, and include materials such as sawdust, forest brash, cereal straw and bagasse from sugarcane. Use of these products as a bio-mass energy source may become more attractive as alternative disposal costs increase.
Bio-mass energy already contributes significantly to the world’s primary energy consumption. It is most important in developing countries where it provides an estimated one third of primary energy consumption for traditional uses such as cooking and heating (Bauen, 2001). In industrialised countries the comparable estimate is much lower at 3% of primary energy consumption. There are wide variations between different countries, depending on factors such as resource availability and government policies. Bio-mass represents around only 3% of primary energy in the USA, compared to 14% in Austria, 18% in Sweden and 20% in Finland, primarily due to the availability of forestry by-products. The Netherlands expect to be utilising 10m tonnes of bio-mass per annum, principally imported, for power generation by 20104.
Bio-mass applications range in scale from a small-scale log-wood heating system for a single house through to a 150 KW wood fuel pellet system for a school or complex of buildings. Combined Heat and Power (CHP) plants supply both heating and electricity for small communities. Such plants have been used for a considerable time in Sweden, where district heating is common and it has been relatively easy to convert older coal or oil burning boilers to the use of wood chips. In Austria, bio-mass district heating schemes involve a large number of small private sector operators.
Larger-scale electricity generating plants using bio-mass have also been developed. The ARBRE plant in North Yorkshire was designed to produce 10 MW of electricity, with 8 MW going to the local grid. In 2002 the project went into receivership but efforts to refinance it are actively underway. Once fully operational it will require 43,000 dry tonnes of wood fuel per year in the form of wood chips which initially will be supplied primarily from forestry waste. An increasing proportion is expected to come from 1,300 hectares of willow coppice planted under contract. ELEAN power Station at Ely, Cambridgeshire is the UK’s first and the world’s largest power station fired with waste cereal straw. Electricity production started in 2000 and the plant consumes over 200 000 tonnes of straw each year, collected from a 80 km radius of the power station. Power output from the plant is 36 MW.
2.5.3 Bio-polymers
Bio-polymers are a loosely defined family of materials designed to degrade through the action of living organisms (Bastioli, 1998). They have the capability to significantly reduce environmental impacts in terms of energy consumption and greenhouse effects in specific applications; they perform as traditional plastics when in use and completely biodegrade within a composting cycle (Bastioli, 2001). Applications include: Composting (bags and sacks); Disposable table-ware (fast food tableware, cutlery, plates, straws etc); Packaging (soluble foams for industrial packaging, film wrapping, laminated paper, food containers); Agriculture (mulch film, nursery pots, plant labels); Hygiene (nappy back sheet, cotton swabs).
These bio-plastics, derived mostly from starch, can be considered in two forms. Natural starch with minor modification, manufactured either alone or with natural or synthetic biodegradable polymers e.g. Mater-Bi, produced by Novamont, Italy. Polylactic acid (PLA) where starch is first fermented to give a lactic acid, then polymerised to polylactic acid e.g. Nature-Works, produced by Cargill-Dow, USA. 22 4 Appendix 1.1 - Country Report - The Netherlands, ATO-DLO, June 2002 The PLA market was estimated at 8,000 tonnes in 2001 with new capacity coming on stream in the US in 2002 lifting production to around 140,000 tonnes. Novamont report new markets are developing where bio-degradability is not an important issue. Improved technical performance has superseded traditional materials allowing the global market for starch-based bio-plastics to reach an estimated 200,000 tonnes in 2002. Cargill Dow estimate market applications in excess of 500,000 tpa and assume the achievement of a 20-25% reduction in fossil fuel consumption from alternative synthetic plastics, depending on disposal method (Vink, 2001). National Starch, part of the ICI group of companies, who manufacture Mater-Bi in partnership with Novamont and accept that bio-degradable polymers will not replace all synthetic/petrochemical polymers. Nevertheless, they will find applications where the environmental impact or convenience of synthetics is compromised. Smaller companies are producing starch-based bio-polymers using potato waste in both the UK and the Netherlands (Chapter 5.0).
2.5.4 Bio-composites
Composites are manufactured by combining two or more materials to form a new material with altered physical and mechanical properties. A more exacting definition identifies a material of 30-70% fibre and 70-30% matrix or adhesive (Bolton, 1998). Bio-composites involve the use of plant fibres to replace, most commonly, synthetic glass, kevlar or carbon fibres. The use of agricultural crops and crop residues as a replacement for wood based panels is, however, a focus of much research. The US Soybean Board have developed numerous highly specified products using soy proteins as an adhesive or soy flour as a fibre source and filler with various privately owned companies taking these products to market.
Within the EU, research has concentrated on the use of flax, hemp and other natural fibres to reinforce commodity thermoplastic polypropylene or to mix with bio-polymers as the matrix. Commercial applications are not well developed. The EU End-of-Life Vehicles Directive is nevertheless encouraging the development of a bio-composite market within the automotive industry. This Directive requires vehicle manufacturers and material and equipment manufacturers to “design and produce vehicles which facilitate the dismantling, re-use, recovery and recycling of end-of-life vehicles” and “increase the use of recycled material in vehicle manufacture”. It aims to increase the rate of re-use and recovery to 85% by average weight per vehicle by year by 2006 and to 95% by 2015, and to increase the rate of re-use and recycling over the same period to at least 80% and 85% respectively by average weight per vehicle and year. Plant fibre composites have the potential to meet future legislative requirements for the need for increased recyclable plastic contents (Sudol, 2001). The EU Directive does not appear however, to fully support the use of these fibre composites (DEFRA 2002b), and may need amendment.
The German Nova Institute estimate current (Karus, 2001) use of natural fibres in the German automotive industry, the market leaders in this field, to be around 20,000 tpa, with demand rising to 45,000 tpa in the medium term. Demand is estimated to increase by up to 3,000 tpa for each car model adopting natural fibres. Almost all German car manufacturers, Daimler, Chrysler, BMW, Audi, Ford and Opel, use press-moulded parts containing natural fibres in new models for such items as door panels, hat racks and spare tyre covers. Reasons for using such materials are: • weight reduction of 10-30% • good mechanical and manufacturing properties • possibility to manufacture complex structural elements from one material in one pass • good performance in accidents (high stability, no splintering) • superior environmental balance during material and energy use • occupational health advantages compared to glass fibre components • no emission of toxic substances • overall cost advantage compared to conventional construction 23 Recent cost comparisons (Ellison, 2000) showed natural fibres @ $0.45-55/kg, Polypropylene @ $1.25-1.35/kg and Fibreglass @ $8.25/kg. Automotive industries are, however, cautious of applying natural composites in structural components or where resistance is critical. The Dutch Biolicht programme showed that these technical requirements can be met with effective treatments of raw materials and the correct processing parameters (Brouwer, 2000). Production techniques such as Resin Transfer Moulding (RTM), vacuum injection and vacuum pressing, allow low-cost manufacture of parts using natural fibres to replace the more conventional glass-fibre products.
2.6 Conclusions
RRM maintain a strong position in many traditional markets because of superior functionality, cost and consumer preference. The requirements of these markets are factored into commodity markets. RRM activity now seeks to safeguard the position of these materials and to develop new RRM applications. Public RRM policies, in all the countries reviewed, has initially been driven by agricultural arguments. These arguments are now reinforced and largely superseded by environmental, commercial and strategic arguments. RRM policy is increasingly driven by Government ministries other than those responsible for agriculture. Industrial, energy and environmental policy is now directing policy interventions. Government policy is considered more pragmatic with a clear desire to encourage the market to “pull” RRM products into industry in response to a clear market need. Where market signals are insufficient to pull products into commercial applications, intervention is justified if it is in the nation’s perceived strategic interest. The OECD and the European Commission both encourage policy makers to encourage RRM utilisation to support sustainable development policies. The RRM market is seen to be expanding. The OECD report bio-processes using bio-mass as feedstock to be increasingly competitive with conventional chemical routes. Various private-sector institutions are preparing to take advantage of these developments. RRM commercialisation activity is seen across a wide range of applications. Bio-fuel, bio-mass, bio-polymers and bio-composite applications are expected to be of importance to global commodity markets. Local markets and economies will be influenced by a range of relatively small-scale developments. The collective effect of these developments may become of national significance. In the Netherlands, a 2002 review of trends in society, government policy and industry concluded with a matrix of societal motives which encourage RRM adoption (Vellema and de Klerk 2002)5. Citizens require protection, improvement of health and environment and a guarantee of wellbeing for humans, animals and the landscape. Industry is transforming to sustainable entrepreneurship in combination with more efficient production processes and high-quality production.
Governments facilitate innovations by individuals and regulate detrimental effects on humans and the environment. The scientific community conducts RRM research, collaborates in policy development and works with industry to transfer knowledge into industrial processes. These trends can clearly be observed elsewhere across the globe. This combination of consumer interest, industrial enthusiasm, governmental encouragement and scientific support is a powerful combination of factors and ensures RRM utilisation will become increasingly important in a wide range of markets.
24 5 Appendix 1.1 - Country Report - The Netherlands, ATO-DLO, June 2002 3.0 Policy Impacts on Industrial Crop Activity, Sustainable Development and the Rural Economy
3.1 Introduction
An overview of RRM policies in the European Union and North America was provided in Section 2.4. Table 3.1 categorises these policies as economic, fiscal, voluntary, regulatory, information and education, research and development and as other programmes. A similar categorisation is used by the European Environment Agency (EEA) to describe policies and measures which impact on such things as greenhouse gasses (EEA, 2002a).
Economic policies include the provision of financial supports, often in the form of grants and subsidies, to support RRM utilisation, give guaranteed access to markets at preferential rates and provide economic intelligence to support investment decisions.
Fiscal policies involve the use of taxation to change price relativity’s and to encourage changes in buyer behaviour in favour of RRM utilisation. Duty relief on bio-fuels - as practiced in North America and various European countries - have clearly encouraged RRM consumption. Less directly, land-fill taxes encourage the use of compostable RRMs, while carbon taxes encourage bio-energy programmes.
Voluntary programmes support RRM utilisation where regulation is missing to give public good benefits. Codes of practice, with compliance often supported by contractual requirements, encourage adoption. Regulatory programmes legislate for the use of renewable resources in such markets as electricity generation. Information and Education programmes seek to persuade consumers and the wider public of the benefits of RRM utilisation. Research and Development programmes have for the most part, sought to encourage RMM by targeting technical barriers to adoption. Some programmes seek to link industrial chains together to allow market signals to be more clearly felt.
Other programmes cover a very wide range of activities which do not fit easily into any of the above categories. Most are introduced unilaterally by individual states seeking the development of specific industries. German market introduction schemes for example, seek to encourage bio-fuel and bio-lubricant use. US federal procurement programmes aim to encourage a wider utilisation of bio-based materials. Demonstration projects in a range of countries help to establish best practice and show application.
A comprehensive listing of all RRM policies and measures is not included in this report. Country-specific policies are described in Section 3.2. The impact of these policies on RRM activity, sustainability and rural development is described in Section 3.3. Impact in relation to RRM activity is measured where possible by the volume of production, area of crop or number of separate business units. R&D impacts are considered separately in Chapter 4.0. Private sector activity was reviewed in Chapter 2.0. The commercialisation of RRM by the private-sector is considered in Chapter 6.0.
25 Table 3.1 RRM policies and measures - examples by type Type Example
Economic Germany, Denmark, Spain -”feed-in” arrangements for renewable electricity producers Sweden - capital grants for bio-mass plants EU - Set aside legislation giving RRM producers access to area payments France - PRONOVIAL - provision of market and economic information
Fiscal Germany, France, Italy, Austria - tax exemption for bio-diesel Sweden - tax exemption on CO2 and energy taxes Voluntary USA - voluntary labelling programme “USDA Certified Bio-based Product” USA - RRM targets “Technology Road Map to 2020” UK - Code of Practice - Bio-lubricant use in forestry Germany - labelling - Blue Angel
Regulatory Germany - Bio-mass Ordinance 2001, Renewable Energy Sources Act UK - Renewables Obligation Order 2002 Sweden - use of Environmentally Acceptable Hydraulic Fluids (EAHF) in environmentally sensitive areas
Information USA - 2002 Farm Bill, bio-diesel education programme and EU - RRM research networks Education Germany - Kassel Project - test marketing compostable packaging
Research The Netherlands - “Agrification” programme 1985-2000 and EU - Fifth Research Framework - Key Action 5.2. - Sustainable Agriculture Development USA - Bio-Mass R&D Act 2000
Other Germany - Market Introduction Programme for Bio-fuels and Bio-lubricants Germany - Kassel Project - test marketing compostable packaging USA - 2002 Farm Bill, section 9002. “Federal Procurement of Bio-based Product” The Netherlands - Ecological Linking Zones - requiring the use of environmentally friendly products often RRM based
Sustainability impacts are more difficult to measure. Sustainable development is described by the UK Government to involve “a better quality of life for everyone, now and for generations to come” (DEFRA 2002a). Achievement involves social progress, protection of the environment, prudent use of natural resources and maintenance of high and stable levels of economic growth and employment. RRM impacts on sustainability are considered in terms of environmental benefit as measured by the European Environment Agency. Social progress is not measured though some indicators of progress are given by DEFRA. Economic growth and employment issues are considered in terms of RRM activity (Section 3.3) and rural economy impact (Section 3.5).
The impact of RRM policies is inevitably felt in conjunction with a wide range of other pressures. Chapter 2.0 identified the four principle RRM drivers to be agricultural, environmental, strategic and commercial interest (Section 2.4.1). Of these, commercial pressures were thought to have the most profound impact on RRM. Differentiating impact is difficult. Clearly duty relief and renewable resource use orders for energy generation, for example, have had a clear and direct influence on RRM utilisation. Elsewhere, commercial interests are likely to have driven most strongly RRM developments. Public policy will have encouraged interest, at time reduced or removed technical barriers to progress and perhaps provided financial incentives.
26 3.2 National RRM Policies
3.2.1 The Netherlands6
In the Netherlands, government supported the development of industrial crop applications within a policy of “Agrification”. This policy sought to find profitable new industrial cropping opportunities for Dutch agriculture and to push them into markets. Over the 15 years to 2000, the Dutch government is estimated to have spent approx. €82m, (£51.0 m) in support of Agrification. Additional research funding in support of this government programme is estimated to have lifted the total funding of agrification projects to approx. 136m, (£85.0 m).
An important part of this programme was the support given to the Renewable Resource
Division of ATO B.V. Wageningen. This research division reported a turnover of approximately €10.0m in 2001 of which €1.0m was a direct grant from the Agricultural
Ministry. This direct grant underpinned the work of the Division and allowed a further €9.0m to be attracted both from industry and other public funded research programmes. The Renewable Resource Division funding programme is reviewed every 5 years with the latest review having been conducted in June 2002. A number of reports have been commissioned in The Netherlands to support this review. Of importance is:
(i) Factors of Success and Failure of Agrification in the Netherlands, Roekel, G. J. van, and R. Koster, 2000, ATO: Wageningen
(ii) Technology for Health and the Environment. Agenda for durable healthy industrial applications of organic by-products and agricultural raw materials. Vellema. S. and B. de Klerk-Engels. 2002, ATO: Wageningen
The 2000 report showed only 25% of researchers considered the agrification programme to be successful; industry considered the results to be 13% successful; agriculture thought less than 5% of projects were successful. Government was the least impressed with just 1% of programmes considered a success. Certainly “Agrification” is seen as a failure. This policy and its associated programmes have failed to develop any significant industrial crop activity in the Netherlands. Given this position it is unlikely the Ministry of Agriculture can argue for a continuation of the agrification programme in its present form.
The Government has no specific policy towards industrial crops however RRM for science and industry are attracting support from the Ministry of Economic Affairs within their Economy, Ecology, Technology (EET) programme. The EET programme aims to stimulate long-term research and development projects that lead to technological breakthroughs. It combines economic and ecological drivers with fundamental research to achieve the technological breakthroughs that industry can eventually bring to market. ATO, with its considerable knowledge of RRM, is involved in a number of these EET projects.
Industry in general is increasingly interested in using RRM to support their long-term business strategy. Particular interest is shown by the chemical industry and agri-food complexes concerned with the disposal of co-product materials. The chemical industry sees the application of biotechnology as important for their future competitive position.
The Ministry of Agriculture recognises the considerable body of knowledge built up by ATO’s Renewable Division and considers it to have strategic importance. ATO itself considers it critical to have a strong knowledge base if it is to have dialogue with industry and make a contribution to industrial research programmes.
6 Appendix 1.1 - Country Report - The Netherlands, ATO-DLO, June 2002 27 3.2.2 Germany7
The German Federal Government encourages the use of RRM in support of environmental and agricultural policy goals. Federal programmes involve:
(i) basic and applied research (ii) tax relief on bio-fuels (RME) (iii) market introduction aid
Agricultural arguments were considered in 2002 to have remained the most important influence on national RRM policy (Nova Institute, 2002 - Annex 1.2). German Federal elections in the autumn of 2002 were expected to encourage a review of RRM policy and a reduction in the influence of the agricultural lobby. The 1998 election brought in to government a coalition involving the Green Party which put a greater emphasis on the environment. This emphasis may well be strengthened following the 2002 election. Apart from the bio-energy programme, RRM policy has failed in Germany to develop significant industrial activity.
Environmental policy supports Germany’s ratification of the Kyoto protocol and the subsequent adoption of a “National Climate Convention” and a “Strategy for Sustainable Development of the German Federal Government” approved 26/07/00. This strategy clearly included the use of renewable resources. It sought to address the challenges of climate change and the safeguarding of natural resources while maintaining Germany’s competitive position and attraction for innovation, energy investment and job creation.
German Agricultural policy while supporting the overall objectives of the Common Agricultural Policy, with regard to RRM, seeks to develop new non-food markets for the German agricultural industry in order to give better support to farm incomes.
Prior to 1993, RRM research was directed by various government departments. Since 1993, all RRM support activity has been co-ordinated by Fachagentur Nachwachsende Rohstoffe e.V. (FNR) - a research organisation financed by the Federal Ministry of Agriculture to ensure a “practice, problem and result-oriented pooling of activities” in support of renewable resources. Its goals are:
(i) to support a sustainable use of resources and energy (ii) to relieve the environment through the economical use of resources, the development of environmentally friendly products and the reduction of CO2 emissions (iii) to improve the competitiveness of the German agricultural and forestry products industry along the entire value chain
Agricultural interests appear to dominate FNR activity although environmental issues are clearly increasing in importance. FNR co-ordinates RRM research conducted by all of the German research institutes identified as engaged in RRM research. The NOVA Institute identified approximately 80 institutes, most funded or co-funded by government. A review of FNR activity and that of these various institutes is presented in Chapter 4.
Taxation policy. The Federal Government supports the use of bio-diesel (RME) with tax exemptions of €0.4435/litre. This policy has allowed bio-diesel production to increase from 200 tonnes in 1991 to 400,000 tonnes in 2001. Taxation relief is estimated by the NOVA Institute to have cost Germany €230m in lost revenue. This relief is allowing bio-diesel to trade at up to €0.05/litre below conventional mineral oil prices. Consumption is limited only by bio-diesel production capacity.
28 7 Appendix 1.2 - Country Report - Germany, Nova Institute, June 2002 Rapeseed production for bio-diesel is increasing with supplies now being contracted throughout the EU, from the UK for example, where without sufficient tax exemption a bio- diesel market does not exist; and from low-cost, non-EU countries such as Romania.
Commercialisation Support for RRM was introduced in Germany following the 1998 elections. Of particular interest is the “market introduction programme for bio-fuels and bio- lubricants. This programme, with a 3-year budget (2000/01/02) of €23m, will support the purchase of technical equipment and conversion kits for machines, vehicles, and petrol stations to enable the use of bio-fuels and bio-lubricants in existing technologies8. A second market introduction programme for RRM in construction and insulation applications is under consideration.
These market introduction programmes are designed to increase market “pull” forces by reducing or removing barriers in the market. Their affect has been to widen the availability of bio-diesel in Germany and increase market demand for bio-lubricants. They, together with the bio-diesel tax relief, will have encouraged investment in bio-diesel production and distribution capacity and supported realisation of environmental targets set out in the National Climate Convention and the Renewable Energy Law. Unlike tax relief the market will not require these market introduction programmes to support long-term sustainability. As commercialisation supports, they appear effective without creating a dependency.
3.2.3 France9
The French government, like other EU member states, encourages RRM development in support of environmental and agricultural goals as well as its wider industrial policy.
The Ministries of Agriculture, Environment, Industry and Research in collaboration with the French Agency for Energy and Management of the Environment (ADEME) formed in 1994, Agriculture for Chemicals and Energy (AGRICE).
AGRICE’s task is to co-ordinate the funding, monitoring and evaluation of R&D programmes that seek to enhance the value of agricultural products in energy, chemical and material markets. A review of AGRICE activity is presented in Chapter 4.
Initially, AGRICE’s activity in conjunction with that of the French Agricultural Research Agency (INRA), for example, aimed to maximise the use of agricultural land. Particular attention was given to liquid bio-fuels - bio-diesel in particular. When in 2000, its 6-year mandate came under review, the French government re-focused its activity more directly on industry needs and market requirements to encourage market “pull” rather than market “push”. Research support ended for bio-diesel and focused more on bio-molecules, bio- materials and non-vehicular bio-fuels. Emphasis was given to more basic research and market led economic and sociological studies. Since 2000, funding has been spread more evenly across both the Ministry of Agriculture and the Ministry of Environment while ADEME channels in funds from a collection of ministries including, Agriculture, Environment, Industry and Research. Joint funding from industrial partners is increasingly sought.
Legislation and taxation policies that specifically favour RRM, other than for bio-fuels, have not been developed in France. The French government prefers to persuade industry and consumers of the benefits of RRM use within voluntary codes of practice.
3.2.4 The European Union
EU set-aside policies allow crops to be grown on set-aside land if more than 50% of market value was derived from non-food industrial markets. This policy has allowed industrial crop areas to expand within the EU as set-aside was introduced in the early 1990s. EU
8 FNR Reports only the bio-lubricant programme operating in 2003 29 9 Source: Appendix 1.3 - Country Reports - France, SAC/Innovation Management, June 2002 research and development programmes meanwhile have sought to make European agriculture more competitive while reducing CAP costs. Increasing emphasis was given throughout the 1990s to sustainability and competitive supply of RRM (Mangan, 2000). The “fourth” EU research framework, the FAIR programme, targeted the use of biological raw materials from crops, trees and their wastes as RRM for the production of industrial products other than food.
The “fifth” research framework targeted “sustainable agriculture - integrated production and utilisation of biological materials for non-food uses” (Key Action 5.2). An examination of EU research aims clearly shows that the research agenda is moving away from agricultural issues to encompass a more environmental agenda.
The European Commission’s White Paper “European Transport Policy for 2010: time to decide” - Com (2001) 0370 (01), sets out two specific measures to foster the use of alternative fuels for transport. The Commission considered the use of fuels derived from agricultural sources - bio-fuels, as the technology with the greatest potential in the short to medium term. It proposed that an increasing proportion of all diesel and gasoline sold in Member States should be bio-fuel, starting with 2% in 2005 and progressively increasing so as to reach a minimum of 5.75% of fuels sold in 2010. Member States are to be allowed, but not obliged, to reduce excise duties on pure bio-fuels and bio-fuel blended into other fuels, when they are used for heating and/or transportation purposes.
The overall EU aim is to double the share of renewable energy from 6% of total energy demand in 1997 to 12% by 2010 (Com 1197 599).
The EU recently set out their “Sixth Environment Action Programme” to cover the period 2001-2010 entitled “Environment 2010: Our Future Our Choice” Com (2001) 31. This programme (Box 3) explicitly recognises the multi-dimensional nature of environmental issues. Five priority areas of strategic action are proposed, all of which have implications for industrial crops.
(i) improving the implementation of existing legislation
(ii) integrating environmental concerns into other policies
(iii) working closer with the market
(iv) empowering people as private citizens and helping them to change behaviour
(v) taking account of the environment in land use planning and management decisions
The manufacture of chemicals and other products from RRM has been considered by DG Enterprise within a “Renewable Raw Materials” working group. This group quantified the possible reduction in greenhouse gas (GHG) emissions arising from a wider use of RRM materials in manufacturing. While the direct contribution to reducing GHG emissions was modest, estimated at approximately 8m tonnes CO2, indirect reductions associated with product performance improvements were estimated at 30m tonnes CO2. This potential was expected to rise in the medium to long term with the deployment of new and improved bio-technologies.
This working group recognised however, that the wider use of RRM could:
• improve the economic competitiveness of EU industry and agriculture by giving incentives to use the most advanced technologies, including bio-technology
30 • provide social benefits by rejuvenating rural communities through the establishment of local industries and by providing farmers with additional sources of income, thereby securing their jobs
• enhancing further environmental protection by improving soil and water quality
DG Enterprise 2002.
DG Enterprise went on to commission a report “Current Situation and Future Prospects of EU Industry using Renewable Raw Materials” (DG Enterprise 2002). This report reviews the current and future economic performance of selected market sectors. The needs of each of these sectors is assessed and a role outlined for the Commission in meeting these needs to allow the full potential of each sector to be realised with recommendations for action by the EU Commission (Box 2).
3.2.5USA 10
US policy towards RRM or bio-based materials is strongly influenced by:
• the perceived need to support agricultural industries and the wider rural economy by developing new non-food markets for conventional crops and crop products, particularly corn and soybean and unconventional crops for specific, mostly non- food, market applications
• the strategic interest in replacing imported energy sources with home-grown RRM
Of secondary, but growing importance, is the environmental argument for RRM in various applications. The 1996, Federal Agricultural Improvement and Reform Act “The Freedom to Farm Act” removed a number of restrictions on growers and gave them the freedom to grow a range of minor crops, crambe, meadow foam and switch grass mostly for industrial markets and to respond more clearly to market opportunities.
A multi-industry 1998 document “Plant/Crop Based Renewable Resources 2020: A vision to enhance US economic security through renewable plant/crop based resource use” set a target to use plant-derived materials to meet 10% of chemical feedstock by 2020, with development concepts in place to achieve a further increase to 50% by 2050. It is not expected that RRM would completely replace hydrocarbons within a static demand environment, they are, however, expected to meet an ever-increasing portion of an increasing overall level of demand. Importantly fossil fuel consumption is targeted to stabilise at approximately current levels.
This vision document led onto a “Technology Road Map to 2020” published in 2000 with funding from the Department of Energy. This “Road Map” set research priorities for both government and industry to support the realisation of the vision document targets. It focused on four broad categories of activity. Basic plant science, e.g. genetic modification; crop production, to reduce raw material costs; processing to give better separation systems and utilisation, to give for example improved product performance.
Together this vision document and associated “road map” have influenced government thinking. They guide policy makers in the allocation of research funds and set targets for industrial and academic research organisations for the near (0-3 years), medium (2010) and long term (2020). A key outcome is the encouragement it gives to holistic policies and programmes which link across a range of disciplines.
10 Appendix 1.4 - Country Reports - USA 31 During 1999 and 2000, the US government articulated a comprehensive “Bio-energy Initiative” to accelerate the development of technologies for using renewable carbon as a feedstock for the production of power, fuel and products (OECD, 2001). In 1999, the Clinton administration issued an Executive Order (No. 13134) to encourage the development of bio-based products. Its target was to triple the use of bio-based products and bio-energy by 2010 creating $15-20 bn in new income for farmers and the rural economy.
In 2000, the Sustainable Fuels and Chemicals Act established an integrated policy to stimulate R&D. This Act authorised expenditures of $250m over five years on R&D activity. It established a technical advisory committee to provide strategic leadership, advise Federal Agencies and Congress on R&D priorities and encourage co-operation with the Departments of Agriculture and Energy.
Box 3 Environment 2010: Our Future Our Choices
Objectives:
Climate change - a reduction in greenhouse gases to a level that will not cause unnatural variations of the earth’s climate.
The EU aims to support the Kyoto Protocol by reducing greenhouse emissions by 8% by 2008-2012 - when compared with 1990 levels. In the longer term, by 2020 the EU consider it necessary to reduce emissions by 20-40% within effective international agreements.
Nature and bio-diversity - to protect and restore the structure and functioning of natural systems and halt the loss of bio-diversity.
Nature conservation and bio-diversity, for example is to be integrated into commercial and development co-operation policies. Environmental legislation will impact on water and air quality - perhaps in the same way US legislation has encouraged ethanol use in inner cities to improve air quality.
Environment and Health - the achievement of a quality of environment which does not have significant impacts on, or risks to, human health.
Again environmental and health priorities in areas such as water, air, waste and soil. The risk management of new chemicals, banning or limiting use of the most hazardous pesticides.
Management of natural resources and waste - ensuring consumption of renewable and non-renewable resources does not exceed the carrying capacity of the environment.
The aim is to achieve a de-coupling of economic growth from resource use. Waste going to final disposal i.e. not recycled is to be reduced by 20% by 2010 and by 50% in 2050. The European Commission estimate 2 billion tonnes of waste is produced in Member States, rising by 10% per annum (Nicholson, 2001). In the UK, for example, 50% of this is land-filled. Throughout the developed world there is a clear need to reduce, re-use or recycle. The UK Waste Strategy 2000 aims to reduce Commercial and Industrial waste by 15% by 2005.
Environment 2010: Our Future Our Choice: Com (2001)
32 Executive Order 13149, called for a 20% reduction in petroleum products in federal vehicles by 2005. The 2002 Farm Bill gave further encouragement to bio-fuels. Section 9002 “Federal Procurement of bio-based Products” allowed all Federal Agencies to give preference to items “composed of the highest percentage of bio-based products consistent with maintaining a satisfactory level of competition”. Products had to be reasonably available, meet performance standards and be available at a reasonable price. A voluntary labelling programme was established “USDA Certified Bio-based Product” with $6m over six years allowed for product testing.
The Bill also confirmed $75m over six years under the Biomass R&D Act of 2000 for USDA and DoE collaborative programmes. Other 2002 Farm Bill initiatives included:
• grants for the development and construction of bio-refineries
• bio-diesel education programme
• continuation of the bio-energy programme through incentives to enable bio-ethanol and bio-diesel producers to expand production through increasing purchases of agricultural commodities
The Department of Energy’s responsibility is to safeguard the nation’s energy supply. With 60% of US annual petroleum consumption imported and increasing, there is a clear need to reduce import dependency. Research into bio-based products and bio-energy is supported as part of the National Energy Strategy under the Energy Efficiency and Renewable Energy Network (EERE).
3.2.6 Other EU Countries11
Italy and Denmark have both reduced the emphasis they give to RRM development. While agricultural interests in both countries initiated RRM policy, in Denmark the absence of an industrial “champion” or group of “champions”, to maintain interest has allowed RRM policies to decline in importance.
In Italy the emergence of the organic sector diverted agricultural attention away from RRM policy and reduced levels of public funding. However, R&D activity has been maintained by private sector funding from the business community. A number of Italian firms are commercially involved in RRM utilisation and support an active programme of R&D. The presence of key industrial “champions” is clearly important for RRM development. It reflects the now, well recognised, need to “pull” RRM into markets with clear applications in mind.
3.3 Policy Impacts on Industrial Crop Activity
The industrial crops grown on set aside areas in the EU are predominantly oilseed rape and sunflower used mainly for biodiesel production – Table 3.2. Animal fats and waste food oils will also enter bio-diesel markets. A number of specialist crops supplying niche markets have been successfully developed but crop areas remain small (Table 3.3).
In the US, soy oil and corn starch produced from crops grown primarily for animal feed and human consumption are the main RRM feed-stocks in bio-fuel markets. Specific non-fuel industrial crop areas - as in the EU - remain relatively small (Table 3.4).
11 Appendix 1.5 - Country Reports - Italy/Denmark 33 Table 3.2 Areas of Oilseed Rape and Sunflower crops grown for industrial uses on set-aside land in the EU - 2001 (‘000 Hectares)
Member State Oilseed Rape Sunflower 1999 2000 2001 1999 2000 2001 Austria 8 5 5 Belgium/Lux 4 4 3 Denmark 27 24 18 Finland 0 0 0 France 318 310 281 76 66 50 Germany 360 330 317 7 8 10 Italy 3 2 <1 18 14 13 Spain 2 2 2 10 10 10 Sweden 3 4 3 UK + Ireland 128 70 45
TOTAL 852 751 675 111 98 83
Source: European Commission and COCERAL
Table 3.3 Industrial crop areas on set-aside - UK and France - 2001 (Hectares)
Member State Oilseed Rape Sunflower
Oilseed Rape 23052 272084 High Erucic OSR 7249 9420 Linseed 361 1214 Sunflower 49936 Camomile 184 Crambe 499 Valerian 22 Lactuca 11 Hemp 72
Source: DEFRA, European Commission and COCERAL
Table 3.4 Industrial Crop Areas - USA - 2001 (Hectares)
Crop Area
Meadowfoam 3200 Crambe 12,000-20,000 Lesquerella 15 Kenaf 6000
Source: NCAUR
Numerous, mostly small-scale applications are reported in Table 2.1. Other examples are picked out for specific attention in Chapter 5.0. Many of these developments will have been driven by commercial arguments rather than by policy intervention. Economic, fiscal and regulatory policies appear to give the most direct impact. R&D programmes and information and education initiatives are likely to have longer-term impacts unless they can quickly remove specific barriers to progress.
Capital grants, subsidies and “feed-in” arrangements for electricity produced from renewable resources - generally economic policies - have given immediate 34 encouragement to RRM utilisation in Finland, Sweden, Denmark, Germany and Spain (EEA 2002). Fiscal policies favouring bio-fuels have given immediate encouragement to bio-fuel production and consumption in both North America and the European Union. Regulatory policies in the bio-energy field requiring the supply of energy from renewable sources have given direct encouragement to bio-gas in Germany, for example. The German Renewable Energy Sources Act (2000) introduced fixed feed-in tariffs for electricity from renewable sources and actively encouraged investment in bio-mass power generation. The German Bio-mass Information Centre (BIC 2003) reports the commissioning of approximately 1900 bio-mass plants by 2003 as a direct result of this legislation. Power plants are however small averaging 70KW and highly dependent upon local raw material sources (cereals, crop residues and food wastes).
Swedish legislation concerning the use of Environmentally Acceptable Hydraulic Fluids (EAHF) supported bio-lubricant demand in environmentally sensitive areas. Similar, but less pronounced effects have been felt elsewhere with voluntary codes of practices.
R&D programmes, federal procurement programmes, market introduction projects, labelling schemes and other such initiatives all contribute to RRM utilisation. R&D funding can be seen to have at times removed key technical barriers to progress. The development of the bio-polymer PLA by Cargill appears to have progressed when high risk research was supported by the US Department of Commerce (Section 5.5.1). Within the EU, early uncertainties regarding bio-diesel applications were removed within publicly funded research programmes. Where direct economic incentives do not apply or regulation does not force RRM utilisation, the development of RRM markets will inevitably be driven solely by commercial interests.
US Government procurement programmes give clear encouragement to RRM development. German market introduction programmes similarly encourage RRM development in Europe.
3.4 Sustainable Development
Sustainable development is increasingly recognised as a key component of any national and international policy framework. The United Nations Division for Sustainable Development promotes development that “meets the needs of the present without compromising the ability of future generations to meet their own needs”12. National governments elaborate their own sustainability programmes13.
Strategies link social responsibility and environmental protection to economic development. RRM policies can support sustainable programmes of development. Their promotion of renewable resources clearly responds to a widespread public concern with the degradation of the environment, health and safety issues, waste disposal and pollution. Public interest in these issues does not however appear to be as clearly demonstrated as it is with “organic food” for example, perhaps because of the restricted availability of new RRM products.
We previously noted in Section 2.2, consumer interest in many traditional RRM products had remained strong despite the availability of synthetic alternatives. Some of this interest depends on the products renewable credentials. Of most importance is likely to be the products functionality and perceived value for money. Where RRM products have become widely available, in energy, pharmaceutical and cosmetic markets for example, consumer interest has been sufficient to support market growth. RRM benefits from a clear consumer preference. Industrialists note however, consumer interest in green issues rarely translates into price premium. Functionality and value for money are likely to remain key consumer criteria. 12 http://www.un.org/esa/sustdev 35 13 http://www.sustainable-development.gov.uk Industry is increasingly interested in sustainable development (Box 4). Long-term research programmes in both the EU and US, as well as in Japan, Australia and elsewhere, seek to bring into the market technologies that improve industrial sustainability.
The OECD review of bio-technologies found the “application of biotechnology invariably led to a reduction in either operating costs or capital costs or both. It led to more sustainable process, a lowered ecological footprint in the widest sense, by reducing some or all energy use, water use, wastewater or greenhouse gas production” (OECD 2001). Environmental benefits were considered by most decision-makers to be secondary to cost considerations. In most of the situations considered by the OECD the two factors, as with any good “sustainable” system, were however related. A reduction in one component - cost for example, invariably allowed reduction in another - environmental impact (Box 5).
Bio-technologies and the use of RRM are widely recognised to be at the foot of their growth curve. They have yet to prove their full potential in supporting sustainable development. Manufacturing technologies are moving away from synthesis using bio-catalysts and bio- transformations to direct fermentation with metabolic pathway engineering. This engineering will allow for the application of “biosynthesis on a chip” - the deployment of specific systems for specific functions. Low cost raw materials are expected to become available from agricultural and forestry wastes and from cultivated feedstock crops. It is clear bio-technological processes need not be confined to high-value applications - conventionally pharmaceuticals for example, but can also be applied to lower value bulk chemicals such as polymers and bio-fuels.
Box 4 Sustainability
Corporate business activity look for sustainable business practices. They are increasingly assessed by “Triple Bottom Line Reporting” - financial, environmental, and social performance. A company without financial, social and environmentally sensitive trading techniques is considered unable to deliver on a long-term basis.
Robbins, T., Sainsbury (UK), Drivers for Change in Packaging Materials. ACTIN (UK) Workshop 2001 Bio-polymers: Packaging - a new generation.
The OECD picks out Shell’s approach to sustainable development as indicative of what is required:
“Putting sustainable development at the heart of our business has stimulated Shell people to use their ability, experience, imagination and instincts to create real business opportunities”
Paul Skinner MD Royal Dutch Shell Group, June 2002 Sustainable Development - a global business perspective.
“Sustainable development requires us to think about more than just how much money we will make today, but to take a broader view and balance the long term and the short term. We (Shell) place the emphasis on the balance between the short-term and long term, as well as on the integration of economic, environmental and social aspects of our business. For us sustainable development applies to everyday choices we make, like how we dispose of our waste as well as to large regional projects.
36 Box 4 Sustainability (continued)
As you seek to build your business, standing - as it were - on (a) stool, each leg must be in place if you are to build on a sustainable foundation. The truly sustainable development of a society depends on three inseparable factors: the three legged stool.
The first leg is the generation of economic wealth, which companies deliver better than anyone else. The second is environmental improvement, where both government and the company have to play their role. The third leg is social equity. Companies have to play a role here, but the main responsibility rests with civil society as a whole, including government. The balance between these three legs is the key. Excellent environmental performance is meaningless if no wealth is created. Wealth in a destroyed environment is equally senseless. No matter how wealthy, a society fundamentally lacking in social equity cannot be sustained.”
Sir Mark Moody-Stuart 2000. Royal Dutch Shell Chairman, extracted from OECD 2001
Public awareness campaigns supported by robust R&D activity appear to make the most useful contribution to social awareness of RRM opportunities. Product availability at competitive prices will have the biggest impact on social behavior. Economic and fiscal policies which differentiate in favour of RRM products are therefore likely to have the most significant impact in the short-term but may create a dependency on continuing policy intervention. More sustainable are likely to be policies such as the German market introduction programme for renewable resources - for bio-lubricants and bio-fuels - which remove constraints to market development without creating a long-term policy dependency.
The European Environmental Agency have reviewed various RRM applications as part of their analysis of renewable energies (EEA 2002b) and greenhouse gas emission trends (EEA 2002a). Renewable energies, of which bio-fuels form an important part, are expected to reduce carbon intensity14 by 13% over the period 1990 - 2010. Bio-mass developments are making substantial contributions to new generation capacity in a number of EU Member States. Over the period 1993 - 1999, bio-mass generation contributed 60% of new generation capacity in Finland and Sweden. Bio-mass based district heating schemes were important in Austria and Sweden. The EEA expect fiscal and regulatory policies to have the greatest impact on greenhouse gas emissions in the energy sector. Economic instruments are recognised as significant. Voluntary agreements however seem to be preferred by most EU Member States. Research, education and information programmes were predicted to have the least impact on future emissions in the energy supply and use sector.
3.5Rural Economy Impacts
Rural economy impacts are difficult to measure. Commercial developments tend to be localised. Global impacts are felt only on commodity markets when supply / demand balances are effected by increasing RRM consumption. However arguments in support of RRM policy intervention indicating rural development benefits are mis-leading. The use of RRM will not bring universal benefit. Benefit will, for the most part, be point specific.
These benefits can however be significant to local communities. A bio-technology based joint venture between Cargill and Dow for example, has led to the construction of a US $100m plant in Blair, Nebraska (USA) creating 70 new jobs. Numerous other examples
14 Carbon intensity defined as the proportion of CO2 emissions to Total Primary Energy Supply (EEA 2002b) 37 show the value bio-technological investments can bring to local, sometimes rural, communities. Austria clearly recognises the benefits renewable energy schemes bring to regional economies. Structural Funds are used to support many Austrian district heating schemes because of the employment created and safeguarded in rural areas. The German Bio-mass Ordinance was previously reported to have encouraged the construction of 1,900 mostly small, bio-gas plants serving their own local communities. Outside of the renewable energy sector, similar, but less numerous initiatives can be observed bringing local, mostly rural, economic benefit. In the USA, the United Soya Bean Board report15 160 specialist producers of soya products, again mostly small-scale producers. The US Alternative Agricultural Research and Commercialisation (AARC) programme15 claimed to have created 5,000 rural jobs over four years from investments in RRM applications.
Box 5Industrial Uses of Bio-technology
The OECD Task force on Bio-technology for Sustainable Industrial Development believes that:
• bio-technology should be on every industrial agenda
• significant environmental benefits can be realised (from bio-technology)
• industrial sustainability is a key parameter when deciding on process development
• there is an urgent need to reconcile economic, environmental and societal requirements in a sustainable development framework
The 1998, OECD publication “Biotechnology for Clean Industrial Products and Processes” considered the difficulty of measuring the environmental friendliness of bio-technology and highlighted the potential contribution of various management tools.
In 2001, the OECD published a collection of 21 case studies showing the experience of companies that had analysed the potential of bio-technology and then decided to adopt or reject a bio-technological process (Industrial Uses of Bio- technology, OECD 2001). Two major bio-technologies were considered:
• the replacement of fossil fuel raw materials by RRM or “biomass”
• the replacement of a conventional, non-biological process within industry by one based on biological systems such as whole cells or enzymes, used as reagents or catalysts
This report aimed to increase business awareness of bio-technology and its potential contributions to the “triple-bottom line” the required measurement of financial, environmental and societal performance. A process assessment tool, the “Green Index”, is presented to support the decision making process - particularly to show the trade off between economic gain and environmental friendliness associated with the application of bio-technology
38 15 Appendix 1.4 - Country Report - USA 3.6 Conclusions
RRM policies can be categorised as economic, fiscal, voluntary, regulatory, information and education, research and development and as other programmes. This last category includes a wide range of measures which do not easily fit elsewhere.
The impact of RRM policy, particularly that driven by agricultural departments, is widely acknowledged as disappointing. While a significant body of knowledge and a strong skill base has been created in many countries, little RRM based industry has developed up to 2002 - other than in the bio-fuel sector.
Despite this, there is an almost universal recognition of the future significance of RRM based technologies for a wide spectrum of industries. National policies recognise the strategic importance of maintaining national capabilities and protecting their future competitive position in emerging industrial sectors.
Policy, increasingly encouraged by the food and chemical processing sectors in particular, seeks to bring industrial chains together to allow products to be “pulled” efficiently into the market to meet specific needs. Traditional “push” programmes are being discontinued. Where industrial “champions”, who can lead the development of these chains, do not exist (as in Denmark) RRM policy attracts little support. The agricultural lobby is now insufficient by itself to encourage an active programme of RRM development.
RRM utilisation supports sustainable programmes of development which unite social objectives with environmental benefit and economic growth. Consumers are recognised to have a strong interest in green issues and are expected to show a clear preference for renewable materials. Functionality and value for money are the factors which will direct most spending decisions. RRM materials need to become more widely available at competitive prices if they are to be supported by the consumer. Where this occours, as in energy, pharmaceutical and cosmetic markets and increasingly, in bio-packaging applications, demand is sufficient to support market growth. Industry is clearly interested in the development of more sustainable business practices. Some consider a company without sound financial, social and environmental practices to be unable to perform on a long term basis.
RRM utilisation is recognised to bring important environmental benefits and to support economic development. This is particularly so in rural areas. Bio-energy programmes provide an example of where RRM activity, mostly as relatively small-scale developments, can bring benefits to widely dispersed local communities. The accumulative effect of a number of small-scale RRM programmes may well become significant to regional and national economies.
39 40 4.0 Public Sector R&D Strategies in Support of RRM R&D expenditures on RRM programmes are compared across the group of nations targeted by this report. These programmes are described by country to show their impact and approach (Section 4.1). Technology transfer programmes (Section 4.2) and the provision of market and economic information (Section 4.3) are highlighted and described as key components of successful R&D strategies.
4.1 An Overview of Activity
R&D strategies, in support of RRM are developed by a range of government departments. Agricultural departments aim to support rural development and the expansion of profitable RRM land use. Trade and Industry departments support RRM to safeguard industrial competitiveness while Energy departments look to achieve strategic and environmental goals.
Dedicated R&D expenditures on RRM by a number of leading industrial nations are compared in Table 4.1. Additional funding for RRM R&D will, in many countries, be provided by other related programmes from various ministries. Where this involves the support of near market developments, such as pilot plants, R&D results may not become publicly available. Research results are often retained within the host organisation to give competitive advantage.
Table 4.1 Specific RRM R&D expenditures by national governments
Country Expenditure Government Total Annual Average Period RRM Public Expenditure Expenditure Funding €/Year
The Netherlands 1985 - 2000 180m Fl 300m Fl 9.0m (€81.7m) (€136.0m)
France 1994 - 2000 €14.0m €80.0m 13.33m
Germany 1993 - 2001 €250m €31m
USA - USDA 2001/02/03 $492 160m - DoE 2001/02/03 $200 175m
Source: Annex 1 - Country Reports
4.1.1 The Netherlands16
The Dutch have supported the development of industrial crops within their “agrification” policy. This policy clearly aimed to develop new crops and crop applications which would be “pushed” into the market. From circa. 1998 agrification focused on the development of durable and renewable feed-stocks. A total of €136m (£85m) was spent over the 15 years to 2000. An annual average of €9m /year.
Results are widely acknowledged within the Netherlands to have been disappointing. While a great deal of knowledge was accumulated the programme failed to bring into production, on any significant scale, new crops or to create significant new markets for conventional crops. Following an evaluation of R&D activity in 2002, the Ministry of Agriculture, Nature Management and Fisheries (MANMF) will commission new non-food R&D programmes. The focus of this research is expected to be the maintainence of the existing knowledge 16 Appendix 1.1 - Country Report - The Netherlands, ATO-DLO, June 2002 41 base and development of non-food products from co-products of agricultural, food and drink industries. This new four year programme will run from 2002 - 2006 with an expected annual budget for the Renewables Division of ATO of 700,000/year, compared with 1.0m in previous years. Additional RRM funding will be directed through various other national programmes. The changing R&D policy environment is described by ATO in their Country Report (Appendix 1.1). Of importance is the need to find markets for ”redundant” agro- industrial by-products that can no longer find easy access into livestock feed applications. By-product volumes are listed (Appendix 1.1, Table 8) with Rabobank (a large Dutch private bank closely involved with agro-food industries) emphasising the importance of developing non-food (RRM) outlets for these agro-industrial by-products. The Agricultural Ministry is giving this problem priority, with “AKK” funding being applied to find Supply Chain solutions using the considerable body of knowledge on RRM applications.
Bio-based R&D is increasingly funded by the Ministry of Economic Affairs (EZ) within NOVEM and SENTER programmes. EZ is currently investigating the possibilities and strategic benefits of using bio-mass as a feedstock for energy and chemical industry products over the long-term with the Netherlands participating in a “bio-based” economy.
4.1.2 Germany17
Germany has directly supported RRM development through FNR (Section 3.2.2). Over the eight years to 2001, approximately 600 projects were supported by FNR, with public funding of 250m, approximately 31m/year. Currently, over the period 2001 - 2003, FNR has available 26-35m/year to support RRM development. Applied RRM research grants in support of near market technical developments including capital grants for pilot scale production units, are reported to average 70m/year. Market introduction schemes average 10m/year.
FNR objectives are to:
• support a sustainable use of resources and energy. • relieve the environment through the efficient use of resources, development of environmentally friendly products and the reduction of CO2 emissions. • step up and improve the competitiveness of German agriculture and forestry along the whole value added chain including upstream and downstream activities.
Its approach is to ensure a practice, problem and result-orientated pooling of activities for the support of renewable resources18. Additional public funds will have supported RRM research in other public institutions where the “Freedom of Research” principle allowed unrestricted research activity. The NOVA Institute reports very little return to this investment with no significant development of industrial crops other than bio-fuels driven by tax relief.
Bio-energy production is developing as a collection of relatively small units using locally available materials. Fibre production is supported by the demands of the automotive and construction industries. Other RRM applications under development in Germany and supported by FNR include lubricants and hydraulic fluids, cleaning agents, building and insulation material, medicines, paints and lacquers, paper and cardboard and textiles.
4.1.3 France19
The French government formally supported RRM with the formation of AGRICE in 1994 (Section 3.2.3). AGRICE co-ordinates French R&D programmes focused on new and enhanced uses of agricultural products and by-products as energy, chemical and material
17 Appendix 1.2 - Country Reports - Germany 42 18 http://www.fnr.de 19 Appendix 1.3 - Country Reports - France feedstock. Over the six year period 1994 - 2000 AGRICE supported approximately 400 projects with a total value of 80m, averaging 13.33m/yr. Direct funding of these projects by AGRICE totalled 14m (Table 4.1). Additional state funding for these and other RRM projects has been provided by other French programmes.
In 2000 AGRICE was re-commissioned for a further six years with a new charter (Box 6) to support RRM development. Research over the first six years had focused on energy and in particular liquid bio-fuels. Bio-molecules had, however, increased in importance over the period to become the most important area of research, accounting for 46% of cumulative funding. Liquid bio-fuels accounted for 26% of funds, bio-materials 16%, and bio-combustibles (bio-mass) 12%. In its second six-year programme, research is to focus more on the needs of industry and the market with more market research and sociological surveys. Bio-diesel research will almost end with more emphasis being given to sustainable agricultural priorities involving RRM.
Core funding of AGRICE is now balanced more evenly between the Ministries of Agriculture and the Environment. Project funding comes via ADEME from the Ministries of Agriculture, Environment, Industry and Research and is supported by public research bodies (CNRS, IFP, INRA), agricultural professional organisations and industrial partners.
Box 6 AGRICE Charter - 2000
• to promote crop production and chains of activity, via diversification and research/development, seeking new industrial markets for agriculture, in a commitment to sustainable development
• to guide research and development in accordance with market perspectives and product competitiveness
• to bring together, under the auspices of AGRICE, representatives of all sectors with the potential to advance renewable resources
• to strengthen evaluation and forward thinking within AGRICE, relying, notably, on work by thematic study groups
• to offer high quality communication by setting up a centre for economic intelligence on renewable products and the greenhouse effect in liaison with AGRICE.
AGRICE Annual Report 2001
4.1.4 USA20
US research policy towards RRM has traditionally been driven by the need to support the farm based rural economy. Particular effort was made to maximise the value of corn and soya. The USDA is now, however, emphasising safety in food processing and handling and the replacement of imported fossil fuels for energy and chemical feedstock.
The Agricultural Research Service (ARS) within the USDA manages bio-based research at four centres spread throughout the US. Research budgets for bio-based products and bio- energy programmes over three years 2001 - 2003 total $292m with a further $200m allocated to bio-energy incentive payments. Together, these budgets average $160m/year, approximately €160m/yr (Table 4.1).
20 Appendix 1.4 - Country Reports - USA 43 The Department of Energy (DOE) also funds RRM research. Its overall aim is to safeguard the nation’s energy supply. It is seen as important to reduce import dependency, replacing imports with bio-based products (RRM). Following internal reorganisation, research is moving away from feedstock to give greater emphasis to conversion technologies based on corn, wheat straw and oilseed crops. Demonstration projects involving switch grass are also supported. Total DoE funding of RRM will average $175/year over the three years to 2003, slightly more than USDA expenditure on RRM.
4.2 Technology Transfer Policies Technology Transfer is positively encouraged in all the countries reviewed using a variety of mechanisms (Table 4.2). These mechanisms aim to encourage the movement of RRM technologies into commercial applications. Intellectual Property Rights (IPR) are protected to varying degrees. EU research programmes give particular attention to the attribution of IPR to research teams while encouraging the transfer of technology to industry. In the USA, IPR rights appear less tightly controlled by researchers with access by industry encouraged.
Table 4.2 Policy interventions to improve competitiveness in the market place.
Mechanism Example
Tax breaks in favour of the end product Most EU - Removal of duty on bio-diesel USA - Reduced duty on Bio-ethanol
Crop production support EU - Growing of industrial crops on set aside (with the proviso that the non-food component is at least 50% of the value)
Purchasing incentives by Government USA - 2002 Farm Bill directive departments
Environmental legislation which favours USA - Clean Air Act - bioethanol the use of RRM UK - NETA’s for electricity generation
Environmental legislation and support Germany - composting laws favouring schemes which encourage the production bio-degradables of RRM EU - CO2 taxes. Legislation in favour of RRM in specific Germany - Motor industry - renewables industry sector and recyclable directives
Labelling schemes in favour of RRM Germany - Blue angel label for lubricants
While many of the mechanisms described in Table 4.2 do not favour specific products, without such interventions many successful RRM applications would not have been commercialised.
It is clear that bio-diesel in the EU, bio-ethanol in the USA and fibre board products for the motor car industry in Germany owe their success to policy interventions.
Public sector research managers and business managers jointly feel technology transfer can be improved. Various national programmes are compared.
44 4.2.1 The Netherlands
The Dutch support new RRM activity by encouraging product developments in line with the country’s strategic needs. Although there is no specific policy towards industrial crop development it is clear that agricultural waste disposal is an important issue. Through ATO a number of projects based on optimising the use of crop and animal wastes have been funded.
A particularly good example of where limited Government support can prove successful has been the development of a bio-polymer from potato peelings by Rodenburg Polymers (Box 8). Although public sector support for R&D started late, it is recognised that in order to maintain competitive advantage the company will need further public funding to sustain its product innovation capability.
4.2.2 Germany
The majority of German research centres working in RRM field are Government funded. A large number are orientated towards specific industries: fibres, bio-plastics etc. Consequently there is strong Federal Government support to bring forward commercial products and processes. FNR, the key German agency co-ordinating RRM R&D, does not take a financial interest in any new product venture.
A novel approach to help speed up the commercial development of RRM has been instigated with the Kassel project (Box 7).
Box 7 Kassel project: Test Marketing of Compostable Packaging Project duration: Spring 2001 to end 2002 Location: Kassel. Population 200,000, 200 km north of Frankfurt Objective of the project: To test market biodegradable plastic products manufactured from, for example, corn starch. Products: Consumer items such as shopping bags, fruit and vegetable trays, butter wrapping film, flower and gift wrappers etc. Distribution: 80 normal retail outlets Disposal: The Biobins - standard (already in use) disposal bins for compostable materials Branding: A specific logo printed on all items Communication: Media campaign explaining benefits and disposal method Evaluation of consumer Initial survey from 600 consumers 61% awareness, reaction: 80% of purchasers will purchase again Scientific measurement: Bauhaus University are checking for any misplaced plastics in the bio-bins - results are encouraging. Composting performance of bioplastics are being checked. Funding: Ministry of Agriculture (FNR), National bio-polymer companies
45 4.2.3 France
The French Government focuses its efforts to bring RRM products to the market through the agency AGRICE. This organisation, 40% funded by the Ministries of Agriculture, Environment and Industry and by private-sector contributions, is essentially a research management and communication agency, which selects, funds and monitors projects. For the most part, product developments coming out of AGRICE managed work have been in niche markets. AGRICE’s emphasis is increasingly market-orientated with market-size a key factor in deciding priorities. Although a more commercial focus on AGRICE’s programmes is developing, based on economic intelligence from, for example PRONOVIAL, it is left to the private sector to find the way forward with new products. There is no Government mechanism to take a financial stake in new ventures. The producer organisations, Unigrains and ONIDOL, take on this role.
AGRICE, in an attempt to improve public and industry awareness of RRM opportunities has published case study examples of eleven RRM products. INRA, although primarily active in long term research, encourage technology transfer and pilot scale production at their research centres.
In practice, apart from bio-diesel, there are few examples in France of new RRM products being commercialised. The one area, which is relatively buoyant, is in the development of RRM for the cosmetics market.
4.2.4 USA
US government RRM research has generally been quite separate to private sector research programmes. However, closer co-operation is now being encouraged. The DOE in particular, is part funding major projects with industry with the aim of speeding up product and process introductions. The research centres managed by USDA are also being encouraged to step up collaborative agreements with CRADA (Appendix 1.4 - Country Reports - USA).
Box 8 Solyanyl - mouldable plastic - Rodenburg Biopolymers
Company background: Core business - potato processing for fast food and frozen food markets
Project driver: Need to find new outlets for potato peelings with the of demise the pig industry
1997 Rodenburg funded research at ATO to consider development of extrudable polymers
2001 Formation of Rodenburg Biopolymers
Government support Only recent - R&D support through NOVEM, and tax breaks for R&D staff
Markets Solyanyl plastic aimed at horticultural markets etc. plant pots. Price competitive with synthetic plastics
Production Dutch plant commissioned - International development planned
46 In general the mechanisms for transfer of intellectual property from a US Government Department to a private company is quite favourable for the company. There does not appear to be the sort of limitation that occurs within EU funded research programmes. Technology transfer agreements are drafted to avoid innovation stagnation. Encouragement is given to companies to demonstrate that if they are unable to develop a new technology they have the capability of organising onward licensing arrangements. Furthermore if a company does not progress the innovation the Government research department can ask for the agreement to be terminated and wider access given to the technology.
Both the DoE and the Department of Commerce will support new product development at a late stage in the development cycle, to overcome for example, scaling up problems in manufacture. There is a recognition, particularly within the USDA, that faster-track product development and a reduced risk of failure with new products and processes is necessary. The Alternative Agricultural Research and Commercialisation programme (AARC) first introduced by the USDA in 1991 (Box 9) and now closed, provided useful experience of technology transfer.
Box 9 USDA Alternative Agricultural Research and Commercialisation (AARC) programme
1990 New Uses Council formed
1991 AARC founded
Role Venture capital organisation aiming to bring new biobased products to the market. Board members from USDA and industry
Product areas Wide and numerous - from new crops, oils and starch by products
Funding $28 million in first four years, leverage for another $112 million
Products Mainly low tech - composite boards etc
1996 USDA assumed total control
2000 Funding discontinued
Possible limitations: Too many projects, poor business management, mainly low tech niche products with limited payback, insufficient funds
4.3 Provision of Market and Economic Information
Government departments take into account market opportunity and potential product economics in a wide variety of ways when deciding on research and development priorities. Most policy and research managers recognise that the linkage between market awareness, economics and scientific researchers needs to be improved. Many, however, do not have systems in place that create this linkage.
There is a view that creative scientists should not be too constrained by short-term economics or market factors. This appears to be an influencing factor with INRA in France, FNR in Germany and to some extent within the USDA. The term “serendipity” is often 47 referred to. The expectation is that unexpected discoveries coming out of targeted research may prove as valuable as the original target.
This attitude has however led to the widespread “push” of RRM into the market place by a science dominated research agenda. This “push” programme is widely regarded to have failed, as most pushed RRM products are unable to meet market requirements.
In contrast, an economic goal can prove to be the main aim of research. This is certainly the case with research programmes on the conversion of bio-mass to ethanol in Canada and the USA. The target is to reduce manufacturing costs of bio-ethanol so that it can compete or be close to competing with fossil derived petrol (Appendix 1.4 - Country Report - USA).
More emphasis is being given to the “pull” approach in many research programmes. Where a “pull” approach is adopted the aim of the research is to meet a clearly defined need in the market. The need may be strategic such as identified by the DoE in the USA where the aim is to reduce the dependence on imported energy. “Pull” programmes can also be developed where more specific consumer needs are called for, such as natural cosmetics or bio-degradable plastics.
The need for clear economic and market intelligence is emerging as an important issue. For Governments this helps rationalise overall strategic policies and gives confidence to funding decisions.
The EC funded “EuroRicin” project is an example of how insufficient market information can lead to wasted R&D effort. This programme aimed to produce a castor oil replacement with fatty acids from rapeseed within a plant-breeding programme. Although most of the technical problems were met, by the time the research programme had been completed the world price of castor oil had weakened dramatically, removing market interest in an alternative source.
In the USA, and particularly in the USDA, economic and market studies are provided at a strategic level through the Economic Research Service (ERS). This agency, up until 1997, published an annual review of progress on industrial crop developments mainly from the agricultural point of view. The Agricultural Research Service (ARS) of the USDA is not mandated to hire economists. Some research stations may have access to services of costing engineers while economic studies are built with assistance from Universities. Otherwise, the USDA research management relies on company collaborators to provide economic and market information. The United Soybean Board, in contrast, seems to be particularly strong in providing market information.
In France, the recent formation of the economic and market studies group PRONOVIAL, has come about through initiatives from regional government and AGRICE (Appendix 1.2 - Country Report - France). Established in 2001, PRONOVIAL provides market and economic information on industrial crop products.
In Germany, the main Government organisation driving industrial crop products, the FNR, is primarily a project management and promotional agency. The same applies to regional organisations such as CARMEN. Specific economic and market studies appear to be supplied by independent, private-sector management consultancies.
The Netherlands has a reputation for the close, economically viable management of Government funded research. ATO-DLO applies a fully integrated approach to its research, bringing together not only the agrotechnology and environmental factors but also economic, socio-economic and consumer acceptance studies. The latter may involve the LEI-DLO, Economic Research Institute. 48 The Dutch Ministry of Economic Affairs manages a number of research and feasibility programmes through agencies such as NOVEM (Appendix 1.1 - Country Report - Netherlands). Integral to the management of these programmes is that new product developments show significant market potential. Agencies such as NOVEM are therefore well equipped and staffed to evaluate markets and measure economic viability.
4.4 Conclusions
R&D activity in all the countries reviewed is substantial and has been sustained over a considerable period of time. In some countries (France, Germany) R&D activity is managed by a specific organisation established to co-ordinate RRM activity. In other countries, publicly funded R&D is commissioned directly by government departments within specific programmes.
RRM R&D activity has recently been formally reviewed and redirected to give a more market orientated approach in France and the Netherlands. Elsewhere, a less formal review process also appear to be redirecting R&D activity more to the needs of the market. Fundamental research in all countries continues to support the longer-term development of RRM applications and to give a clear understanding of RRM opportunities.
The need to more closely involve market participants in R&D programmes is clearly recognised. The effective transfer of technology into the private sector is increasingly supported as is the provision of market and economic intelligence. Technology transfer is supported by a range of measures. Of importance are the market introduction and test marketing programmes in Germany and the insistence IPR is made available to those who can best use it in the US.
Market and economic information is now specifically provided in France by PRONOVIAL. In other countries, the requirement for market information is being tied into research programmes. All countries agree R&D needs to support the market to “pull” RRM into applications rather than “push” these materials into the market.
49 50 5.0 Private Sector Strategies that Support the Commercialisation of RRM Private sector RRM activity is first described in realtion to the RRM supply chain (Section 5.1). The involvement of chain members in RRM development has been clearly recognised as critically important by R&D programmes if RRM applications are to be successfully commercialised. RRM case studies are reviewed in Section 5.2 to identify product development strategies, factors effecting success and failure (Section 5.3) and dependence on public support (Section 5.4). New and emerging RRM developments are reviewed in Section 5.5 to give examples of important future RRM applications Producer organisations are seen in several countries to have had a key role in developing RRM applications. This role is reviewed in Section 5.6. The concluding section draws out characteristics of successful RRM commercialisation strategies.
5.1 The Supply Chain
The supply chain for the manufacture and marketing of industrial crop products can be described as: Traditional Stage Value Chain Technologies Modern Technologies I Farmer/Contract Plant breeding Crop Genetics Grower Plant Geonomics Livestock producer Crushing Retting Novel Bio-Systems II Primary Processor Fermentation/ Genetic Material Primary Products Distilling GM Enzymes Co-products Physical and chemical process Novel Catalysts III Intermediate Fermentation Manufacturer Extrusion Engineering Blending Moulding Separation systems Waste Technologies - composting - re-cycling IV Finished Product - combustion Manufacturer
V Consumers
More than one company may be involved in the chain. Large chemical groups are likely to be fully integrated covering stages III and IV. With specialised products the same company may be involved in growing, processing and refining the product. i.e. stages I, II and III. Generally, it is the companies closest to the market, those in stage IV, that are in the strongest position to exploit the consumer benefits of the industrial product based on: functionality, cost or environmental characteristics such as bio-degradability; due to their knowledge of the market environment. Grower organisations (stage 1) and processing companies (stage II) have a strong incentive to maximise the utilisation of crops and crop products. These organisations are however, invariably dependent on the
51 innovation and marketing skills of down-stream companies in stage III and beyond. Chapter 2 recognised that the most important driver to RRM adoption is industrial need. Downstream consumers were considered to be interested in functionality. De Graff and Kolster (1998), in their review of industrial proteins, identified processing and performance as key industrial parameters. Bio-degradability was important for many, but not a key driver. Bio-polymers needed to be processable on the same equipment, show equally good performance and have an acceptable price.
One of the most important factors, therefore, in achieving successful commercial development of industrial crop products is to have a well co-ordinated supply chain within which all parties can profitably benefit. The AKK programme - “Agro-chain management knowledge”, managed by the Ministry of Agriculture of the Netherlands seeks to bring together production and delivery chains for new and innovative products of agriculture. The 2002 programme “Duurzame Agro Food Ketens” aims to find solutions to waste product and co-product disposal by the agricultural, food and drinks industry. The programme will seek agro-industrial solutions through chain optimisation or the creation of new production chains. The programme does not seek to develop new technologies but to utilise existing technological knowledge (Appendix 1.1 - Country Reports - The Netherlands).
5.2 Private Sector Activities
Company strategies were reviewed to identify the driving force behind R&D and marketing strategies, their relationship with government or public support mechanisms and determinations of success and/or failure. Information was obtained through interviews with company managers, particularly in the UK, with Producer Group and Trade Associations and, internationally, by web searches and literature reviews.
The pan-European network organisation INFORRM, under the supervision of ACTIN, has been charged with completing a case study report on twelve RRM companies in the EU. The findings from the first five company case studies have been made available for this report. Additional case studies have been drawn from the OECD review of Industrial Bio- technology (OECD 2001). A listing of the main private sector organisations found to be involved in RRM development is presented in Table 5.1.
52 Table 5.1. Companies active in the manufacture of RRM
Note: With large companies, sales of RRM are generally small in comparison with the total business. Many of the smaller companies however, only market RRM. Details of many of these companies and others are included in Appendix 2.
A number of company case studies have been developed. These are based on interviews (Appendix 2) and literature review (OECD 2001, INFORRM 2002).
53 Table 5.2 Case studies of private-sector RRM activity
Many of the companies are relatively small. Fuchs and Coates Lorrileux are UK subsidiaries of international companies. In the US, a wide range of often small companies market products based on soya oil or soya protein (Appendix 1.4 - Country Report - USA). Approximately 160 companies are listed by the United Soybean Board as marketing adhesives, inks, carpet backing, composites and other soy-based products. Multinationals - Cargill, ADM in the US and National Starch & Chemical and Eridania Beghin Say (Novamont) in Europe, for example, are fully integrated and involved in the marketing of finished products such as bio-fuels and bio-plastics. Generally these products only represent a minor part of a multinationals’ total sales.
5.3 Key Success Factors
A review of the impact of “agrification” in the Netherlands concluded with an analysis of the factors contributing to success and failure in the development of RRM applications (van Roekel and Koster, 2000)21. This analysis is repeated below.
(i) Market demand, competition and specific demands for renewable products are the most important factors determining success or failure of agrification (RRM) initiatives. Bio-degradability, renewability and sustainability are by themselves not enough to sell a product unless this provides specific functional advantages that are required (ii) The market does not develop by itself; the market has to be created. All successful projects have been initiated and executed by parties who create and directly serve the market
54 21 Appendix 1.1 - Country Reports - The Netherlands (iii) For a successful introduction of a product based on renewable resources the party serving the market has to take the lead (iv) Regulations obstruct successful “agrification”. Newly developed products have much difficulty penetrating the market because regulations are made for existing synthetic products and do not allow for alternatives. Few regulations promote renewable resources and products (v) The availability of processing technology is an important requirement for success. Development of suitable technology and infrastructure has been important in any successful development. Where this is absent it is an important reason for failure (vi) Many successful initiatives have been spin-offs from existing agri-food production chains. Setting up entirely new agri-production chains has proven to be difficult (vii) In the Netherlands, the price of domestic RRM is often uncompetitive with imported material
This Dutch research clearly emphasises the need for the market to “pull” RRM into applications in response to a clear need. Those closest to the market appear best able to achieve this. Experience shows RRM developments utilising familiar technology and/or raw materials in familiar markets are most likely to succeed. Risk was found to increase significantly every time new products, technologies or markets were introduced. Government is implicitly required to reduce regulatory barriers to RRM adoption.
INFORRM categorised their RRM case studies in terms of their strengths and weaknesses. This approach is repeated here using information from all of the case study material.
5.3.1 Strengths
While no single factor can be identified which makes a company successful in developing and marketing RRM, various factors are clearly important:
Surplus Raw Material
Where there is a vital need to find new markets for by-products or otherwise unwanted crop material, there are several examples where this agricultural “Push” driver has resulted in success. This has certainly been the case with companies marketing soya bean oil based products in the USA22.
A more specific example is Rodenburg in the Netherlands (Box 8). Rodenburg’s core activity has been the processing of potatoes, and potato peelings for animal feed, particularly pig feed. The rapid decline of the pig production industry in the Netherlands, a consequence of environmental pollution problems, and changes in feeding practices, created a threat to Rodenburg’s future. With some vision, the management decided to invest in R&D, together with help from ATO, towards developing bioplastics based on peelings. The extruded plastic, Solanyl, is now being marketed for applications such as plastic plant pots.
Emerging Market opportunities due to legislative developments
New market opportunities can be created by changes in environmental legislation and this can create new company activities and even new companies. The policy decision to support the bio-diesel market in the EU has created new businesses and in some cases new companies, for example Novance in France and Oelmuhle Leer Connemann GmbH in Germany. Companies such as Rix Biodiesel are now responding to a changed situation
22 Appendix 1.4 - Country Report - USA 55 in the UK. In the USA the combination of the Clean Air Act and the tax break for fuel ethanol has spawned new ethanol producing companies.
Similarly, the German directive that motor car components have to be made from either recyclable or renewable materials has created new business opportunities for plant fibre based composites, for example Faurecia Interior Systems and Johnson Controls Interiors.
Product performance
Products most likely to be marketed successfully are those which offer specific functional benefits compared with the competitive equivalents derived from fossil fuel sources. Most companies’ products are based on relatively low technology processes and many have based their business around a single crop derived product or product group such as soybean oil, kenaf, flax etc. It is the intrinsic property of the material that imparts the functionality. This is not the case with companies such as Fuchs, Coates Lorrilleux or Rix who source materials from commodity markets and where the process is crucial to the functionality.
Commitment from personnel
A number of people have cited the presence of a product champion within the organisation as a key factor for success. This factor is important with both large and small organisations. Managers in AGRICE in France commented that the more successful and sustainable business ideas were where the inventor, or originator of the idea, had persevered long enough to promote the product and to gain internal and external support for it. Even major international development projects such as PLA with Cargill Dow survived because a single scientist or scientific team maintained their belief in the product concept.
5.3.2 Weaknesses
Key barriers to success or reasons for commercial failure were highlighted in the INFORRM study.
Cost of manufacture
The most important factor common to many RRM businesses is the relatively high raw material or manufacturing costs compared with non-renewable materials. Consequently, the absence of tax incentives (or other mechanisms) which narrow product price differentials are a weakness and remain a barrier to successful market entry. Companies such as Fuchs, Coates Lorrilleux, Trenal or Appia rely on market knowledge and influence to obtain competitive material costs.
Unreliable raw material supply chain
There is also a perceived lack of security of supply due to changes in agricultural policy or changes in cropping by farmers. A long supply chain with little integration between raw material supply and finished product can also be a disadvantage when compared with that for the fossil fuel derived chemical industry. Where there is better integration then the chances of success will be greater. Rodenburg, Flachshaus and Bical are intimately concerned with the production of the basic raw material as well as the marketing of the finished product.
Poor market acceptance
Lack of both market acceptance and awareness by industry and the public of the benefits of renewable or biodegradable products remain a significant barrier to entry. Fuchs find 56 this to be the main barrier in marketing lubricants in the UK. Acceptance and awareness in Germany and Canada are much higher.
Financial status of the company
Lack of sustained financial resources is often a limitation particularly with start up companies. The INFORRM case studies confirmed that the most financially vulnerable stage of any new development was at the business development stage, after pilot scale production or limited marketing. Scaling up production and widespread marketing require considerable financial resources. Any delays in customer acceptance, the need to modify product features, or changes in the market environment can quickly lead to a loss of confidence from financial backers. It is during this stage that most projects and products fail. Generally those companies already well established in the market place, marketing mineral oil based products, have sufficient financial resilience and market knowledge and are better able to survive external influences and to react to the arrival of new competitors.
Competitor response
The important threats or risks associated with the commercial introduction of renewable products is the real, or perceived, competitive response from non-renewable product companies based on product improvements or price reaction. Even where a crop-based product can offer technical benefits there are risks that non-renewable, synthetic products can ultimately be developed to give the same performance.
Difficulty in responding to market forces
Companies that are primarily intermediate manufacturers rely on the economies of scale plus their production and supply infrastructure to maintain competitive advantage. They are however vulnerable to external market price variations with consequent risk to margins. Starch companies supply the established non-food markets, paper, adhesives etc, with modified starch. They operate from large plants and generally are not looking to change processes. Nonetheless a few companies, e.g. National Starch, see opportunities from the development of added value products such as bio-plastics.
5.4 The Role of Government in Commercial Developments.
It appears that only a few of the smaller companies have emerged from or benefited from Government funded research initiatives in the UK. Rodenburg is a good example where R&D support from the Dutch Government, relatively late in the development stage, helped bring product to market. Executives from Potatopak, a UK based biopolymer company, appeared to be unaware of existing UK Government support schemes. Discussions with DTI were however commencing. Fuchs, a world leader in bio-lubricants, had not taken advantage of any R&D support scheme in the UK. Some companies have however taken advantage of Government support schemes for capital investment.
The INFORRM project concluded that while there is no set blueprint to ensure success for industrial crop products the role of Government is important. Governments should minimise risk, give support through market entry schemes and help generate momentum - particularly when there is a product champion.
Dutch RRM specialists expect government to influence RRM adoption by encouraging procurement by public bodies, providing public information and supporting the promotion of RRM products23. Pre-competitive research, demonstration projects and the development of a knowledgeable research community is valuable. Changes in regulation and codes of practice need to be encouraged.
23 Appendix 1.1 - Country Reports - The Netherlands 57 5.5 New and Emerging Major Product Developments
In recent years (2000/01/02) a number of significant RRM developments have been announced. Most involve bio-plastic materials. These developments24 have for the most part come from the application of improved industrial enzymes in fermentation processes. Most are coming out of US based multinationals. Products offer novel functional properties. There is every indication that in the near future, crop derived products will play an increasing role in international industrial and consumer markets.
5.5.1 Cargill Dow - NatureWorks™ Polylactide (PLA) bio-polymers
This is the most advanced and significant development so far. It is the first time that a company has been able to offer a family of polymers derived entirely from annually renewable resources. The project started in 1988 with a small group of scientists at Cargill’s facility in Minnesota looking for added value outlets for starch. The technologies involve conversion of lactic acid (derived from corn dextrose) to lactide followed by purification and polymerisation. The fermentation process does not rely on a GM enzyme. PLA polymers have potential in packaging and for common consumer items, clothing, furnishings etc. and future potential uses include blow moulding for bottles. The cost of material is comparable with synthetic plastics used for the same applications, however, PLA is biodegradable.
Cargill built a 4,000 tonne pilot plant in 1994. There was recognition that to develop a polymer internationally the company needed to establish a relationship with a company that had the appropriate size, reputation and market knowledge. In 1997, a 50/50 joint venture was launched with Dow. It is unlikely that Cargill or Dow would have progressed the project separately. A new 140,000 tonne capacity plant came on stream in 2001, based at Blair, Nebraska, chosen because of access to low price feedstocks (maize). Cargill Dow have also opened an office in the Netherlands in readiness for developing the European market based on European feedstock.
US Government, Department of Commerce - Advanced Technology Program, R&D support has been considerable. Early in the life of the project Cargill received $2 million assistance to overcome crystallisation problems. Since then Cargill Dow have received several grants from the DoE including $1m for material science and $6-7m for improved fermentation technology.
Cargill Dow are also looking at life cycle assessments of PLA with the aim of minimising the environmental impact. This includes composting methods and even improved methods of corn production and total crop utilisation. Alternative feedstocks other than dextrose e.g. Pentoses, are being considered.
5.5.2 Du Pont /Tate and Lyle - Sorono® polyester type fibre
In this case the initiative started with the polymer company Du Pont - in partnership with Tate and Lyle Citric Acid and the enzyme company Genencor. They developed a fermentation route, using a GM enzyme to produce 1,3-propandiol. The finished Sorono polymer is marketed by Du Pont. It is produced chemically by reacting the 1,3-propandiol with terepthalate. In the case of Sorono therefore, although renewable feedstock e.g. corn dextrose, is used the end product still relies on a chemical conversion step. Commercial production is scheduled for 2003. In principle this type of polymer could replace up to half fossil derived polymers.
5.5.3 Du Pont/Roquette - isosorbide, bio-based monomer
The manufacture of isosorbide is based on the conversion of sorbitol produced from starch through fermentation. Again there is collaboration between a US polymer company and, 58 24 Information on these developments has been obtained from interviews in the USA and Europe, papers given at the 2002 Green Tech conference and from the OECD report, Application of Biotechnology to Industrial Sustainability, 2001 in this case, a European wheat starch company. The diol, isosorbide, can be used as a substitute for other fossil oil derived diols such as ethylene glycol. The isosorbide is used in the manufacture of Polyethylene Isosorbide Terepthalate (PEIT). It demonstrates improved thermal stability properties compared with PET. This will give the polymer advantages for hot filling bottles and containers. Prospects for using PEIT for beer bottles without allowing gas to permeate through the bottle walls look promising.
5.5.4 Iogen (Canada)/Shell - bio-mass to ethanol process
Iogen is Canada’s largest industrial enzyme company supplying food, paper pulp and animal feed markets. Work on cellulose to ethanol enzyme conversion processes has been underway since the 1980s. The process is based on the conversion of wheat straw using enzymes derived from Trichoderma reesii. Pilot scale production plants were built in the 1980s and 1990s. Investment from PetroCanada helped build a C$30 million commercial validation plant in Ottawa, which came on stream in 2001. Support from the Canadian Government’s Technology Partnerships Canada/Climate Change Action Fund, has amounted to C$10 million as the company aims to prove the potential of the process in converting agricultural wastes; wheat straw, corn stover etc. as well as forest wastes and possibly new energy crops. In 2002, Shell took a controlling interest in Iogen and plans for the introduction of the technology into the UK brought under consideration.
5.5.5 Metabolix/Monsanto - Biopol® polyhydroxybutyrate - bio-degradable plastic
Based on developments in the mid 1990s at the University of Durham (UK), Zeneca (formerly ICI) commenced commercial development of the fermentation process production of polyhydroxybutyrate (PHB), using a naturally occurring bacterium, Ralstonia eutropha. PHB, marketed as Biopol, is a totally biodegradable plastic but high production costs limit its uses to specialist medical and specific packaging markets. In 1999, Monsanto, having acquired the technology from Zeneca explored the opportunity of transferring genes from the Ralstonia spp to the growing plant. The objective was to increase yield and lower production costs. The company successfully transferred the gene to cress plants but shelved the project before a successful transfer to the target crop, rapeseed, was achieved.
In 2001, Metabolix, a Massachusetts based company, acquired the rights to the technology from Monsanto. Metabolix has received R&D grants from the DoE. Work on PHB is also continuing at Durham University and at the University of Lausanne.
5.5.6 Genetically modified crops
Although the prime focus in the development of genetically modified crops, so far, has been with crops for food production, all biotechnology companies involved have stated their intention of, and in some cases have started, to commit resources to the development of modified crops for the production of new and novel industrial products. Aventis (Bayer), BASF, Dow, Du Pont, Monsanto and Syngenta are all working in the field. Research is targeting oilseed crops, wheat and corn. While acceptance of GM food crops in Europe is far from certain there may be a more ready acceptance towards crops which deliver novel materials such as pharmaceutical products or bio-degradable plastics.
5.6 The Role of Producer Organisations
In several countries the need to enhance the rural economy and to support the farming industry provides the impetus for the commercial development of industrial crop or bio- based products. Levy boards may play a key role in determining research policy, funding research and development activities and in some cases helping to finance commercial
59 developments. It is clear that the approach of levy boards to RRM varies considerably from country to country. The most proactive role is adopted in France where the producer group organisations Unigrains and Onidol are effectively venture capital organisations which take a financial stake in new ventures.
The example of the United Soybean Board in the USA is interesting. A small team manage project funding but also provide technical and market information and supplier details to potential customers and collaborators. Levy board activity is reviewed below:
Table 5.3 Levy Board RRM activity - by country
60 Table 5.3 Levy Board RRM activity - by country (continued)
5.7 Conclusions
Companies closest to the consumer of RRM products find themselves best placed to exploit RRM markets because of their knowledge of product benefits, consumer expectations and the competitive environment. While growers and grower organisations have a strong incentive to develop RRM applications, they are not generally able to exploit their market potential, needing the innovative technical and marketing skills of organisations further down-stream.
A key requirement for the successful commercialisation of RRM products is therefore identified as a well coordinated supply chain well connected to the final consumer. National R&D programmes which recognise this are likely to be most successful in bringing RRM product to market. Research in The Netherlands emphasises the need for the market to “pull” RRM into applications in response to a clear need.
No single factor is seen to explain RRM adoption. Market demand is always important. Biodegradability, renewability and sustainability are not sufficient by themselves to guarantee market access. Functionality and competitivity are of key importance. Unreliable supply chains, poor market acceptance, internal financial constraints to scaling- up and competitor reaction all contribute to failure to successfully commercialise RRM applications.
Government intervention is often required to reduce risk, give support via market entry schemes and help generate momentum. Producer Groups, though generally not close to RRM consumers, can influence RRM adoption by consistently pushing the product into the market, supporting product awareness campaigns and supplying venture capital to support commercialisation.
61 62 6.0 UK RRM Activity
6.1 Overview of UK Position
UK Government strategy towards RRM was clearly articulated in the 1994 MAFF consultative document “Alternative Crops New Markets”. In this document MAFF committed itself with the creation of an “Alternative Crops Unit” to assist the development of alternative crops and new uses. Government policy aimed “to encourage developments which will bring particular benefit to the UK economy” and “to the environment”. Communication between potential suppliers and potential buyers was to be encouraged and new and renewable energy sources stimulated. These policies supported Government plans for “sustainable development”. RRM had been previously supported by MAFF as part of its work to improve the economic performance of farmers. The 1994 policy sought to meet more closely the needs of UK industry and give support only to RRM applications with the “potential to be commercially viable” with improved linkages with producers and consumers.
More recently (2000), the UK Government’s position regarding RRM was set out25 in response to the UK Parliamentary Select Committee on Science and Technology report on Non-Food Crops26. The UK Government: “...believes firmly that non-food crops have an important contribution to make towards sustainable development through substitution for products made from petroleum or other mineral sources, and by direct synthesis of chemical compounds...” recognises “... the importance of non-food crops other than energy crops” and accepts these crops need encouragement accepts the idea that “activity should be better coordinated in the UK and in Europe” with activity, including research, geared to industrial potential. Appendix 1, Non-Food Crops - Government Response, Select Committee on Science and Technology, 4th report - April 2000. The UK Government proposed a forum, involving industry, the scientific community and government, which could review the development of non-food crops, look ahead for potential opportunities and advise on research priorities and government policy. A Government Industry Forum on Non-Food Crops (GIFNFC) was established early in 2001. Its terms of reference are to provide strategic advice to Government and industry on the development of non-food uses of crops (RRM). More precisely, it is expected to: • keep under review technological developments and market opportunities for non- food uses of crops • make recommendations on policy affecting non-food uses of crops and on R&D priorities • publish an annual report The Forum includes eight members from outside Government, including the Chairman, two members from DEFRA and two members from the DTI. DEFRA provides a full-time secretary and two technical advisors. The Forum meets four times a year with papers made available on its website27. The House of Lords Select Committee welcomed the formation of this Forum but clearly re-emphasised the need for a ministerial “champion”
25 Non-Food Crops Government Response, 4th report 2000, House of Lords Select Committee on Science and Technology, April 2000 63 26 Non-Food Crops, 1st report 1999-2000, House of Lords Select Committee on Science and Technology, November 1999 27 Government Industry Forum on Non-Food Crops. www.defra.gov.uk/farm/gifnfc and considered the appointment of DEFRA as the lead department indicated that the need for a “transdepartmental approach” to policy had not been fully accepted.
DEFRA emphasises “sustainable development” as its overall aim28. The use of RRM is alluded to in its 6th Objective - the “...sustainable management and prudent use of natural resources...DEFRA’s Sustainable Development Strategy, published June 2002, set out the principles and processes by which the Department will support sustainable development and articulate this across government.
The private sector in the UK is increasingly adopting sustainable business practices (Box 4). Private sector interest in RRM is encouraged by the Alternative Crops Technology Interaction Network (ACTIN). Within this forum, industrialist are brought together to work with the research community to develop RRM applications. Interest in RRM applications is shown by all sectors of industry with RRM applications actively under development by both small and large companies, individual farmers, suppliers to agriculture, product processors and by those from conventional industrial backgrounds. R&D programmes are supported by a variety of researchers from a range of academic disciplines, operating generally within small research teams.
6.2 RRM Activity in the UK
The importance of industrial crops to UK industry can to a certain extent be assessed by the area of non-food crops grown on set-aside land. A study of these figures indicates that industrial crops, other than rapeseed, have a minor impact on UK agriculture (Table 6.1).
Table 6.1 UK area for non-food crops for harvest year 2001
Source: DEFRA June Census, 2001, SAC estimates
64 28 DEFRA’s Aim and Objectives. www.defra.gov.uk/corporate/aims/aims.htm.2002 Rapeseed dominated industrial crop areas grown on set-aside in 2001 accounting for 96% of the total. Second to rapeseed is crambe, a relatively new UK crop, grown as an alternative to HEAR for the production of erucic acid. Crambe cropping is forecast to expand rapidly, reaching perhaps 12,000 ha in 2003 in response to increasing demand for erucic acid. Minor crop areas are also forecast to increase on both set-aside and main- scheme land. Of interest is borage for the pharmaceutical market, camelina for cosmetic applications, linseed for manufacturing and bio-mass production and hemp for a range of applications in fibre, cosmetic and insulation markets. Bio-mass energy crop areas are also increasing, principally miscanthus and willow as short rotation coppice.
Industrial crops (or more especially their down stream co-products) may be sourced from mainstream commodity markets and enter industrial processes without appearance on agricultural statistics. Examples include cereals for starch production and oils for the oleochemical industry. Conventional crops may be grown on main scheme land on contract for industry, e.g. HEAR. Meanwhile, traditional RRM outlets in the wood processing and construction industry, textile and oleochemical sectors, continue to support UK RRM activity within primary agriculture and forestry and amongst down-stream processing sectors.
Consequently it is difficult to assess precisely the area of crops grown for industrial purposes and their associated importance to UK industry. This difficulty is exacerbated by trade within the EU where commodities, OSR for biodiesel for example, may be grown in one country and processed and sold in others. UK OSR grown specifically for the German bio-diesel market is expected to reach 85,000ha in 2003. A further 15,000ha of cereals may well be contracted for export into bio-ethanol markets in Spain and Sweden. The total areas of industrial crops grown on set aside in the UK is estimated to increase to around 100,000ha in 2003. While currency factors will determine the future development of bio- fuel crop production for export, domestic demand is expected to maintain activity at least at this level in the medium term. If a further 50,000ha of industrial crops is added following expansion in a number of RRM Markets, on main scheme land, a combined total approaching 200,000ha, will represent less than 4% of the total area available.
There are many small areas of herbs and other minor crops, some with a high value on an area basis. Many of these developments are by small highly specialised companies relying on confidential in-house R&D to provide market advantage. On the whole, however, there has been little large-scale agricultural impact of non-food crop developments.
The animal rendering industry process, crushes and grinds animal by-products. Each year the UK produces 250,000 tonnes of fat (tallow) and 400,000 tonnes of protein meal. Prior to BSE, these products had a wide range of uses, particularly in the feed industry. Currently, most meat or bone meal is buried or incinerated and there is an urgent need to find new uses. Incineration for power generation is of increasing interest. Tallow is much cheaper than vegetable oils. This price advantage has allowed some recovery in market share from the low of 1996 (when BSE restrictions were announced). Tallow is used in human food, soap manufacture and as a raw material for the oleochemical industry, e.g. oils and greases, paints and tyre manufacture.
A number of companies are now utilising waste animal fats and waste food oils to produce bio-diesel for the UK market. Other companies are importing bio-diesel to satisfy an emerging UK interest in liquid bio-fuels.
65 6.3 A Comparative Assessment of UK RRM Activity
6.3.1 Policy
UK recognition of the importance and potential economic significance of RRM clearly matches that given by governments elsewhere in Europe and North America. UK Government policy, as presented by such departments as DEFRA, DTI and the DoE, support RRM development in the UK. The strategic importance of RRM and associated bio-technologies to the future competitiveness of individual industrial sectors is recognised, for example, by the DTI supported BIO-WISE programme. Specific encouragement is given to the production of renewable electricity by the Renewables Obligation Order 2002. This places an obligation on all licensed electricity suppliers to source a growing proportion of total sales from eligible renewable sources, rising from 3% in 2002/03 to 10.4% in 2010/11.
The GIFNFC brings Government departments together with industry and researchers to support RRM development in the UK. This forum is promoting the development of an agricultural industry supplying RRM for industrial and commercial applications (DEFRA 2002b). It gives strategic support to key RRM sectors which appear to have the potential for significant development in the UK. As such, it can be compared with AGRICE in France and goes someway towards the prioritisation of R&D activities as in the US “Roadmap” for RRM development.
The UK recognises the need for activity that “pulls” RRM into the market place in response to a specific market requirement. Conventional “push” programmes that sought to develop agricultural crops and crop products for most often, unproven markets are being phased out, as is increasingly the case elsewhere. R&D activity in the UK, appears increasingly to focus on the removal of technical barriers to meeting the needs of the market and fundamental R&D to strengthen the capability of UK industry to meet the needs of future market requirements.
Examples of UK policy and other RRM supporting measures are set out by category in Table 6.2. Economic support is provided to RRM development within a system of grants provided by the DTI, DEFRA and the other regional agricultural departments of the UK. These grants include the Agricultural Development Scheme, the Processing and Marketing Grant Scheme and Rural Development Programmes. In England, the Rural Enterprise Scheme specifically supports the development of more sustainable, enterprising rural economies and communities. This scheme appears well suited to supporting RRM developments. The DTI provide support for bio-energy schemes within the New Opportunities Fund and BIOWISE.
Fiscal policies provide duty relief on the bio-fuels, bio-diesel and bio-ethanol. Duty reductions of 20p/litre have however proven insufficient to encourage domestic production of bio-fuel other than from waste or low grade food oils and animal fats. As in North American and other EU Member States, the production of these bio-fuels at competitive prices is dependent on substantial fiscal discrimination in their favour. Further reductions in duty are required in the UK before significant production is commissioned.
Voluntary RRM schemes in the UK are under development. A code of practice covers the use of bio-lubricants, for example, with chainsaws in forestry operations. The Forestry Commission and other private sector forest operators enforce this code within contractual agreements. Within the retail sector, multiple grocers experiment with biodegradable plastic bags. These voluntary schemes may well encourage significant RRM development without legislation if they can become accepted as core market requirements. These
66 schemes help the public and private sector to introduce more sustainable business practices as a part of their overall business strategy.
Regulatory policies are confined, as elsewhere, to principally the bio-energy market. The UK Renewables Obligation Order clearly encourages the development of RRM applications in the energy sector as a part of a wider commitment to renewable energy resources. The straw-fuelled ELEAN power station in Cambridgeshire (Section 2.5.2) and the poultry litter fuelled Westfield plant in Fife29 provides examples of what is possible with RRM. Technology difficulties, as experienced by the ARBRE plant in Yorkshire and by Border Bio-fuels in Scotland, show however the need for further technological development.
Information and education programmes are not very prominent in the UK. DEFRA’s commitment to provide information on the environment and its information programme for schools - the Growing Schools Initiative - provides an opportunity for government to increase the availability of RRM information and to raise consumer awareness of RRM opportunities, perhaps as a part of a wider market development programme for RRM.
R&D activity is well supported in the UK. Public programmes of R&D are described in Section 6.3.3. Other RRM programmes appear not as well developed in the UK as elsewhere. There is no overall commitment to the procurement of RRM products by UK Government. DEFRA, as a part of its Sustainable Strategy, does commit itself and other Government Departments to “use ... purchasing power to reduce the environmental impacts of the goods and services it buys and to support innovation and resource efficiency” (DEFRA 2002a). This commitment could be further developed to differentiate more clearly in favour of RRM products as is happening in the US within Federal procurement programmes.
Market introduction programmes, as implemented in Germany, could be introduced into the UK to help remove logistical barriers to RRM adoption. These programmes do not introduce a long-term policy dependency but do require RRM product to be more widely available.
Table 6.2 UK RRM policies and measures - examples by type
29 The Westfield Bio-mass plant used a fluidised bed combustion system to burn poultry litter to produce electricity and 67 fertiliser. A net output of 10MW allows for the generating of around 87,000 MWh/year 6.3.2 RRM Activity
RRM activity in terms of industrial crop area is, like elsewhere in Europe and North America, small when bio-fuel areas are discounted. Clearly, bio-fuel activity is important in both North America and many EU member states where government policy gives specific encouragement. In the UK, where such encouragement is significantly lower, industrial crop areas are limited to satisfy fairly small niche markets. The RRM knowledge base in the UK is however considerable. This knowledge base leaves UK industry well placed to take advantage of market opportunities as they develop. The importance of this knowledge base and its retention over time is clearly recognised in the Netherlands and justifies continuous funding of the Renewables Division within ATO-DLO. The UK needs to consider and support a continuity of R&D activity if knowledge and skills are to be retained for use by industry.
Of importance is the erucamide market utilising UK production of OSR and crambe. Bio- lubricant, cosmetic and pharmaceutical markets support a range of crops while crop fibre markets sustains a relatively small area of hemp. Bio-energy production is increasing with an expansion reported in both Short Rotation Coppice, miscanthus and other bio-mass crops, albeit from a small base.
Well-established industrial users of RRM within the oleo-chemical and starch industries continue to pull out of UK agriculture large volumes of crop material. These users are developing in the UK new applications for their material which may lead to significant increases in RRM demand. Of particular interest are the bio-polymer products produced from crop starches reported in 2.5.3.
6.3.3 R&D Activity
R&D support for RRM in the UK is provided by various Government departments. R&D expenditure by the various Agricultural Departments (MAFF / DEFRA / SEERAD / DANI) is estimated to have increased over the 10 years to 2000 from around £1.0m/year (€1.6m) in the early 1990s30 to £1.8m/year (€2.88m) by 200031. This support has been directed through programmes such as LINK - Crops for Industrial Purposes (1990 -), Competitive Industrial Materials (CIM) from Non-food Crops (1996 -) or as directly commissioned projects, DANI’s coppice and flax programme for example. The total level of funding for RRM programmes by all Government departments is estimated at €9.6m /year.
Additional funds are now becoming available specifically for bio-fuels. DEFRA has allocated £29m (€46m) to its Energy Crops Scheme and £66m (€106m) is available through the DTI sponsored Bio-energy programme.
Comparisons with national spends elsewhere are difficult. A large part of Government appropriations for RRM research funding is often included in broader scientific programmes which may embrace food as well as non-food applications. This is the case in France with INRA and in the UK with BBSRC. In the USA, a high proportion of fundamental scientific research is carried out with DoE funding in association with the Department of Science.
Country Reports (Appendix 1) indicate annual R&D expenditures of €9.0m/year in the Netherlands, €13.3m/year in France and €31m/year in Germany, while in North America the USDA alone is committing €160m/year to RRM R&D over the three years to 2003 (Chapter 4).
UK R&D expenditure is not small but appears low in comparison to annual expenditures in the Germany and North America. However, UK R&D results will for the most part, enter
68 30 Source: MAFF 1994, Alternative Crops New Markets - A consultation document 31 Source: House of Lords Science and Technology Report, April 2000, Non-Food Crops Government Response the public domain. Elsewhere, the results from many publicly funded research programmes conducted by, or in partnership with the private sector, will not become publicly available.
Development activity is supported by the LINK programme, by the DTI Bio-Wise programmes and importantly by the Alternative Crops Technology Interaction Network (ACTIN). Launched in 1995 ACTIN links business within the UK with the UK’s research community and with Government. Its aim is to promote the development of industrial crops and has actively promoted RRM applications. International networking gives it access to a wide range of mostly EU-based information programmes.
The Bio-Wise Demonstrator Project provides support to “user-led” collaborative projects involving bio-technology. HGCA Enterprise Awards encourage innovative, including non- food applications for UK cereals.
6.3.4 Rural Development Impacts
Rural development impacts in the UK remain small and highly localised. Claims that, for example, five jobs are created per MW of electricity generated by bio-mass32 need to be re-confirmed. Individual niche market developments do provide limited rural employment opportunities. However, the entire rural economy only benefits from RRM developments when commodity supply and demand balances are improved. Given the surpluses available in most UK commodity markets, in terms of both domestic requirements and capacity, significant shifts in demand will be required to impact on commodity price levels.
6.3.5Sustainability
Sustainability has been a key part of Government strategy since the 1992 UN Conference on Environment and Development (the Earth Summit) at Rio de Janeiro. The UK strategy on sustainability was set out in January 1994 in the Document “Sustainable Development: the UK Strategy” (Cm 2426, 1994). More recently, DEFRA published its own Sustainable Development Strategy (DEFRA 2002a). Sustainable development is described as “a better quality of life for everyone, now and for generation”. Achievement requires social progress, effective protection of the environment, prudent use of natural resources and maintenance of high and stable levels of economic growth and employment. While renewable raw materials are not specifically mentioned, this strategy clearly implies the development of RRM applications to support sustainable development.
Sustainability, as defined by Shell for example (Box 4), is increasingly accepted by UK industry as an important corporate objective. Its inclusion in overall business strategies helps fulfil the need to satisfy the “triple bottom line”, the financial, social and environmental account. Clearly, a full understanding of sustainable principles will not have been achieved by business managers. Government can, and is, supporting a better understanding of what sustainability means for business with information and advice.
The use and deployment of RRM fits into both public and private sector programmes. Increasingly, sustainability claims, as with Quality Assurance for example, need to be confirmed with rigorous Life-Cycle-Assessments (LCA) to prevent misuse of the term. Government can assist here by establishing and developing clear LCA guidelines and by commissioning LCA of RRM applications. Such an analysis is likely to be important if the UK Government is to give more support to the bio-fuel industry.
32 DEFRA ERDP Energy Crops Scheme web site, 2002 69 6.3.6 Commercial Strategy
While the UK business community does appear sensitive to new business opportunities, without a well developed bio-fuels industry in the UK, it is primarily niche market products that have been commercialised and most often by SMEs. The main barriers to entry appear to be lack of price advantage compared with fossil fuel derived products. Access to venture capital is not considered to be a limiting factor in the UK although there is little evidence that financial investment organisations have specifically targeted RRM based developments.
A number of multi-nationals are committed to the development of RRM products and processes, particularly in the USA. There is much scope to encourage greater involvement from multi-nationals in the UK. The ICI companies, National Starch and Uniqema, appear the most active. Examples of UK company approaches to RRM are listed in Chapter 5 and Appendix 2.
70 7.0 Summary and Conclusions
7.1 Summary 7.1.1. Public and Private-Sector Activity
The development of Renewable Raw Materials (RRM) for industrial non-food applications has conventionally been driven by agricultural arguments that sought to improve the economy of rural areas. These arguments are now reinforced and largely superseded by environmental, commercial and strategic issues. RRM policy is increasingly driven by government ministries other than those responsible for agriculture. Industrial, energy and environmental policy is now directing most policy interventions.
Within the countries reviewed, government policies are more pragmatic, with a clear desire to encourage the market to “pull” RRM products into industry in response to market needs rather than to support agriculture’s attempts to “push” RRM from a supply base. Where market signals alone are insufficient to pull products into commercial applications, intervention has been justified if it is in the nation’s perceived strategic interest. The OECD and the European Commission both encourage policy makers to encourage RRM utilisation to support sustainable development policies.
RRM markets are expanding with commercial activity reported across a wide range of industrial sectors. Bio-fuel, bio-mass, bio-polymers and bio-composite applications are expected to be of importance to global commodity markets, while local markets and local economies will be influenced by a variety of relatively small-scale developments. However, the collective effect of these minor developments may become of national significance.
Policies and measures in support of RRM development may be categorised as:
Economic policies which include the provision of grants and subsidies to support RRM utilisation, give guaranteed access to markets at preferential rates and provide economic intelligence to support investment decisions.
Fiscal policies involving the use of taxation to change price relativities and to encourage changes in buyer behavior in favour of RRM utilisation. Duty relief on bio-fuels - as practiced in North America and various European countries - have clearly encouraged RRM consumption. Less directly, land-fill taxes encourage the use of compostable RRM, while carbon taxes encourage bio-energy programmes.
Voluntary programmes support RRM utilisation where regulation is missing to give public good benefits. Codes of practice, with compliance often supported by contractual requirements, encourage adoption.
Regulatory programmes legislate for the use of renewable resources in such markets as electricity generation. Information and Education programmes seek to persuade consumers and the wider public of the benefits of RRM utilisation. Research and Development programmes have for the most part, sought to encourage RMM by targeting technical barriers to adoption. Some programmes seek to link industrial chains together to allow market signals to be more clearly felt.
Other programmes cover a very wide range of activities, which do not fit easily into any of the above categories. Most are introduced unilaterally by individual states seeking the development of specific industries. German market introduction schemes for example, seek to encourage bio-fuel and bio-lubricant use. US federal procurement programmes aim to encourage a wider utilisation of bio-based materials. Demonstration projects in a range of countries help to establish best practice and show application.
71 7.1.2 Impact of government policies on RRM activity
To date, the impact of RRM policies, particularly those driven by agricultural departments, is widely recognised as disappointing. While a significant body of knowledge and a strong skill base has been created in many countries, little RRM-based industry has developed other than in the bio-fuel sector. Despite this, there is an almost universal recognition of the likely future significance of RRM-based technologies. National policies recognise the strategic importance of maintaining capabilities supported by sustained R&D programmes. Governments increasingly seek to bring industrial chains together within these programmes to allow RRM products to be pulled more efficiently into the market place.
Successful RRM utilisation is supporting sustainable programmes of development, which seek to unite social objectives with environmental benefit and economic growth. Consumers are generally recognised to have a strong interest in green issues and to show a preference for renewable materials. When RRM products become available at competitive prices, demand is sufficient to support market growth.
Industry is also clearly interested in the development of more sustainable business practices with some industrial sectors looking to RRM to help achieve sustainable corporate goals.
Rural economies are supported by RRM developments. Impact is however, difficult to measure and often likely to be overstated. However, bio-energy programmes do provide examples of where RRM activity, mostly as relatively small-scale developments, can bring benefits to widely dispersed local communities. Benefits will be most commonly point- specific, with wider benefits only achieved when mass commodity markets are affected by RRM consumption.
7.1.3 R&D Strategies
R&D activity in all the countries reviewed is substantial, and has been sustained over a considerable period of time. In some countries (France, Germany), R&D activity is managed by a specific organisation established to co-ordinate RRM activity. In other countries (e.g. USA), publicly funded R&D is commissioned directly by government departments within specific programmes.
In France and the Netherlands, RRM R&D activity has recently been formally reviewed and redirected to give a more market-orientated approach. Elsewhere, a less formal review process also appears to be redirecting R&D activity more to the needs of the market. Fundamental research in all countries continues to support the longer-term development of RRM applications and to give a clear understanding of RRM opportunities.
The need to involve market participants more closely in R&D programmes is widely recognised. The effective transfer of technology into the private sector is increasingly supported, as is the provision of market and economic intelligence. . Of importance are the market introduction programmes in Germany and the insistence in the US that IPRs are made available to those who can best use it.
Market and economic information is now specifically provided in France by PRONOVIAL (who/what?? - give an inkling: an agency??). In other countries, the requirement for market information is being tied into research programmes. All countries agree that R&D needs to support the market to “pull” RRM into applications rather than “push” these materials into the market.
72 7.1.4 Private-Sector Strategies
No single factor is seen to explain RRM adoption. Market demand is always important. Biodegradability, renewability and sustainability are not sufficient by themselves to guarantee market access. Functionality and competitiveness are of key importance. Unreliable supply chains, poor market acceptance, internal financial constraints to scaling- up and competitor reaction all contribute to failure to successfully commercialise RRM applications.
Companies closest to the consumer of RRM products find themselves best placed to exploit RRM markets because of their knowledge of product benefits, consumer expectations and the competitive environment. While growers and grower organisations have a strong incentive to develop RRM applications, they are not generally well placed to exploit their market potential.
A key requirement for the successful commercialisation of RRM products is therefore identified as a well-coordinated supply chain well connected to the final consumer. National R&D programmes, which recognise this, are likely to be most successful in bringing RRM product to market. Research in the Netherlands emphasises the need for the market to “pull” RRM into applications in response to a clear need.
Government intervention is often requested to reduce risk, give support via market entry schemes and help generate momentum. Producer Groups, though generally not close to RRM consumers, can influence RRM adoption by consistently pushing the product into the market, supporting product awareness campaigns and supplying venture capital to support commercialisation.
Technology transfer mechanisms are important if RRM technologies are to be successfully commercialised. It is clear, bio-diesel in the EU, bio-ethanol in the US and bio-composites in Germany, for example, have developed because of policy intervention. In France and the USA, levy-funded producer organisations take a lead role in encouraging RRM developments. In Germany, market introduction programmes (bio-diesel and bio- lubricants) and test marketings (biodegradable/compostable materials in Kassel) are important tools to encourage technology transfer and uptake.
7.1.5The UK Position
UK support for RRM was set out in the 1994 MAFF consultation document: “Alternative Crops New Markets”. More recently, UK RRM policies were confirmed in the April 2000 response of Government to the UK Parliamentary Select Committee on Science and Technology report on Non-Food Crops. The UK Government recognises non-food crops (RRM) have an important contribution to make towards sustainable development and a Government Industry Forum has been established to provide strategic advice to both Government and industry on the development of non-food uses of crops.
Industrial crop areas are nevertheless of minor importance in the UK. Rapeseed dominates industrial crop areas on set-aside land. Cereal starches and oilseed rape will enter industrial markets from main-scheme lands. Small areas of linseed, flax and other minor crops will also be grown on both main scheme and set-aside land for industrial applications. In 2003, industrial crop areas are expanding in response to a growing export demand for bio-fuel feedstocks (oilseed rape and cereals) and some increase in domestic demand for RRM generally.
Economic policies in the UK aim to encourage RRM development. Various schemes provide assistance in terms of capital grants and market development support. Regulatory
73 policies have set out a clear position for bio-energy crops within the larger renewable energy market. Bio-fuels for transport were not encouraged by UK fiscal policy until very recently. (Bio-diesel in 2002 and bio-ethanol in 2003) Even now duty relief given to these bio-fuels is considered insufficient to allow major investment in domestic production facilities. To date, UK demand for these bio-fuels is met by imported material or from domestic production based on animal fats and waste food oils.
In many respects the UK is adopting similar approaches to other industrialised nations. The importance and potential economic significance of RRM is clearly recognised and there is strong commitment from Government to support RRM development. The need to “pull” and not “push” product into the market is well understood. Policy increasingly aims to bring industrial chains together within R&D programmes to allow market signals to be better understood.
A strong and well-developed RRM knowledge base leaves the UK well placed to take advantage of market opportunities as they develop UK funding of RRM R&D programmes by all government departments is estimated at €9.6m/year. This is not small and compares with an average of €9.0m/year of dedicated RRM expenditure in the Netherlands and €31m/year in Germany. Annual expenditures by the USDA and the US DoE are estimated at €335m/year reflecting a new emphasis in the USA on the development of RRM.
7.2. Recommendations
7.2.1 Overall Strategy
UK Government is encouraged to develop a clear and forward-looking RRM strategy within which public-sector interventions can be directed and private-sector actions encouraged. This strategy should involve, and meet the objectives of, several Government departments, most notably Environment, Food and Rural Affairs (DEFRA), Industry (DTI) and Energy (DoE). The US “Technology Roadmap for Plant/Crop Based Renewable Resources 2020” provides a useful guide to the development of a national RRM strategy, and the UK government is recommended to develop a similar “roadmap” for the UK.
The contribution which RRM utilisation can make to sustainable development programmes is not widely appreciated. Government needs to promote RRM benefits more widely to potential producers, users and consumers, in order to encourage adoption of RRM products and processes.
7.2.2 R&D policy
R&D programmes for RRM need to embrace several characteristics:
• be supportive of fundamental strategic research
• include socio-economic studies
• bring together supply chain participants to allow market signals to be more clearly understood
• include a speculative element to allow new ideas to emerge
• be sustained, with long-term strategic goals and near-market when necessary to support private sector R&D effort during critical developmental stages.
The support and participation of individual supply chains is vital. Programmes similar to the Dutch “AKK” programmes are recommended for inclusion in UK R&D programmes.
74 The UK has a strong science skill base, which can be channelled towards RRM R&D. Emphasis needs to be given to the application of biotechnology as a means of gaining competitive advantage. This should include the application of novel microbial fermentation systems, the use of industrial enzymes, separation technologies, plant biotechnology and genomics.
A key strength of the UK’s RRM position is its diversity of R&D capability distributed across different disciplines and well established centres. While the concentration of RRM R&D activity at one UK centre is not recommended, there are benefits in building up a critical national mass of expertise and knowledge. This has been achieved in the Netherlands within the Renewable Division of ATO, Wageningen, and to some extent at the US National Center for Agricultural Utilization Research, at Peoria, USA. However, it appears more important to establish collaborative programmes based on the best use of scientific expertise rather than be dictated by location.
7.2.3 Market Introduction
In most countries, new RRM technologies are controlled by large national or multi-national groups. In some cases such groups have benefited from public sector support but most are able to bring RRM products to the market without significant public sector involvement.
In sharp contrast, traditional technologies appear only able to develop into commercial significance with the aid of sizeable public-sector support. The UK government will need to discriminate in favour of traditional technology products where their development is considered important and a part of UK RRM strategy. Support can come in many forms including: tax relief, legislation, codes of practice and sustained highly focused R&D programmes to remove technical barriers to progress and market acceptance. A number of specific actions are recommended for action by Government:
• establish procedures and protocols for RRM labelling or logo branding
• define procedures and protocols designed to encourage the purchase of RRM by Government procurement agencies
• examine more fully the success of the Kassel test-marketing project in Germany with a view to setting up a similar project in the UK
• establish a mechanism whereby the environmental, societal and economic importance of RRM is communicated to policy makers, industrialists, educationalists and the media as part of a sustainable policy of development
75 76 References Bastioli, C. (1998). Novamont (Italy), Biodegradable Materials: Present Situation and Future Perspectives. Macromol Symposium 135, 193-214.
Bastioli, C. (2001). Novamont (Italy), Bio-polymers: The World Market Potential. ACTIN (UK) Workshop. Bio-polymers: Packaging - a New Generation.
Bauen, A. (2001). Biomass energy, greenhouse gas abatement and policy integration. Aspects of Applied Biology 65. Proceedings of Biomass and Energy Crops II, University of York, UK, 353-363.
BIC (2003). Results of the monitoring of the German Biomass Ordinance. Biomass Information Centre. Leipzig, Germany.
BROUWER (2000). Natural Fibre Composites - from upholstery to structured components. ACTIN (UK) Workshop, Natural Fibres for the Automotive Industry.
DEFRA (2002a). Foundations for our Future -DEFRA’s Sustainable Development Strategy. www.defra.gov.uk.
DEFRA (2002b). Annual report of the Government - Industry Forum on Non-Food Uses of Crops, Department for Environment, Food and Rural Affairs.
Bolton, A.J. (1998). The Industrial Potential of Plant Fibres: New Potential for Plant Fibres in Industry. The First ERMA Conference Proceedings, ERMA. de Graaf, L.A. and Kolster, P. (1998). Industrial Proteins as a Green Alternative for “Petro” Polymers: potential and limitations. Macromol. Symposium 127, 51-58.
DG Enterprise. European Commission, (2002). Current Situation and Future Prospects of EU Industry using Renewable Raw Materials, ed. J. Ehrenberg.
EC (2001). Environment 2010: Our Future Our Choice. COM (2001) 31.
EC (2001). European Transport Policy for 2010: time to decide. COM (2001) 0370 (01).
EEA (2002a). Greenhouse gas emission trends and projections in Europe. Environmental Issues Report No.33. European Environment Agency.
EEA (2002b). Energy and environment in the European Union, Environmental issue report, No 31. European Environment Agency.
Ellison, J. (2002). The Textile Consultancy, (UK). The Use of Natural Fibre Composites in the Automotive Industry. ACTIN (UK) Workshop 2000, Natural Fibres for the Automotive Industry.
House of Lords Select Committee on Science and Technology, (1999). First Report. 22 November 1999. Non-food Crops. www.publications.parliament.uk
IENICA (2000). Interactive European Network for Industrial Crops and their Applications. Background Scenario and Executive Summary to European Overview. CSL, York (UK).
Inverizon (1999). The Technology Road Map for Plant/Crop-Based Renewable Resources 2020. Office of Industrial Technologies, Energy Efficiency and Renewable Energy, US Department of Energy, www.oit.doe.gov/agriculture/
77 Kamminga, R. (2000). Uniqema (Netherlands), Setting the Stage, CTVO NET Final Conference Proceedings, June 2000. eds. W. Stelter, B. Kerckow, M. Hagen; FNR, Germany
Karus, M. (2000). Nova Institute (Germany). Use of Natural Fibres in the German Automotive Industry ACTIN (UK) Workshop, Natural Fibres for the Automotive Industry.
Mangan, C. (2000). European Commission, DG Research, EU Research Policy in Renewable Biomaterials and its Role in a Sustainable Future. CTVO-NET Final Conference Proceedings June 2000, Eds. W.Stelter, B. Kerckow, M. Hagen: FNR, Germany.
Morgan, D. (2002). Energy Bill, a Daschle nod to key farm states. Washington Post, February 19, 2002.
NPA (2001). National Party of Australia. Policies, Our Future Action Plan, Bio-fuels for Cleaner Transport. www.nationalparty.org/policies/2001-10-31-biofuel/htm.
OECD (1998). Biotechnology for Clean Industrial Products and Processes, Paris
OECD (2001). Applications of Biotechnology to Industrial Sustainability, Paris
OECD (2002). Non-food Markets: Outlook and Policy Issues - an Overview. G. Entwistle, K. Walker, E. Booth. OECD Directorate for Food, Agriculture and Fisheries Committee for Agriculture. 21st Session, 15 April 2002.
Robbins, T.(2001). Sainsbury (UK), Drivers for Change in Packaging Materials. ACTIN (UK) Workshop, Biopolymers: Packaging - a New Generation.
Raynaud, L. (2001). National Starch and Chemical (UK). New Commercial Developments in the Field of Starch-Based Plastics, ACTIN (UK) Workshop. Biopolymers: Packaging - a New Generation.
Sudol, M. (2000). Concargo Composites (UK). Developments in Resin Transfer Mouldings. ACTIN (UK) Workshop, Natural Fibres for the Automotive Industry.
van Bekkum, H. and Okkerse, C. (1999). Towards a Plant Based Economy, Royal Society of Chemistry. Vol. 1 no. 2, April 1999 - originally printed under the title “From Fossil to Green”.
van Roekel, G.J., and Koster, R. (2000). ATO: Wageningen (Netherlands), Factors of Success and Failure of Agrification in the Netherlands.
Vellema, S. and de Klerk-Engels, B. (2002). ATO: Wageningen. (Netherlands) Technology for Health and the Environment. Agenda for durable healthy industrial applications of organic by-products and agricultural raw materials.
Vink, E. (2000). Cargill Dow Polymers (USA). Industrial Product Utilisation of Soybean Derivatives. CTVO-NET Final conference Proceedings, June 2000, eds. W. Stelter, B. Kerckow, M. Hagen: FNR Germany.
78 Appendices
Appendix 1 Country Reports
1.1 The Netherlands
1.2 Germany
1.3 France
1.4 USA
1.5Denmark / Italy
Appendix 2 Private Sector Organisations - Interview Reports
2.1 UK Company - Interview Notes
2.2 Major Companies Marketing RRM
79 80 Appendix 1.1 The Netherlands
Report on the Situation with Respect to Industrial Crops and Products in the Netherlands
Government Policy, Public R & D & Private Sector Strategies
A Report for SAC, Aberdeen
Wageningen, June, 2002
Wolter Elbersen Ed de Jong (Edited by Garth Entwistle, SAC)
H.W. Elbersen (ATO) E. de Jong (ATO)
ATO Agrotechnologisch Onderzoeksinstituut Bornsesteeg 59 Postbus 17 6700 AA Wageningen Tel: 0317-475024
81 1.0 Introduction The Netherlands is a small densely populated country with a large agri-industry and connected food and beverage industry that contributes substantially to the export volume. The agri-industry is based both on local production and on imports. Of the total land area of 4 million ha approximately I million ha are grassland for dairy cattle and some 800.000 ha serve for production of arable crops. Arable crops consist of maize for fodder production and rotational cropping of potatoes, sugar beet and wheat (or another crop). The processing and related industries rely only to a small extent on locally grown crops. 40% of the raw materials are imported from surrounding countries (potatoes) or further abroad (oil seeds, chocolate, etc). 75 % of the products from the food and beverage industry are exported (LNV, 2000).
The animal feed industry relies mainly on residues from the large processing industries and on imported feed (tapioca, wheat, etc). Overall the added value of the agri-processing industry is approximately €33 billion which is many times the added value of the Agricultural crops it is based on.
1.1 Centres of Research Expertise
Table 1. Centres of research expertise on industrial crops and biobased products in the Netherlands.
82 Table 2. Industrial-crops business organisations and crop producer organisations
1.2 Government Activities 1.2.1 Policy Guidelines
Currently no (or hardly any) government policy is directly directed towards industrial crops or products though indirectly policies exist that can be supported by the use of industrial crops and products.
Examples are:
• support for development of ecologically grown food products. This leads to a demand for plant based packaging materials like bio-based plastics. • creation of so called “Ecological Linking zones” (some 100,000 ha are planned) which link natural areas to each other allowing contact between isolated animal and plant populations, can increase demand for the use of environmentally friendly products in these areas; bio-lubricants, bio-based geotextiles (in waterways), bio-diesel, etc. • demand for CO2 neutral energy production increases possibilities and support for bio-fuels.
In recent reports (Loomans et al, 2001; Vellema et al., 2001; Vellema and de Klerk, 2002) evaluated market perspectives of products based on renewable raw materials that support health and environmental policies are evaluated (see Chapter 1.7).
In policy papers the use of bio-mass for the production of renewable energy is specifically mentioned (VROM 2001, NMP4). The production of energy crops is mentioned but no specific targets are set. Importing bio-mass for power generation and bio-fuel production is mentioned. Some 10 million tons of bio-mass are expected to be used for power production by 2020 in the Netherlands.
1.3 Government Funded Activity The Dutch Ministry of Agriculture funds research through the Directorate General for Research (DWK). Most of the funding is allocated to the DLO research institutes, which are mainly situated in Wageningen, they include:
• LEI (Economics) located in The Hague • ATO: (Agrotechnological Research Institute) in Wageningen 83 • IMAG (Mechanisation) in Wageningen • Alterra (Green World Research) in Wageningen • PRI (Plant Research International) in Wageningen • ID-Lelystad (Animal production) • and 2 others
The institutes mentioned above and The Agricultural University Wageningen have been integrated under the name Wageningen University and Research Centre (Wageningen- UR). DLO receives direct funding from the ministry and executes specific 4-year research programmes for the Ministry of Agriculture. In one of the new 4-year research programmes that is currently being discussed by the Ministry of Agriculture Research Directorate General (DWK) the focus will be on maintaining the knowledge base and on developing non-food products from by-products mainly from agriculture and the food and beverage industry. Industrial crop development is not expected to be a topic. The programme will run from 2002 to 2006 and will be executed by ATO and other DLO institutes. The yearly turnover is estimated at €700.000. (reduced from €1.0m/yr).
Outside of the direct funding by the Ministry of Agriculture there is a number of subsidy programmes under which research into bio-based materials is possible. In general these programmes are intended for industrial/research institute co-operative research. The funding percentage depends on the type of project with fundamental research projects receiving up to 90% funding and projects closer to market introduction as feasibility studies.
The main entities executing programmes that are of interest to developing bio-based products are NOVEM, SENTER and AKK. Funds for developing industrial crops are limited. There are also some regional funds available that can give specific investment subsidies.
Table 3. Agencies that execute subsidy programmes under which research and development into bio-based products can be subsidised or under which investment grants can be obtained.
The most important programmes under which applications for bio-mass or renewable resources are developed are:
EET (executed by NOVEM) is a programme with three priority fields:
• Economy: Stimulate development of fundamentally new products and production processes with a large market potential
• Ecology: Finding technological solutions to large environmental problems
• Technology: Strengthen the knowledge base of the Netherlands, both of industry and universities and research institutes
84 The maximum subsidy level depends on the development phase of a project:
• Fundamental research up to 62,5% • Industrial research up to 40%. • Pre-competitive development up to 25%.
Under the current tender there is € 22 million of which € 0.5 million is for 1 year preliminary projects (KIEM-projects). Every 9 month a new tender is executed.
AKK (“Agro chain management knowledge”): Executes support programmes for the Ministry of Agriculture in production and delivery chain development for new products or innovation in agriculture. In a new co-innovation programme “Duurzame Agro Food Ketens” one of the focus points is finding solutions for waste and by-products from agriculture and the food and beverage industry. The purpose is to deal with the problem of wastes and by-products in agro-industrial production chains through chain optimisation or development of new production chains (relationships between partners in a chain). Technology development is not possible under this scheme.
1.4 Tax Incentives, Government Capital Grants etc The possibility of reduced taxation on alternative (bio)-fuels is possible but to date no initiatives have been implemented (as far as we are aware).
Specific tax reductions are even rebates are available that support “green investing”, reduced taxation on specific investments that provide environmental benefits or reduce CO2 emissions. They include:
• de VAMIL-regeling • de Energie-investeringsregeling • de regeling Groen Beleggen • het CO2-reductieplan • Regulerende EnergieBelasting
1.5The Key Companies Table 4. Key companies involved in the production of products from industrial crops or other bio-based feedstocks.
85 Table 4. Key companies involved in the production of products from industrial crops or other bio-based feedstocks (continued)
1.6 Industrial Crops in Production The area of pure industrial crops is limited in the Netherlands. Many of the products or by- products that are produced in the processing of crops have non-food applications. See Tables 7 and 8 for examples. In Table 5 the most important industrial crops are included:
Table 5. Average acreage of the most important industrial crops (mainly industrial) in the Netherlands
Ref. CBS
86 1.7 Overall Assessment 1.7.1 Successes and Failures to Date
The development of industrial applications for arable crops under the name “Agrification” has been one of the focal points of the Dutch agricultural policy over the last 15 years. In later years policies emphasised durable and renewable feedstocks. Agrification policies were more agriculture “push” orientated. The Ministry of Agriculture has been most prominent in these areas.
Between 1985 and 2000 the Dutch government spent Fl. 180 million on agrification projects, together with contributions from research organisations the total amount spent is approximately Fl. 300 million over the last 15 years.
At the moment the Dutch Government does not have specific policies on Industrial crops and products or agriculturally based renewable resources. This is largely due to a change of focus with regard to the function of the countryside and the government role in agriculture. However, Government is instrumental in stimulating (or preventing) the development of market demand for renewable products.
In a recent report the factors contributing to success or failure of “agrification” (or the development of industrial crops and products) were identified through a consultation of the most important players in the field (van Roekel et al., 2000). See Table 6.
Table 6. Factors contributing towards success or failures of successful or non- successful “Agrification” initiatives.
van Roekel and Koster, 2000 From interviews about the factors for success and failure it was concluded that: 1 Market demand, competition and specific demands for renewable products are the most important factors determining success or failure of agrification initiatives. Bio- degradability, renewability and sustainability are by themselves not enough to sell a product unless this provides specific functional advantages that are required. 2 The market does not develop by itself; the market has to be created. All successful projects have been initiated and executed by parties who create and directly serve the market. 3 For a successful introduction of a product based on renewable resources the party serving the market has to take the lead.
4 Regulations obstruct successful “agrification”. Newly developed products have
87 much difficulty penetrating the market because regulations are made for existing synthetic products and do not allow for alternatives. Regulations are lacking which promote renewable resources and products.
5 The availability of processing technology is an important requirement for success. Development of suitable technology and infrastructure has been important parts in a successful development. Where lacking they were an important reason for failures.
6 Many successful initiatives have been a spin-off from existing agri-food production chains. Setting up entirely new agri-production chains has proven to be difficult.
7 In the Netherlands the price of agri-raw materials is often so high that in successful products the raw materials are imported form abroad.
It should be noted that new regulations can also give an impulse to products based on renewable raw materials. Examples are bio-diesel and a number of products based on bio- degradable plastics.
Interviews with different people involved in agrification initiatives showed that people in research were most optimistic rating 40% of the initiatives as a success while people in government were most sceptic rating only 10% of the initiatives as a success (see Figure 1).
Figure 1. Perception of success or failure of “agrification” initiatives of different people in different sectors.
1.8 Indicators of Change in Policy In recent years government focus has shifted more towards food production and environmental issues. Industrial crops seem to have received less interest and focus has shifted from technology “push” more towards technology “pull”. Other aspects like health and environment from a consumer perspective seem to receive more government interest.
Currently the problem of redundant agro-industrial by-products due to BSE, swine pest, mouth and foot disease and dioxin-contaminated feed is an important issue for the Ministry
88 of Agriculture. Many slaughter by-products and fat and grease by-products can not be used in cattle and swine feed. In Table 7 a list is given of the types and volumes of by-products for which currently new applications are being sought. The previous research projects (under Agrification and later projects) have provided valuable options that will help in finding solutions for the current challenges. Furthermore, the research infrastructure is available.
Table 7: By-products from the food and beverage industry for which currently other (mainly non-food) applications are being sought.
It is expected that other by-products from potato, sugar-beet, and starch production may need new outlets now that animal production will be scaled back (by 50% by 2030 in some policy papers) and higher quality criteria will be imposed on feed products. See Table 8 for a list of these potential feedstocks. A non-food application for energy and chemical industries and for products appears to be an attractive new market for these by-products. The traditionally strong position of Dutch industry in “agro-chain” management can be an asset here.
Table 8. By-products for which in the near future other (mainly non-food) applications are being sought
In a recent report by the Rabobank (2001) an analysis is made of the interconnection of the primary agricultural production (arable crops) the processing industries and the feed sector. It is concluded that the Netherlands is an attractive place for companies to establish agri-business because of the good infrastructure and possibilities of bringing by-products to value in the feed industries. With the planned reduction in the dairy and especially the pork industries this advantage can be lost. It is recommended to develop alternative (no- food/feed) applications for by-products. Production of ethanol is specifically mentioned.
Government (Ministry of Agriculture) has among others initiated a co-innovation programme with Agro Keten Kennis (AKK) that will provide agro-industry with funding to find new outlets for these agro-industrial by-products mainly in non-food uses (see Chapter 1.5).
89 Vellema and de Klerk (2002) have evaluated trends in society, government policy and industry that could be fulfilled by the use of renewable raw materials. In Table 9 an analysis of tends in society is presented which can be translated into a number of demands that favour the use of renewable raw materials.
Table 9. A matrix of societal motives that are relevant for the application of products based on renewable raw materials in the Netherlands (Vellema and de Klerk, 2002).
The use of renewable raw materials instead of fossil raw materials, minerals and metals does not deplete resources, is CO2 neutral, provides the possibility of using clean production processes and makes it possible to add specific advantages to products (for example degradability, stronger, lighter, non-toxic, less waste, better acceptance by public, cheaper, etc). The trend in industry (world-wide?) towards environmentally conscious entrepreneurship also can give a boost when the benefits of using bio-based products are obvious.
In a recent report (Loomans et al, 2001) a number of case studies are presented on the respective of safe and environmentally friendly products based on renewable resources. In the first report a total of 34 so called product market combinations were evaluated in the following fields:
1 Application of natural fibres in building materials 2 Application of natural fibre in glass house and nursery industries 3 Use of natural fibre in stabilisation of waterways 4 Application of natural fibres in fibre reinforced products 5 Reduction of volatile compounds in paints, glues, ink and detergents 6 Degradable lubricants 7 Packaging materials with specific functional qualities 8 Additives in food, cosmetics and biomedical applications 9 Additives in industrial products 10 Bio-energy
90 The use of renewable raw materials proved to be one of the available solutions that can solve environmental or health problems. The three most interesting options from a societal viewpoint with a good commercial perspective were:
• replacement of volatile organic solvents and heavy metals in paints, glues, and ink • the use of “recombined” collagen and gelatine in biomedical applications, cosmetics and foodstuffs • environmentally friendly plasticisers in plastics
Three other options showed perspective but are highly dependent on changes in regulations:
• natural fibres in building materials, and synthetic materials • natural fibre for geo-textiles • the use of bio-degradable lubricants in natural areas and waterways
Other options that showed good potentials from a environmental strategic viewpoint were the use of bio-mass for energy or bio-fuel production.
In a subsequent report by Vellema et al. (2001) market perspective of renewable raw materials based products for the packaging, glasshouse and nursery sectors was evaluated.
The options included bio-degradable pots, substrates, foils, binding tape, and all kinds of bio-degradable packaging material with or without specific functionalities. Barriers to market penetration included high price of the new product, lack of information about (the advantages of) the product, limited availability of the product, regulations that do not fit (favour the traditional product) and, in a number of cases, technical challenges that need to be overcome first.
It was recommended that government can influence market introduction through:
• purchasing preferences where government entities are the consumer of products • stimulating pre-competitive research • demonstration projects • adapt regulations and influence covenants in a certain sectors • support research infrastructure that is knowledgeable about these products and can provide the knowledge to industry • providing information and promotion of the products
1.9 Future Plans Currently a new centre right government is being formed that may have a different view on the role of agriculture which may change the perspectives for primary production of industrial products. The use of products based on renewable raw materials can support a variety of environmental and health policy targets. In order to justify the support of these products the advantages over traditional products has to be proven. The use of relevant methods like LCA will have to play an important role here.
Currently decisions are pending on the allocation of strategic funds (€800 million over 4 years) to strengthen the Research Infrastructure (ICES-KIS). In some of the focus areas 91 that are of interest the production or application of bio-mass and bio-based products is mentioned or implied. These focus areas include transition to a sustainable agricultural production, transition to a sustainable energy supply and transition to sustainable chemical production.
The Ministry of Economic Affairs is currently investigating the possibilities and strategic benefits of using bio-mass as a feedstock for energy and products (chemical industry). In the long term what are the roles and potential benefits for the Netherlands in participating in the “bio-based economy”?
1.10 Policy Targets – Targeting and Monitoring Methods As there are no specific policies on industrials crops and products no specific targets or monitoring methods apply. As discussed in Chapter 1.8 other targets in relation to health, environment and economic development can be supported with products based on renewable raw materials and bio-mass in general. The link between these policy targets and the use of renewable raw materials probably may have to be made more explicit before specific targets can be set.
1.11 References Elbersen, H.W., F. Kappen, J. Hiddink. 2002. Quickscan hoogwaardige toepassingen voor rest- en nevenstromen uit de voedings- en genotmiddelenindustrie. Een rapport voor LNV-I&H. Wageningen. Vertrouwelijk concept. . (Quick scan high end applications for by- products from the food and beverage industry. A report for the department of trade and industry of the Ministry of Agriculture. Wageningen, confidential preliminary report).
ERRMA. 2002. Current situation and future prospects of EU industry using renewable raw materials, European Renewable Resources and Materials Association (ERRMA), Working Group “Renewable Raw Materials”. Brussels.
LNV, 2000. Nota Voedsel en Groen. Het Nederlandse agro-foodcomplex in perspectief. Den Haag. (Ministry of Agriculture, Nature, and Fischeries. Policy Food and Nature. The Dutch agri-food complex in perspective.)
Loomans, E., S. Vellema, M. van Wijk, L. Minere. 2001. Groene Opties. 8 case-studies van veilige, milieuvriendelijke producten op basis van hernieuwbare grondstoffen. Werkdocument. 2001, ATO, BECO: Wageningen. (Green options. 8 case studies on safe environmentally friendly products on the basis of renewable feedstocks, working document)
Rabobank, 2001. De Nederlandse akkerbouwkolom. Het geheel is meer dan de som der delen. Rabobank Food en Agribusiness Research: Utrecht. (The Dutch arable crops production column. The total is more than the sum of the different parts).
VROM, 2001. NMP4, Nationaal Milieubeleidsplan 4. Den Haag. (Ministry of Environment, etc. National Environmental Policy plan 4. The Hague.)
Roekel, G.J.van, and R. Koster, 2000. Succes en faalfactoren van de agrificatie in Nederland (Factors for success and failure of agrification in The Netherlands). 2000, ATO: Wageningen.
92 Vellema. S. and B. de Klerk-Engels, 2002. Technologie voor gezondheid en milieu. Agenda voor duurzame gezonde industriele toepassingen van organische nevenstromen en agro-grondstoffen in 2010. (Technology for health and the environment. Agenda for durable healthy industrial applications of organic by-products and agricultural raw materials)
Vellema, S., M. van Wijk, U. Thoden van Velzen, F. Kreft, L. Minere. 2001. Groene opties. Aanvullende studie naar het marktperspectief van hernieuwbare grondstoffen in de verpakkings-, glastuinbouw- en boomkwekerijsector. Werkdocument. ATO: Wageningen. (Green options. Additional study into the market perspectives of renewable raw materials in the packaging, glasshouse, and tree-nursery industries. Working document.)
93 94 Appendix 1.2 Germany
Industrial Crops and Products: Policy, Public R&D, Private Sector Strategies in Germany
May 2002 A Report for SAC, Aberdeen
Dr. Markus Kaup (nova-Institut) Dipl.-Phys. Michael Karus (nova-Institut)
(Edited by Garth Entwistle, SAC)
Contact: nova-Institut GmbH Goldenbergstraße 2 D-50354 Hürth GERMANY
Tel.: +49 (0) 2233-9436-84 Fax: +49 (0) 2233-9436-83
E-Mail: [email protected] Internet: www.nova-institut.de
95 1.0 Centres of Research Expertise In Germany about 80 research institutes are actually engaged in the field of renewable resources. In general the centres of German research activities are governmental funded or co-funded institutions. Most of them are part of university research activities linked to a faculty. Only a few research institutes are private companies. The following list gives an overview of important research centres in Germany relating location and main activities:
1.1 Biomass for energy and biofuels (1) Fraunhofer-Institut für Umwelt-, Sicherheits- und Energietechnik (UMSICHT) Osterfelder Straße 3 46047 Oberhausen Contact: Dipl.-Ing. Markus Ising Tel.: 02 08 / 85 98-0 Fax.: 02 08 / 85 98-2 90 E-Mail: [email protected] Internet: www.umsicht.fhg.de Fields of activities: Biomass and wood for energy generation esp. gasification.
(2) Institut für Energiewirtschaft und Rationelle Energieanwendung (IER) Universität Stuttgart Hessbrühlstraße 49a 70565 Stuttgart Contact: Oliver Waitze Tel.: 07 11 / 7 81 39-08 Fax.: 07 11 / 7 80 61-77 E-Mail: [email protected] Internet: www.biomasse-info.net Fields of activities: Information and consulting in the field of biomass for energy, e.g. Biomasse-Info-Zentrum (BIZ) under www.biz.de.
(3) Institut für Energie- und Umweltforschung GmbH (ifeu) Wilckensstr. 3 69120 Heidelberg Contact: Dr. Guido Reinhardt Tel.: 06221 / 4767-0 Fax.: 06221 / 47 67-19 E-Mail: [email protected] Internet: www.ifeu.de Fields of activities: Life cycle analysis (LCA) in the field of biofuels and biomass for energy.
(4) Institut für Verfahrenstechnik und Dampfkesselwesen (IVD) Universität Stuttgart Pfaffenwaldring 23 70569 Stuttgart Contact: Roland Berger Tel.: 07 11 / 6 85-34 87 Fax.: 07 11 / 6 85-34 91 E-Mail: [email protected] Internet: www.ivd.uni-stuttgart.de Fields of activities: R&D in the field of biomass combustion and gasification for energy generation.
96 (5) Internationales Wirtschaftsforum Regenerative Energien GmbH (IWR) Grevener Str. 75 48159 Münster Contact: Dr. Norbert Allnoch Tel.: 02 51 / 83-3 39 95 Fax.: 02 51 / 83-3 00 99 E-Mail: [email protected] Internet: http://www.iwr.de Fields of activities: Know-how transfer and research activities in the field of production technology for regenerative energy.
(6) Transferzentrum für angepasste Technologie GmbH (TaT) Hovesaatstraße 6 48432 Rheine Contact: Prof.-Dr. Robert Tschiedel, Dr. Thomas Becker (lubricants) Tel.: 0 59 71 / 9 90-1 00 Fax.: 0 59 71 / 9 90-1 25 E-Mail: [email protected] Internet: www.tat-zentrum.de Fields of activities: Co-ordination and research activities esp. in the fields of biomass for energy
(7) Union zur Fürderung von Oel- und Proteinpflanzen e.V. (UFOP) + Arbeitgemeinschaft Qualitätsmanagement Biodiesel e.V. (AGQM) + Landwirtschaftliche Arbeitsgruppe Biokraftstoffe (LAB) Ernst-Reuter-Platz 3-5 10587 Berlin Contact: Dieter Bockey 0 30 / 3 19 04-2 15 0 30 / 3 19 04-4 85 [email protected] www.ufop.de Fields of activities: Co-ordination and R&D activities in the field of oil & protein crops esp. biodiesel.
1.2 Biomass for material use in industrial applications (1) Bundesanstalt für Getreide-, Kartoffel- und Fettforschung Institut für Getreide-, Kartoffel- und Stärketechnologie Schützenberg 12 32756 Detmold Contact: Prof. Dr. M. G. Lindhauer Tel.: 0 52 31 / 74 14 20 Fax.: 0 52 31 / 74 13 00 E-Mail: [email protected] Fields of activities: Starch, thermoplastic starch (TPS), TPS-Blends, starch glues.
(2) Bundesforschungsanstalt für Landwirtschaft (FAL) Institut für Technologie und Biosystemtechnik Bundesallee 50 38116 Braunschweig Contact: Dr. Thomas Willke, Prof. Dr. Klaus-Dieter Vorlop Tel.: 05 31 / 5 96-7 51 97 Fax.: 05 31 / 5 96-3 63 E-Mail: [email protected] Internet: www.fal.de Fields of activities: 1.3-Propandiol based on glycerol resp. sugar, carbon acid (itaconic acid) based on sugar, polyols based on sugar.
(3) Bundesforschungsanstalt für Landwirtschaft (FAL) Institut für Pflanzenbau und Grünlandwirtschaft Bundesallee 50 38116 Braunschweig Contact: Mr J. M. Greef, Dr. Frank Höppner Tel.: 05 31 / 59 63 07 Fax.: 05 31 / 59 63 65 E-Mail: [email protected] Internet: www.fal.pg.de Fields of activities: R&D in the field of cultivation of industrial crops esp. fibre crops.
(4) Deutsche Gesellschaft für Holzforschung e. V. Bayerstraße 57-59 80335 München Contact: Dipl.-Ing. Joachim Tebbe Tel.: 0 89 / 5 16 17 00 Fax.: 0 89 / 53 16 57 E-Mail: [email protected] Internet: www.dgfh.de Field of activities: non-profit-making association for the funding of research activities in the field of wood..
(5) Deutsches Zentrum für Luft- und Raumfahrt e. V. (DLR) Institut für Strukturmechanik Lilienthalplatz 7 38108 Braunschweig Contact: Dr.-Ing. Dipl.-Chem. Ulrich Riedel Tel.: 05 31 / 2 95-28 65 Fax.: 05 31 / 2 95-28 38 E-Mail: [email protected] Internet: www.sm.bs.dlr.de Fields of activities: R&D of natural fibre reinforced composites for industrial applications esp. processing technologies of natural fibre reinforced bio- polymers.
(6) Faserinstitut Bremen e. V. (FIBRE) Wachtstraße 17 - 24 28195 Bremen Contact: Dr.-Ing. Jörg Müssig Tel.: 04 21 / 3 60 89-0 Fax.: 04 21 / 3 39 84 99 E-Mail: [email protected] Internet: www.faserinstitut.de Fields of activities: Research and testing (properties) of natural fibres, special fibres, textiles, fibre reinforced composites and materials based on renewable resources.
98 (7) Fraunhofer-Institut für Angewandte Polymerforschung (IAP) Geiselbergstraße 69 14476 Golm Contact: Dr. Ulrich Buller Tel.: 03 31 / 5 68-10 Fax.: 03 31 / 5 68-30 00 E-Mail: [email protected] Internet: www.iap.fraunhofer.de Fields of activities: R&D in the field of cellulose-, carbohydrates- resp. poly lactid-materials.
(8) Fraunhofer-Institut für Fabrikbetrieb und -automatisierung (IFF) Sandtorsstraße 22 39106 Magdeburg Contact: Dipl.-Ing. W. Witek, Dipl.-Ing. R. Renner, Dipl.-Ing. G. Wagenhaus Tel. 03 91 / 40 90-0 Fax 03 91 / 40 90-5 96 E-Mail: [email protected] Internet: www.iff.fhg.de Fields of activities: Processing technologies and product development for materials based on renewable resources esp. biodegradable plastics.
(9) Fraunhofer Institut für Verfahrenstechnik und Verpackung (IVV) Giggenhauser Straße 35 85354 Freising Contact: Dr. Horst-Christian Langowski, Regina Walz Tel.: 0 81 61 / 4 91-0 Fax.: 0 81 61 / 4 91-4 91 E-Mail: [email protected] Internet: www.ivv.fhg.de Fields of activities: Processing of glues, binders, coverings for speciality papers, foils and packaging materials based on renewable resources.
(10) Fraunhofer-Institut für Werkstoffmechanik (IWMH) Heideallee 19 06120 Halle (Saale) Contact: Dr. Andreas Heilmann Tel.: 03 45 / 55 89-0 Fax.: 03 45 / 55 89-1 01 E-Mail: [email protected] Internet: www.iwmh.fhg.de Fields of activities: Testing of mechanical properties of packaging materials based on starch/carbohydrates, moulded compounds and insulating materials based an natural fibres.
(11) Institut für Agrartechnik Bornim e. V. (ATB) Max-Eyth-Allee 100 14469 Potsdam Contact: Dr. E. Kramer, Dr. K. Richter, Prof. Ch. Fürll Tel.: 03 31 / 56 99-0 Fax.: 03 31 / 5 49 63 00 E-Mail: [email protected] Internet: www.atb-potsdam.de
99 Fields of activities: Fundamental research, processing technologies and technical solutions in the field of renewable resources esp. for starch/carbohydrates and fibre crops.
(12) Institut für Angewandte Forschung Fachhochschule Reutlingen (IAF) Hochschule für Technik und Wirtschaft Alteburgstraße 150 72762 Reutlingen Contact: Dipl. Ing. Martin Tubach Tel.: 0 71 21 / 27 1-5 36 Fax.: 0 71 21 / 27 1-5 37 E-Mail: [email protected] Internet: www-IAF.FH-Reutlingen.de Fields of activities: R&D and testing in the field of natural fibre reinforced composites, wet and dry laid fleeces, yarns and textiles.
(13) Institut für Biochemie und Biotechnologie Abteilung Biotechnologie Technische Universit€t Braunschweig Spielmannstraße 7 38106 Braunschweig Contact: Priv.-Doz. Dr. Siegmund Lang Tel.: 05 31 / 3 91 57 37 Fax.: 05 31 / 3 91 57 37 E-Mail: [email protected] Field of activities: Biochemical and biotechnological processing of biodegradable surfactants, sunflower oil, rapeseed oil, sucrose, glucose.
(14) Institut für Energie- und Umweltforschung GmbH (ifeu) Wilckensstr. 3 69120 Heidelberg Contact: Dr. Guido Reinhardt Tel.: 0 62 21 / 47 67-0 Fax.: 0 62 21 / 47 67-19 E-Mail: [email protected] Internet: www.ifeu.de Fields of activities: Life cycle analysis (LCA) in the field of renewable resources esp. biodiesel, biomass for energy, natural fibres and bioplastics.
(15) Institut für Kunststofftechnologie (IKT) Universität Stuttgart Böblinger Str. 70 70199 Stuttgart Contact: Prof.-Dr.-Ing. H.-G. Fritz, Mr J. Ruch Tel.: 07 11 / 6 41-23 17 E-Mail: [email protected] Internet: www.ikt.uni-stuttgart.de Fields of activities: R&D in the field processing technologies of biodegradable plastics and natural fibre reinforced composites.
100 (16) Institut für Mikrobiologie Westfälische Wilhelms-Universität Universitätsstraße 14 - 16 48149 Münster Contact: Andrea Mersmann, Prof.-Dr. Andreas Steinbüchel Tel.: 02 51 / 8 33 98 20 Fax.: 02 51 / 8 33 83 88 E-Mail: [email protected] Fields of activities: R&D in the field of biodegradable plastics based on starch resp. sugar (carbohydrates).
(17) Institut für Pflanzenbau Rheinischen Friedrich-Wilhelms-Universität Katzenburgweg 5 53115 Bonn Contact: Dr. Ralf Pude Tel.: 02 28 / 73-28 75 Fax.: 02 28 / 73-20 43 E-Mail: [email protected] Internet: www.uni-bonn.de Fields of activities: Cultivation of industrial crops.
(18) Institut für Technik in Gartenbau & Landwirtschaft (ITG) Universität Hannover Herrenhäuser Straße 2 30419 Hannover Contact: Dr. Linda Groot Tel.: 05 11 / 7 62 38 85 Fax.: 05 11 / 7 62 26 49 E-Mail: [email protected] Internet: www.itg.uni-hannover.de Fields of activities: Testing and introduction of agricultural foils, flower-pots etc. based on biodegradable materials into the market.
(19) Institut für Werkstofftechnik, Kunststoff- und Recyclingtechnik Universität GH Kassel Mönchebergstr. 3 34109 Kassel Contact: Mr. K. Specht, Prof.-Dr.-Ing. A.-K. Bledzki Tel.: 05 61 / 8 04 36 88 Fax.: 05 61 / 8 04 36 92 E-Mail: [email protected] Internet: www.kutech-kassel.de Fields of activities: R&D in the field of wood and natural fibre composites.
101 (20) nova-Institut für politische und ökologische Innovation GmbH Goldenbergstraße 2 50354 Hürth Contact: Dipl.-Phys. Michael Karus, Dr. Markus Kaup Tel.: 0 22 33 / 94 36 84 Fax.: 0 22 33 / 94 36 83 E-Mail: [email protected] Internet: www.nova-institut.de Fields of activities: Market research, marketing concepts, profitability analysis, consulting, internet-services (e.g. www.nachwachsende-rohstoffe.info) esp. in the fields of material uses of renewable resources (natural fibres, composite materials, biodegradable plastics and lubricants etc.).
(21) RIKO - Realisierung innovativer Verbundwerkstoffe aus nachwachsenden Rohstoffen Abelnkarre 2 a 38100 Braunschweig Contact: Dr. Andreas Baar Tel.: 05 31 / 2 44 66 70 Fax.: 05 31 / 2 44 66 77 E-Mail: [email protected] Internet: www.riko.net Fields of activities: Co-ordination, project management and research in the field of composite materials based on renewable resources.
(22) Thüringisches Institut für Textil- und Kunststoffforschung e.V. (TITK) Breitscheidstraße 97 07407 Rudolstadt-Schwarza Contact: Dr.-Ing. Bürger, Dr.-Ing. Klaus-Peter Mieck Tel.: 0 36 72 / 3 79-0 Fax.: 0 36 72 / 3 79-3 79 E-Mail: [email protected] Fields of activities: R&D and testing in the fields of natural fibres, natural fibre reinforced composites and bioplastics.
(23) Transferzentrum für angepasste Technologie GmbH (TaT) Hovesaatstraße 6 48432 Rheine Contact: Prof.-Dr. Robert Tschiedel, Dr. Thomas Becker (lubricants) Tel.: 0 59 71 / 9 90-1 00 Fax.: 0 59 71 / 9 90-1 25 E-Mail: [email protected] Internet: www.tat-zentrum.de Fields of activities: Co-ordination and research activities esp. in the fields of construction & insulation materials based on renewable resources and biodegradable lubricants.
(24) Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) Ernst-Reuter-Platz 3-5 10587 Berlin Contact: Dieter Bockey Tel.: 0 30 / 3 19 04-2 15 Fax.: 0 30 / 3 19 04-4 85 E-Mail: [email protected] Internet: www.ufop.de Fields of activities: Co-ordination and R&D activities in the field of oil crops for oleochemical applications (e.g. lubricants, detergents, surfactants etc.).
102 2.0 Industrial Crops - Business Organisations In Germany four important organisations which dispose of remarkable budgets for promotion measures are linked to industrial crops. One of them is the “Fachagentur Nachwachsende Rohstoffe e.V. (FNR), Gülzow” which is directly funded by the German Federal Ministry of Agriculture (Bundesministerium für Verbraucherschutz, Ernährung und Landwirtschaft, Berlin). In 1993 the FNR was initiated by the Federal Ministry of Agriculture in order to support research and development in the subject area of renewable resources. The FNR is at present the driving force in the context of renewable resources in Germany.
The second organisation is the Bavarian “Centrales- Agrar-Rohstoff-Marketing- und Entwicklungsnetzwerk e.V. (C.A.R.M.E.N.), Straubing”. Bavaria has, as far as agriculture policy is concerned, a special status in the federal system in Germany. In contrast to other federal states the Bavarian Ministry of Agriculture (Staatliches Ministerium für Landwirstchaft und Forsten (StMLF), München) founded in 1992 the association C.A.R.M.E.N. as a service and co-ordination unit for the promotion of renewable resources only in Bavaria. Other federal states have no specific governmental organisations for renewable resources. In these states the co-ordination of the promotion measures are located in the particular Ministries of Agriculture. The following profiles report on objectives, staffing, key activities, budgets and sources of funding of the four most important institutions in the area of renewable resources:
(1) Fachagentur Nachwachsende Rohstoffe e.V. (FNR) Hofplatz 1 18276 Gülzow Tel.: 0 38 43 / 69 30-0 Fax: 0 38 43 / 69 30-1 02 E-Mail: [email protected] Internet: www.fnr.de Objectives & scope: Promotion of renewable resources in industrial applications Staffing: 34 staff members. Key activities: Allocation of funds, notifications, tenders and PR for renewable resources in industrial applications (energetical and material use). Budget: €26-34 millions per year. Source of funding: Funded by the German Ministry of Agriculture “Bundesministerium fur Verbraucherschutz, Ernahrung und Landwirtshaft (BMVEL), Berlin”.
(2) Centrales - Agrar-Rohstoff-Marketing- und Entwicklungsnetzwerk e.V. (C.A.R.M.E.N.) Schulgasse 18 94315 Straubing Tel.: 0 94 21 / 9 60-3 00 Fax: 0 9421 / 9 60- 3 33 E-Mail: [email protected] Internet: www.carmen-ev.de Objectives & scope: Co-ordination and services for the Bavarian government and the Bavarian industry in the entire field of renewable resources (energetical and material use). Staffing: about 20 staff members. Key activities: Co-ordination, supervising and evaluation of Bavarian projects in the field of renewable resources. Studies and consulting for the Bavarian government and industry. Budget: information not available. Source of funding: Financial contributions of association members (56 organisations/institutions incl. the Bavarian government), compensations by the
103 Bavarian government for the co-ordination and supervising of Bavarian funded projects (2% of the project budget), compensations for service, studies and consulting activities.
(3) Deutsche Bundesstiftung Umwelt (DBU) An der Bornau 2 49090 Osnabrück Tel.: 05 41 / 96 33-0 Fax.: 05 41 / 96 33-1 90 E-Mail: [email protected] Internet: www.dbu.de Objectives & scope: Funding of projects in the sectors of environmental technologies, environmental research, environmental protection also in the context of renewable resources. Staffing: about 120 staff members. Key activities: Selection, co-ordination, supervising and evaluation of environmental projects. Budget: about €90 million per year (for all projects incl. renewable resources). Source of funding: Funded by the assets of the charitable foundation (about € 1.2 billion).
(4) Umweltbundesamt (UBA) Bismarckplatz 1 14191 Berlin Tel.: 0 30 / 89 03-0 Fax.:0 30 / 89 03-22 85 Internet: www.umweltbundesamt.de Objectives & scope: Protection & preservation of the environment for future generations. Key activities: Research, reports and public information regarding environmental data. Selection, promotion and funding of projects linked to sustainable development incl. renewable resources. Budget: information not available. Source of funding: Funded by the German Ministry of Environment (Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit (BMU), Berlin).
In addition to the above mentioned institutions/organisations there are several trade associations which are also relevant. Unfortunately it was not possible to gain any information about the budgets available for promoting renewable resources. The trade associations do not report on the budgets they spend on renewable resources. Despite unknown budgets the following trade associations are linked to renewable resources:
(1) Arbeitsgemeinschaft für Dämmstoffe aus nachwachsenden Rohstoffen e. V. (ADNR) Tulpenweg 25 53229 Bonn Tel.: 02 28 / 9 48 25 39 Fax.: 02 28 / 9 48 25 41 E-Mail: [email protected] Internet: www.ADNR-Bonn.de Objectives & key activities: Promotion of insulation materials based on renewable resources (flax, hemp, cellulose, wood). Source of funding: Financial contributions of association members (10 producers of insulation materials).
104 (2) Arbeitskreis Naturfaserverstärkte Polymere Arbeitsgemeinschaft Verstärkte Kunststoffe Technische Vereinigung e.V (AVK-TV) Am Hauptbahnhof 10 60329 Frankfurt am Main Tel.: 0 69 / 25 09 20 Fax.: 0 69 / 25 09 19 E-Mail: [email protected] Internet: www.avk-tv.de Objectives & key activities: Promotion of natural fibre reinforced polymers. Source of funding: Contributions of association and working group members.
(3) Bundesverband Pflanzenöle e.V. Nauwieser Straße 19 66111 Saarbrücken Tel.: 06 81 / 3 90 78 08 Fax.: 06 81 / 3 90 76 38 E-Mail: [email protected] Internet: www.bvp-pflanzenoele.de Objectives & key activities: Co-ordination, promotion and market introduction of oils & fats for biofuels (direct oil not RME) and biodegradable lubricants. Source of funding: Financial contributions of association members (27 members, among others institutes/companies and engineers in the field of combustion engines for direct oil use).
(4) Bundesweite Arbeitsgemeinschaft Umweltschonende Schmier- und Verfahrensstoffe Transferzentrum für angepasste Technologie GmbH (TaT) Hovesaatstraße 6 48432 Rheine Tel.: 0 59 71 / 99 01 11 Fax.: 0 59 71 / 99 01 21 E-Mail: [email protected] Internet: www.tat-zentrum.de Objectives & key activities: Working group for the promotion of biodegradable lubricants. Source of funding: Financial contributions of working group members (about 25 producers, institutions, mechanical engineers in the field of biodegradable lubricants).
(5) Deutscher Naturfaserverband e.V. (DNV) Ebersbacher Straße 1 08396 Waldenburg Tel.: 07 00 / 50 10 01 00 Fax.: 07 00 / 50 10 02 00 E-Mail: [email protected] Internet: www.naturfaserverband.de Objectives & key activities: Promotion of German hemp and flax in industrial applications. Source of funding: Financial contribution of association members (about 45 farmers, fibre-processors and institutions in the field of flax and hemp).
(6) European Industrial Hemp Association c/o nova-Institut GmbH Goldenbergstraße 2 50354 Hürth Tel.: 0 22 33 / 94 36 84 Fax.: 0 22 33 / 94 36 83 E-Mail: [email protected] Objectives & key activities: Promotion of hemp fibres and shives in industrial applications.
105 Source of funding: Financial contributions of association members (6 European hemp separating & processing companies).
(7) EUROSOLAR e.V. Europäische Vereinigung für Erneuerbare Energien e.V. Kaiser-Friedrich-Straße 11 53113 Bonn Tel.: 02 28 / 36 23 73 Fax.: 02 28 / 36 12 79 E-Mail: [email protected] Internet: www.eurosolar.org Objectives & key activities: Networking and promotion of renewable energy (special networks and working groups for biomass and gasification). Source of funding: Financial contributions of association members (about 28 producers, institutions, mechanical engineers in the field of biomass and gasification for energy).
(8) Fachverband der Stärke-Industrie e.V. An der Elisabethkirche 26 53113 Bonn Tel.: 02 28 / 91 42 30 Fax.: 02 28 / 9 14 23 20 E-Mail: [email protected] Objectives & key activities: Promotion of starch in the food and non-food sector. Source of funding: Financial contributions of association members (about 8 producers of starch).
(9) Interessengemeinschaft für Biologisch Abbaubare Werkstoffe e.V. (IBAW) (International Biodegradable Polymers Association & Working Groups e.V.) Anklamer Straße 11 10115 Berlin Tel.: 0 30 / 440 568 50 Fax.: 0 30 / 440 568 51 E-Mail: [email protected] Internet: www.ibaw.org Objectives & key activities: Promotion of bioplastics in industrial applications. Source of funding: Financial contributions of association members (29 international producers of bioplastics).
(10) Verband der Chemischen Industrie e.V. (VCI) Fachvereinigung Organische Chemie Karlstraße 21 60329 Frankfurt Tel: 0 69 / 25 56-14 63 Fax: 0 69 / 23 56 99 E-Mail: [email protected] Internet: www.vci.de Objectives & key activities: Promotion of renewable resources in chemical applications (esp. oleochemical applications). Also engaged in the “European Renewable Resources and Materials Association (ERMA)” as Secretary General - Dietrich Wittmeyer (based within the VCI offices, Brussels) and in excellent collaboration with the Fachagentur Nachwachsende Rohstoffe (FNR) (also association member of the FNR). Source of funding: Financial contributions of association members (about 1,400 chemical producers).
106 (11) Verband Deutscher Bio-Diesel-Hersteller e.V. Am Weidedamm 1a 10117 Berlin Tel.: 0 30 / 72 62 59 00 Objectives & key activities: Promotion of biodiesel. Source of funding: Financial contributions of association members (about 8 German producers of biodiesel esp. RME).
(12) Verband Deutscher Oelmühlen e.V. (VDO) Am Weidendamm 1a 10117 Berlin Tel.: 0 30 / 72 62 59 00 Fax.: 0 30 / 72 62 59 99 E-Mail: [email protected] Internet: www.oelmuehlen.de Objectives & key activities: Promotion of oils & fats based on renewable resources esp. oil crops in food and non-food applications (oleochemistry, biodiesel). Source of funding: Financial contributions of association members (18 oil mills).
3.0 Crop Producer Organisations In Germany two crop producer organisations are relevant in the context of industrial crops, namely the “Union zur Förderung von Oel- und Proteinpflanzen (UFOP), Berlin” and the “Deutscher Bauernverband e.V. (DBV), Berlin”. Both organisations, UFOP and DBV, work together and are linked to each other (e.g. DBV is an association member of UFOP). UFOP and DBV build a community of interest in all questions concerning German crop producers and industrial crops, especially in the context of representing the interests of German farmers of oil and protein crops in the EU.
Further on UFOP is also involved in research activities (see above, Section 1) and promotion measures in the sense of an industrial crop business organisation. Nevertheless UFOP always represents the interests from a farmer’s point of view in strategic alliances with crop processing companies. Currently UFOP funds research activities concerning bio- diesel and oleochemical applications, e.g. “Quality Systems for Biodiesel”, “High-Oleic Sunflowers for oleochemical applications” or “Glycerol for animal food”. UFOP and DBV are also members of important German governmental institutions and associations like the Fachagentur Nachwachsende Rohstoffe (FNR). In summary UFOP and DBV are the main players regarding agricultural lobbying for industrial crops in Germany.
(1) Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) Ernst-Reuter-Platz 3-5 10587 Berlin Contact: Dieter Bockey Tel.: 0 30 / 3 19 04-2 15 Fax.: 0 30 / 3 19 04-4 85 E-Mail: [email protected] Internet: www.ufop.de Objectives & key activities: Community of interest and promotion of oil and protein crops in food and non-food applications, esp. biodiesel and biodegradable lubricants. Source of funding: Financial contributions of association members (60 organisations esp. about 20 federal farmers associations) incl. fees of seed breeders based on seed sales to the farmers.
107 (2) Deutscher Bauernverband e.V. (DBV) Godesberger Allee 142-148 53175 Bonn Contact: Dr. Klaus Kliem Tel.: 02 28 / 8 19 80 Fax.: 02 28 / 8 19 82 05 E-Mail: [email protected] Internet: www.bauernverband.de Objectives & key activities: Promotion of oil and protein crops in food and non food applications, esp. bio-diesel and bio-degradable lubricants. Source of funding: Financial contributions of association members (430,000 farmers).
4.0 Government Activities
4.1 Policy guidelines
The promotion measurements with respect to government activities in the field of renewable resources in Germany are embedded in two different political processes:
Environmental policy: The environmental policy in Germany is dominated by the ratification of the Kyoto Goals and the German “Nationale Klimarahmenkonvention” (National Climate Convention). In addition to the Kyoto Goals and the “National Climate Convention” the German cabinet also approved on 26 July 2000 the “Nachhaltigkeitsstrategie der deutschen Bundesregierung” (Strategy for Sustainable Development of the German Federal Government). The most important questions in this strategy are:
(a) How can climate-protection challenges be addressed and, at the same time, Germany’s attractiveness enhanced as a location for energy investments and the creation of jobs?
(b) How must a policy aimed at safeguarding natural resources be formulated so that it will create impetus for innovation and employment?
Renewable resources are explicitly mentioned in this “Strategy for Sustainable Development”. Based on these guidelines and CO2 reduction goals important German laws and regulations like the “Erneuerbare Energien Gesetz” (Renewable Energy Law) or the “Biomasseverordnung” (Bio-mass Regulation) were passed by the German parliament and implemented by the Ministry of Environment in 2001.
Agricultural policy: Since 1993 - in spite of the increasing importance of environmental aspects - the agricultural policy is still the driving force for renewable resources in Germany. Before 1993 different ministries such as the German Ministry of Education and Research (Bundeministerium für Bildung und Forschung (BMBF), Bonn), the Ministry of Economics and Technology (Bundesministerium für Wirtschaft und Technologie (BMWi), Bonn) or the Ministry of Nourishment, Agriculture and Forestry (Bundesministerium für Ern€hrung, Landwirtschaft und Forsten (BML), Bonn) had their own guidelines and promotion measurements in the subject area of renewable resources. Since 1993 all the promotion measurements (incl. industrial R&D) have been concentrated in the German Ministry of Agriculture (Bundesministerium für Verbraucherschutz, Ern€hrung und Landwirtschaft (BMVEL), Berlin) and its central co-ordination agency the Fachagentur Nachwachsende Rohstoffe e.V. (FNR). The BMVEL/FNR is charged with ensuring a practice-, problem- and result-oriented pooling of activities for the support of renewable
108 resources. Beside professional consultation and financial support the BMVEL/FNR takes part in scientific events, notifies current results of research to the public and informs about the whole range of applications of renewable resource.
Therefore the EU agricultural policy, including AGENDA 2000, is the decisive guideline for the German agricultural policy in the context of industrial crops, i.e. new incomes for farmers apart from food production and subsidies. In addition to the “classic” goals of the EU agricultural policy the goals of the BMVEL/FNR for renewable resources, can described as follows:
• to support a sustainable use of resources and energy
• to relieve the environment through the economical use of resources as well as the development of environmental friendly products and the reduction of CO2 emissions
• to step up and improve competitiveness of the German agriculture and forestry along the whole value added chain, i.e. also the economic activities upstream and downstream of farming
Formal - on technical grounds - only measurements/projects, which are in harmony with the three above listed goals can be funded, but in practice agricultural goals are the most important drivers. In general the promotional funds of about 26-35 million per year can be used for the following projects/measures:
• implementation of product lines based on renewable resources over the whole value added chain
• research, development and demonstration projects in the non-food sector
• information transfer and consulting of producers, processors and user of renewable resources
• marketing and Public Relations (PR)
Currently the situation in Germany - as far as renewable resources are concerned - can still be summarized as “agriculturally dominated”. But in the last four years (since 1998) environmental policy and therefore environmental guidelines became more and more important in the field of renewable resources. One example is the controversial discussion in Germany about the ecological advantages and the tax incentives of bio-diesel - rape oil methyl ester (RME) - released by a study published in 1999, initiated and funded by the Ministry of Environment (not by the Ministry of Agriculture!). This development is also a result of the elections and the political change in 1998 from a conservative dominated and more “classical” agriculturally oriented government to a government built by a coalition of the Social-Democratic Party and the Green Party, which is more agri-ecologically oriented.
4.2 Government funded activities
(A) Direct support of institutes
As mentioned above in Section 1 most of the German research institutes are government funded (e.g. FAL), co-funded (e.g. Fraunhofer Gesellschaft) or linked to a university (in Germany also government funded). As a rule the financial support from the government is not purpose-oriented in Germany.
109 Important institutes linked to renewable resources like the Bundesforschungsanstalt für Landwirtschaft (FAL) or the Fraunhofer Gesellschaft (FhG) receive government funding that can be used as a global budget to (co-) finance research activities in any fields that the institute is involved in, not only but also for industrial crops. This not purpose-oriented funding is directly linked to the German research principle called “Freiheit der Forschung” (Freedom of Research). On the one hand this principle allows invention and development of new technologies/products which in a market and purpose oriented research policy would have no chance of raising any funds. On the other hand research activities in Germany are not focused or co-ordinated with regard to a specific goal.
In the past this lack of co-ordination and market-orientation ended in some cases, in a situation that can be described as the “reinvention of the wheel” or the invention of technologies/products which were not in conformity with market conditions, quality and market prices. The following Section gives an example of German research work in the field of natural fibres, especially the failed German flax programme during the 80’s and the successful development of natural fibre reinforced composites during the 90’s.
(B) Research Projects
The published figures of the FNR in its annual report give a good indication of the amount spent for projects in the field of renewable resources. From 1993 to 2001 about 600 projects were promoted by the FNR with government funding of €250 million. Plus circa. €65 million of government funding before 1993 brings the total funding for renewable resources since the beginning in 1979 to about €315 million.
One example of the German research policy is the ‘failed’ German flax programme during the 80's and early 90's. About €10-20 million of government funding were spent for basic research, applied research and also investment aid, e.g.:
• 6 traditional flax swingles for long fibres (analogue to the existing swingles in the BENELUX countries!) were founded with governmental investment aid (only 1 German swingle survived)
• different harvest technologies were developed with government funding, among other things the failed combine harvester from Claas
• flax processing and separating technologies for short fibres (analogue to the existing technologies in France and the BENELUX countries like LaRoche, Charle etc.) were developed, also the processing and separating technologies from TEMAFA and BAHMER - both did not reach the technical standard and quality of existing technologies
• different technical applications for flax fibres were investigated in several basic research projects and applied industrial projects, esp. for geotextiles, friction linings, break linings, clutch lining, heat resisting doors etc. (all these applications failed as they did not conform with market conditions). However, research projects were funded which led to relatively successful applications like insulation materials and composite materials
Another good example in this context is the successful development and market penetration of natural fibre reinforced composites in the automotive industry during the 90’s. Appendix 1 gives an overview of 34 funded research projects since 1990 on the use of natural fibres (flax, hemp, kenaf, jute) in the automotive industry in Germany. This impressive list of research projects documents that at least the “failed” German flax programme was also a basis which led - after millions of €s were spent - to the successful use of natural fibres in composite material. Therefore the question arises whether this 110 outcome could have been achieved in a more efficient manner. Maybe also market driven but without government interventions? To provide an answer, cost-benefit-analysis can be helpful in the case of government promotion measures. Till now no extensive cost-benefit- analysis for renewable resources exists in Germany except different studies for bio- diesel/RME in the context of the given tax incentives. The results of this macroeconomic cost-benefit-analysis for bio-diesel/RME are contradictory, but they indicate that the costs are high and the benefits for the national economy are at least doubtful.
(C) Tax incentives
In contrast to government funded research projects, subsidy and tax incentives are often mentioned as more market conforming promotion measures. In the case of tax incentives the market price mechanism leads to a more efficient result as in the case of public spending with the typical economic problems of “dead weight loss” and “excess burden” - among others caused by inefficient government structures or information deficit.
But even tax incentives can lead to very inefficient market results caused by a government deficit of information or a lack of political capacity to act. In this context a typical example is the German mineral oil and green tax exemption for bio-diesel (in 2001 €0.4435 per litre diesel plus 16% VAT). With the help of this tax exemption combined with relatively high oil prices since 1999/2000 the bio-diesel/RME consumption in Germany increased from 200 t in 1991 to 400,000 t in 2001. Due to that the total tax losses for bio-diesel/RME amounted to approx. €230 million in 2001.
Without this very expensive government intervention bio-diesel/RME would have never reached such an increase in sales. The problem is that with rising oil prices, the constant tax exemption for bio-diesel causes a massive distortion of competition in relation to conventional diesel. Since 1999, the bio-diesel sales price was always €0.05 per litre lower than the current price of conventional diesel - independent of a high conventional diesel price of €0.90 per litre in September 2000 or a lower price of €0.70 per litre during 2001.
This indicates that constant tax exemption, under changing market conditions, can create a market result with high profits for bio-diesel producers without deployment of cost reducing processing technologies or innovations. This implies an inefficient allocation of goods and inefficient market result for the national economy. Currently the amount of bio- diesel sold in Germany is only limited by the available bio-diesel capacities. Otherwise the high price elasticity of fuel demand would cause a total switch of demand to less expensive bio-diesel. For that reason it is absolutely necessary to lower the tax exemption for bio- diesel in Germany. The question is to what extent.
(D) Commercialisation support
In this Section it has to be stressed that a direct financial commercialisation support by the government, e.g. for the market introduction and penetration of a specific product based on renewable resources, was not possible before 1998. After the elections in 1998 with the “new” Social-Democratic-Party/Green-Party government the political attitude towards direct commercialisation support changed. The most relevant example is the 3 year “Markteinführungsprogramm für biogene Treib- und Schmierstoffe” (Market introduction programme for bio-fuels and bio-lubricants) with a total budget of €23 million from 2000 to 2002. With this programme it is possible to fund technical equipment and conversion kits for machines, vehicles and petrol stations to enable the use of bio-fuels and bio-lubricants in existing technologies. For the first time this programme pursues a more market oriented approach in contrast to the existing focus on basic and applied research - in this case to overcome technical barriers for the market penetration. Currently another market introduction programme for construction and insulation materials is under construction.
111 (E) Conclusion on government funded activity
In Germany governmental funded activities for renewable resources are focused on:
• basic and applied research esp. technical research
• tax exemption for biodiesel/RME and
• introduction programmes
In general in a more market economic oriented approach, concerning the funding of basic and applied research, it is absolutely necessary to realise in an early state whether a new technology or product conforms to market conditions. Therefore research institutes and universities have to integrate economic approaches in their research work, e.g. cost- benefit-analysis or market research and profitability calculations. In sum all the governmental promotion measures esp. direct price interventions like the tax exemption have a great impact on the private sector activities in Germany (see bio-diesel or flax swingles). In addition to the government funded activities the German “Erneuerbare Energien Gesetz” (EEG) (Renewable Energie Law) is another massive intervention in the German energy market (the EEG fix minimum prices for energy produced by renewable sources).
Despite the impact of government intervention in Germany some developments and inventions are more market driven, e.g. further development of the former Elsbett technology for direct unrefined oil use in combustion engines. The market penetration of this technology is a good example that if the product benefit is high enough (simple unrefined oil can be used) in some cases no or less government funding is needed. But from our point of view government intervention for products and technologies based on renewable resources are necessary because of market failures (e.g. externalities) which hinder development and market introduction.
Without government promotion measures some successful environmental friendly products/technologies would never have been developed and introduced by the private sector in such a short space of time, e.g. bio-diesel, bio-plastics or natural fibre reinforced composites.
Nevertheless it has to be discussed whether it is efficient or not if measurements beyond basic research are government funded, especially the commercialisation and penetration of products.
Finally from an economical and also ecological point of view, the question is: Which are the most efficient promotion measures?
112 5.0 The Key Companies Involved The following list gives an overview of the key companies involved and their basic marketing strategy in the field of renewable resources:
(I) Biodiesel (olso direct oil)
Oelmühle Leer Connemann GmbH & Co. Sägemühlenstraße 45 26789 Leer Contact: Mr Joosten Connemann Tel.: 04 91 / 80 02-0 Fax.: 04 91 / 80 02-1 40 Internet: www.biodiesel.de Fields of activities: Production of rape oil methyl ester (RME) for biodiesel (capacity 100,000 t per year) Marketing strategy: Direct marketing through “free” petrol stations and competitive price level linked to conventional diesel.
Vereinigte Werkstätten für Pflanzenöltechnologie Josephplatz 3 80798 München Contact: Thomas Kaiser Tel.: 0 89 / 2 71 91 62 Fax.: 0 89 / 2 72 23 35 Fields of activities: Conversion kits and retrofit of diesel cars for direct oil use in combustion engines. Marketing strategy: Direct sale esp. to farmers with cultivation of oil crops (rape).
(II) Biolubricants
Fuchs Petrolub AG Friesenheimer Str. 17 68169 Mannheim Contact: Dipl.-Phys. Rolf Luther Tel.: 06 21 / 38 02-1 20 Fax.: 06 21 / 38 02-2 39 Fields of activities: Production of biodegradable lubricants based on native and synthetic oleochemical ester. Marketing strategy: High performance lubricants for eco-sensible applications.
(III) Biomass for Energy
Choren Industries GmbH Frauensteiner Straße 59 09599 Freiberg Contact: Dr.-Ing. Herbert Aly Tel.: 0 37 31 / 26 62-21 Fax.: 0 37 31 / 26 62-25 E-Mail:[email protected] Internet: www.choren.de Fields of activities: Production of fuels based on biomass and gasification of biomass with the patented process of the Carbo-V-Technology. Marketing strategy: Competitive price level linked to conventional fuels and usability in conventional combustion engines analogue to biodiesel and also in fuel cells (current project with DaimlerChrysler).
113 (IV) Bioplastics
Hubert Loick VNR GmbH Heide 26 46286 Dorsten-Lembeck Contact: Hubert Loick Tel.: 0 23 69 / 98 98-0 Fax.: 0 23 69 / 98 98-99 E-Mail: [email protected] Internet: www.farmfill.com Fields of activities: Production of starch based biopolymers in a short processing chain (extrusion process) esp. Loose-fill and catering materials. Marketing strategy: Biodegradable plastics which are competitive with mass produced plastics (PE, PS etc.).
Biotec Naturverpackungen GmbH Blinder Weg 30 46446 Emmerich Contact: Jürgen Lörcks Tel.: 0 28 22 / 9 23 10 Fax.: 0 28 22 / 53 72 65 E-Mail: [email protected] Internet: www.biotec.de Fields of activities: Production of biodegradable thermoplastic starch blends for injection moulding and foils. Marketing strategy: Thermoplastics for more complex injection moulded parts and foils which are biodegradable.
(V) Composites
Faurecia Interior Systems Am Reichenberg 12 36214 Nentershausen Contact: Dr.-Ing. Jochen Gassan Tel.: 0 66 27 / 92 05-15 Fax.: 0 66 27 / 92 05-25 Fields of activities: Production of natural fibre reinforced composites for the automotive industry. Marketing strategy: High-quality and high-value composite interior systems esp. for the German automotive industry.
Johnson Controls Interiors Mühlhausener Str. 35 47929 Grefrath Contact: Dr. Eugen Prömper Tel.: 0 21 58 / 9 19-1 36 Fax.: 0 21 58 / 9 19-2 60 Fields of activities: Production of natural fibre reinforced composites for the automotive industry. Marketing strategy: High-quality and high-value composite interior systems esp. for the German automotive industry.
114 (VI) Construction & Insulation Materials
Flachshaus GmbH Pritzwalker Str. 1 16928 Giesendrof Contact: Jens Brethauer Tel.: 0 33 95 / 70 07 96 Fax.: 0 33 95 / 30 19 2 Fields of activities: Production of fleeces for insulation based on pure flax fibres. Marketing strategy: High-value insulation fleeces based on pure flax fibres without any synthetic additives esp. for ecological oriented customers.
Hock Vertriebs GmbH Industriestr. 7 76297 Stutensee-Spöck Contact: Ms Carmen Hock Tel.: 0 72 49 / 94 71-0 Fax.: 0 72 49 / 94 71-25 E-Mail: [email protected] Fields of activities: Production of insulation fleeces based on hemp fibres blended with PE (to achieve better quality). Marketing strategy: High-value and high-quality insulation fleeces based on domestic hemp fibres esp. for ecological and quality oriented customers in combination with wooden houses.
(VII) Natural Fibres, fleeces and mats
Treu Hanf AG Am Treptower Park 30 12435 Berlin Contact: Mathias Schillo Tel.: 0 30 / 53 69 91-53 Fax.: 0 30 / 53 69 91-54 E-Mail: [email protected] Internet: www.treunhanf.de Fields of activities: Separation and processing of hemp fibres - interest and shareholder of different companies also in eastern Europe in the field of hemp processing (e.g. Badische Naturfaseraufbereitung GmbH, Hanf Fabrik Zehdenick etc.) Marketing strategy: Co-operation strategy with other european hemp fibre processors to survive as a fibre and fleece/mat supplier for the automotive industry and to develop and introduce new high-value hemp products.
Polyvlies Franz Beyer GmbH & Co. KG Rodderstr. 52 48477 Hörstel-Bevergern Contact: Gunnar Beyer Tel.: 0 54 59 / 93 10-0 Fax.: 0 54 59 / 93 10-50 Fields of activities: Production of mats and fleeces based on natural fibres esp. flax and hemp. Marketing strategy: Production of high-quality mats and fleeces for technical applications.
115 (VIII) Oleochemicals Cognis Deutschland GmbH Henkelstr. 67 40551 Düsseldorf Contact: Dr. Michael Skwierc Tel.: 02 11 / 79 40-82 49 Fax.: 02 11 / 7 98-17 98 E-Mail: [email protected] Internet: www.cognis.com Fields of activities: Production of oleochemicals for surfactants, lubricant, bioplastics etc. Marketing strategy: Oleochemical commodities and specialities with ecological advantages which can also compete with petrochemical basic products.
6 Appendix Summary of publicly funded R&D projects on the use of natural fibres (flax, hemp, kenaf, jute) in the automotive industry in German
116 117 118 119 120 121 122 123 124 125 126 127 128 Appendix 1.3 France
Industrial Crops and Products Country Reports France
SAC/Innovation Management
129 1. Sources of Information Used in this Report This report is based on web sourced and other published information and from consultancy interviews carried out in France.
2. Public Sector Research Organisations There is a very large number of research organisations and universities that undertake research into industrial crops. A list of most of these is given in Appendix A.
2.1. INRA – Institute National de la Recherche Agronomique
INRA is the leading Government Agency responsible for Agricultural Research. It is state funded but relies on industrial collaboration for much of the research at the Institute.
Overall priorities are:
• food, nutrition and health
• sustainable agriculture
• clean environment
The last two have both food and non-food applications.
The research effort on non-food has declined in recent years. In the mid 1990s the research department had 40-50 scientists compared to only 10-15 now.
A high proportion of INRA projects are part of EU wide activities with collaborations with the Netherlands and Germany but less so with the UK.
Up to 1998 the emphasis was on land utilisation - opportunities for specialist products with high value and added value high volume products e.g. bio-diesel. At that stage most of the effort concerning bio-diesel, bio-ethanol and thermoplastics was in the processing step, though the latter was not successful.
Policy within INRA has changed slightly and they are now looking at more fundamental approaches that not led by political drivers. However, they are aiming for more efficient conversion processes, which would therefore be more able to compete with fossil fuels.
Focus of more recent research projects includes:
• the principle of renewable carbon utilisation
• using GM technology for non-food - less consumer sensitive uses
• improved conversion processes for starch to ethanol
• reduced lignin content of straw and poplar (Versailles)
• enzymes for converting C6 carbon chains (in collaboration with Novo)
One target is the development of a yeast that can utilise pentose as well as C6 (10-15% of pentose is usually wasted) (Toulouse).
130 Emphasis on pilot scale developments has declined as staff have tended to leave with the products to go to industry.
Economics does not seem to feature strongly in INRA’s priorities. One economist operates at Government level aiming to influence scientific direction.
Vegetable oil production cannot compete with mineral oil at $41/barrel. Even polylactate plastics are still double their price.
INRA believe that they are well placed to achieve breakthroughs over a 5-10 year timeframe through biotechnology - bioethanol and lignin exclusion. Fibre work is coming from North America.
INRA have clearly taken the view that breakthroughs from renewable crop material rely on the application of fundamental science and have diverted from being led by short-term needs based on land utilisation or political pressures.
Technical centres managed by INRA:
• Amiens - Centre for valorisations - glucide utilisations - for chemical derivatives
• ARD, Reims – fibres, wet fractionation and enzymes
• Toulouse – oils. For example oil transformation for lubricants. Also a technology transfer centre.
Amiens and Reims were historically both developed for pilot scale production.
2.2.1 ADEME - Agence de l’Energie et la Maitrise de L’Environment (French Agency for Energy and the Management of the Environment)
ADEME is a public body, which is industrial and commercial in nature, overseen by the Ministries of the Environment, Industry and Research. It manages a budget of more than 2FF billion per year, with a staff of 770 (of which 400 are engineers) spread over 26 regional branches, 3 overseas territories, and an office in Brussels.
Under the control of the Director General are five departments, one of which is the Department for the use of renewable energy sources.
Two major topics define the scope of this department’s action:
A) Wood-Energy-Environment, consisting of two areas of activity:
1) Fuelwood: The goal is to increase the share of fuelwood in the national energy balance, and to shape a durable structure for the fuelwood processing industry, via effective regional and local organisation. The priority focus is on heating with fuelwood for local authorities and community buildings, through the fuelwood and local development plan; for industry (wood waste plan); and home heating with wood. In the future bio-electricity projects will be developed to exploit gasification and combustion-based technologies.
2) Wood materials (construction): Development of uses for wood materials, notably in the framework of the French programme to combat the greenhouse effect. This
131 action is undertaken under the auspices of a joint programme involving Government Ministries (Agriculture, Environment, Industry & Research) and the construction trades.
B) Bio-fuels and fuel additives. Bio-materials and bio-molecules (agri-resources):
Via the scientific interest group AGRICE, ADEME pursues R&D programmes aimed at increasing the proportion of renewable feedstocks in the national energy balance (bio-fuels) and in the manufacturing of chemicals (lubricants, solvents, surfactants, polymers, additives). The prime objectives are to lower production costs and enhance environmental performance, allowing these sectors to consolidate and sustain their growth, improve fuel quality and define new reformulated fuels. These non-food uses of agricultural crops will also contribute to the development of chemicals and materials markets.
3. Specialist Industrial Crop Product Organisations
3.1. AGRICE (Agriculture for Chemicals and Energy)
The scientific interest group AGRICE, focuses on new uses and enhanced value for agricultural products and byproducts as energy, chemical and materials feedstocks. AGRICE is committed to coordinating, funding, monitoring and evaluating research and development programmes that further these goals.
AGRICE was founded in 1994 by the French Government Ministries for Agriculture, Environment, Industry and Research, in collaboration with ADEME. The initial six-year term came to an end in 2000. After an evaluation process the ministries which sponsor AGRICE have decided to renew the group’s charter for another six years.
AGRICE’s membership comprises associate members, scientific, technical and economic research bodies, businesses, and professional organisations in agriculture. These partners are solicited via a call for expressions of interest to identify businesses, professional and research bodies and institutions that are involved in creating value from agricultural resources (agri-resources).
Members in 2001 included:
• Institute Francais du Petrol (IFP)
• Institute Nationale de Recherche Agronomique ( INRA)
• Centre National de recherche Scientifique ( CNRS)
• Agence de l’Environment et de la Matrise de l’Energie ( ADEME)
• Professional organisations in oilseeds (ONIDOL), grains (AGPB) and Beets (CGB)
• Aventis
• TotalFinaElf
• Limagrain and EDF
• French Ministries of Agriculture, Industry, Research and Environment.
132 (i) Scope of Activities
The scope of AGRICE’s activity covers primarily the industrial conversion of crop production to chemicals (lubricants, surfactants, solvents etc) energy (liquid and solid bio- fuels) and materials (agrimaterials, bio-polymers). It’s brief is to stimulate applied technical research. The consortium first tackled work aimed at substituting plant-based products for products derived from fossil fuels. This strategy has been progressively widened to take into account the inherent characteristics of plant based products in order to meet new needs.
AGRICE issues requests for proposals to select research activities and environmental and socioeconomic studies. A scientific council, made up of ex officio institutional members, associated members and experts, prepares the tenders, assesses proposals and carries out a preliminary selection of the proposed research programmes. The council is assisted by a wide network of experts and thematic working groups. A group council made up of the ex officio members and associate members makes the final selection of AGRICE projects, defines the research strategy and guides funding policy and allocation. Projects are assessed on a number of key criteria:-
• market size
• scientific innovation
• economics
• opportunity for the industry to compete with North America
Initially research focused on energy and in particular on liquid bio-fuels for vehicles. However, the bio-molecules sector has gradually become the largest research sector in the AGRICE budget and represents 46% of cumulative project funding. Liquid Bio-fuels account for 26%, bio-materials 16% and bio-combustibles (non-vehicle) for 12%.
From 1994 to 2000 AGRICE supported or gave its label of approval to 400 public and private research programmes with a total value of over €80millions. Public grants amounted to over €14millions. AGRICE provided public funds and administered 164 projects for the public research branch; 106 of these have been completed. A list of projects supported is given in Appendix B.
Following an evaluation of AGRICE’s activities undertaken by a specialised consultant, the French Government and ADEME decided to prolong AGRICE, renewing and broadening its membership and revamping its operations to keep pace with current developments.
The new charter espouses the following principles:
• to promote crop production and chains of activity, via diversification and research/development, seeking new industrial markets for agriculture, in a commitment to sustainable development
• to guide research and development in accordance with market perspectives and product competitiveness
• to bring together under the auspices of AGRICE representatives of all sectors with the potential to advance renewable resources
133 • to strengthen evaluation and forward thinking within AGRICE, relying notably on work by thematic study groups
• to offer high-quality communication by setting up a centre for economic intelligence on renewable products and the greenhouse effect in liaison with AGRICE
Today AGRICE’s research-development programmes have been strengthened and fine- tuned, with a more direct focus on industry and markets. In particular they recognise that they need to concentrate on market issues and undertake market and sociological surveys. Bio-diesel projects will not be encouraged in future. Developing agricultural practices that are compatible with the environment, exemplified by non-food crops, continues to be a priority for AGRICE. However, AGRICE recognise that new products must be able to match prices of conventional products and have the same or better performance and quality characteristics.
(ii) Funding
With renewed funding AGRICE has a more balanced input from both the Ministry of Agriculture and Ministry of the Environment. More than 40% of AGRICE’s funding comes from the French Ministries for Agriculture, Environment, Industry and Research via ADEME. Public Research bodies (CNRS, IFP INRA) contribute by allocating operating funds to their researchers for research under AGRICE. Agricultural professional organisations and industrial partners finance the programmes in which they directly participate.
There are several criteria, which they use to judge projects.
Market size, scientific innovation, economics, opportunity for the industry to compete with the US.
All AGRICE projects bring together laboratories and industrial companies. The size of the company AGRICE deals with depends on the product sector. The energy sector involves big companies, cosmetics mostly small companies, lubricants medium to big companies and chemicals more often than not big companies.
Apart from the bio-fuels sector, most of the other applications which AGRICE has funded are small scale, niche market applications. Whilst bio-fuels accounts for 1% of the oil market for cars other non-food products have negligible market shares.
The new emerging products need more money in order to assist the companies scale up from research to pilot projects and then on to commercial production.
Some policy measure or tax incentives may be necessary, for example, regulation in environmentally sensitive areas such as bio-degradable lubricants. However, they prefer to use persuasion and voluntary codes of conduct than regulation. They do not set targets for the number of products to be delivered. Over the next 6 years they are going to concentrate on market issues, market surveys and sociological surveys. They are not going to finance bio-diesel anymore. New products must have the same price and the same or better quality than conventional products. The financial report in the AGRICE activity report for 1994 to 2000 shows that the total budget of supported projects, the amount of the ADEME grant, completed projects, objectives attained and patents applied for. The following information is reproduced from that publication.
134 €
135 3.2 PRONOVIAL – Economic Intelligence Unit for Renewable Materials and the Greenhouse Effect. In 2001 under the initiative of a Regional Authority in the Reims area of Northern France, and AGRICE a new service organisation, PRONOVIAL, was established to provide market and economic information on industrial crop products. The founder members were AGRICE, University of Reims, Europol-Agro, Peugeot/Citroen, ONIDOL and Cognis (the latter representing the German Chemical Industry).
Information is provided to company or Government department clients for a fee.
The group is also expected to contribute to the debate on climate change.
4 Crop Producer Organisations In France there are a very large number of crop producer organisations which have, in some way, been involved in or sponsored and supported research and development of industrial crop products. The main ones are discussed here whilst a full list is given in Appendix C.
4.1. PROLEA
PROLEA is the oilseed producers/crushers organisation which has a number of organisations within it,:
• CETIOM - the Research and Development arm
• ONIDOL – the interprofessional organisation of oilseed producers and processors including feed companies
• UNIP – interprofessional organisation of protein crops
• SOFIPROTEOL – the financial organisation responsible for funding oilseed and protein crop based capital investments, and
• FOP – a union of oilseed growers
CETIOM is the R&D arm and has a budget of around €11m per year. Ninety per cent of this is spent in-house with the remaining 10% going to INRA research centres. CETIOM has a staff of 110. Today 80% of the activity is related to crop production research with selection of varieties, climate performance and distance management important. Eco balance issues are also important. Economic studies are mainly at the macro level based on model farms. Development of HEAR has been an important industrial crop activity. Funding is from a mandatory producer levy of €1.5 per tonne. Processing companies are also members of CETIOM but do not pay the levy. CETIOM are represented at AGRICE through ONIDOL.
ONIDOL is the interprofessional organisation of oilseed producers and processors including feed companies. Funding is via a levy of €0.5 per tonne collected by the crusher. ONIDOL supports a programme focusing on the study of the fate in the ground of vegetable oils used as solvents in phytosanitary formulation. (IENICA report).
136 SOFIPROTEOL is the investment arm of PROLEA and is also funded by producers via ONIDOL, at a rate of €1 per tonne. Current funding has reached €2.15billion and once the capital base is sufficient ongoing funding will cease as is now the case with Unigrains for cereals.
There is a recognition that in the past there was insufficient strategic thinking in terms of new industrial crop development. For example a major research effort was put into developing a castor oil replacement under the EEIG ‘Euroricin’ project, significantly funded by the EC. Technically results were good but meanwhile the market price of castor bean oil had declined.
Projects need to be decided or based on the probability of a sustained successful outcome.
SOFIPROTEOL are currently funding projects based on HEAR, High Oleic Sunflower etc.
CETIOM are represented with AGRICE through ONIDOL. Their involvement is mainly for eco-balance work.
4.2. Unigrains
Unigrains is one of the three parts of the larger organisation Cerealiers de France. The other two parts are the AGPB and the ITCF. The AGPB (General Association of Wheat Producers) is a lobbying body which is affiliated to the French farmers union (FNSEA). It has around 15 staff in Paris and represents the interests of French wheat producers in Brussels. The ITCF is the Technical Institute for cereals and fodder. It has 26 regional centres across France running experimental farms.
UNIGRAINS operates like a bank. It takes capital shares in different companies involved in cereal processing, both for food and for non-food uses. Between 1980 and 1990 Unigrains’ funding was derived from a tax on cereal producers. However, in 1990 the European Commission challenged this tax and the tax going to Unigrains was stopped. The Unigrains fund is now purely as a result of financial investments they have made and profits from selling their shares in companies after a period of time. They normally keep their financial stake for 7 or 8 years. They do sometimes receive royalties from commercial products. They have no wish to be the major financial investor and normally have around a 10% – 15% stake.
The main goal of Unigrains is to develop the production of cereals. They have a staff of 80 - 85 but only 3 are involved in the non-food sector. The annual budget for the non-food sector is €2-3million compared to €100 million for the food sector. They are members of AGRICE and whilst many of their projects are financed via AGRICE they do also finance projects without AGRICE help.
The main focus twenty years ago was the bio-fuels sector and this has been very successful, largely as a result of tax incentives supporting it. They have now moved into bio-plastics, cosmetics, surfactants and straw co products.
They tend to work with smaller companies, as these are more interested in research than the larger multinationals like MONSANTO or DUPONT. However, they have also worked with TOTALELF on the Bio-fuels projects.
They are part funding two new bio-ethanol plants. Industrial crop areas for ethanol production are currently: cereals – 15,000 ha, sugar beet – 10,000 ha. Small compared with OSR for bio-diesel.
Normal time frame for R&D to deliver is at least 10 years.
137 Although Unigrains take a royalty on innovations this is purely as a source of income not for licensing. In order to accelerate the development process they would need more money
to fund more research. They work alongside other similar organisations like CETIOM and the oilseeds research body. They are looking for projects with good added value which do not need subsidy to be successful and can be competitive on price. French consumers are not willing to pay more for environmentally friendly products, except in the cosmetics sector which does not appear to be as price sensitive.
Examples of projects in which they have a financial stake include BIODECAP, which has produced an abrasive for use in the aviation sector and a co-operative which has developed a plastic mixture from PET and straw.
Unigrains are responsible for developments of maize. Developments of uses of proteins from cereals or maize are only at the laboratory stage.
AGPM (Maize Producers Association) have given support to BIODECAP to produce a paint stripper from maize starch.
5. Government Policy The driving force behind the development of industrial crop products in France has been to support the agricultural economy. This remains the dominant driver although political concerns on environmental issues and energy security are increasing.
The Desmarescaux report: Industrial Crops in production
In 1998 the French Government commissioned Philippe Desmarescaux, Director-General of Rhône-Poulenc, to undertake a review of Situations and Perspectives for the Development of Agricultural Production for Non Food Uses. According to Mr Desmarescaux in 1999, 5% of cultivated lands in Europe were used to produce crops for new plant-based feedstocks and agri-resources feedstocks and agri-resources.
The view from INRA was that The Desmaresceaux report did not present anything new as far as research policy. It was only concerned with land utilisation.
Crop lands and quantities devoted to alternative and industrial crops :
138 Source: P. Desmararescaux : Situation et perspectives de developpement des productions agricoles usage non alimentaire (December 1998).
6. The Status of Industrial Crops The areas of oilseeds grown on set aside for industrial markets are published annually by PROLEA.
In addition there are about 55000 hectares of flax for linen production. A small area of sugar beet is grown for industrial alcohol production.
6.1 The Key Companies Involved
There are a large number of commercial companies, which are stakeholders in AGRICE and have therefore been actively involved in one or more research projects. These are listed in Appendix D.
6.2 Oils
NOVANCE – uses 1,000 tonnes of vegetable oil to produce bio-lubricants, and several thousand tonnes of vegetable oil in its paints division.
MOBIL – is readying a production line for clean lubricants 9 AGRICE programme.
A SNCF/SHELL/BP partnership is working on lubricants for greasing railway track (around 700t/year).
Pieri FINA marketing vegetable-ester formulations (6000t/yr) for concrete moulds / forms.
Belavoid and Coates Lorrileux companies are investigating use of vegetable oil in ink.
139 ROBBE - company marketing Phytorob, a vegetable oil and ester used as solvents for insecticides and fungicides. NOVANCE and SOLIANCE (subsidiary of ARD) selling doubly natural surfactants to the cosmetics industry.
6.3 Bio-molecules
ATOCHEM is preparing a nylon11 based on undecanioc amino acid, a derivative of ricinoleic acid.
6.4 Bio-fuels
Rapeseed methyl ester Bio-fuel (RME) - The European ALTENER programme (1997) and the French air-quality law (adopted 30 December 1996) have spurred the development of the bio-fuel processing industry. INRA, ONIDOL, INPT the NOVANCE group and IFP, have all been studying the use of RME with funding through AGRICE.
AGRICE managers consider that bio-fuels is a success story and is working better than expected. The EU Directive states that by 2005 biofuels usage must be 2%-5%. This amounts to 600,000 tonnes in France. They are expecting that by 2010 this figure will be 6% usage and amount to 2 million hectares of land.
6.5Carbohydrates
AGRIPAK - company produces packing material from maize starch.
HENKEL-SEPPIC - produces surfactants from agricultural products.
CERESTAR and ROQUETTE - starch applications for adhesives and glues.
BIODECAP - supported via a prize for grain science achievement awarded by grain companies and AGPM to develop a paint stripper from starch.
ROVERCH - factory produces POLYNAT, a bio-plastic made from rye flour.
ARD - company working with CORA chain of hypermarkets to produce packing boats from wheat flour. ARD has a whole series of other products being researched and manufactured from wheat.
6.6 Fibres
EMC2 co-operative in Lorriane created a subsidiary EMC2 Development to work on conversion of lignocellulosic materials. A number of paper companies have been working with sorghum and kenaf for packaging and cardboard - Papeteries de Gascogne, SAPSO, EMIN, LEYDIER. ARD has set up production of surfactants derived from wheat straw.
140 Appendix A
Research Bodies and Departments involved in Industrial Crop Research Universities - Research Laboratories - the following organisations are all stakeholders involved in AGRICE and are public and private organisations that participate in one or more of the projects supported by AGRICE.
EMA : Ecole des Mines d’Alés 6, avenue Clavieres – 30100
ALES ENSAM : Ecole Nationale Supérieure d’Agriculture de Montpellier ENSAM/ INRA - 2, place VIala - 34060 MONTPELLIER Cedex 1
ENSCR : Ecole Nationale Supérieure de Chimie de Rennes Avenue du Général Leclercq - 35700 RENNES
ENSCPB : Ecole Nationale des Travaux Publics ENSCPB / LCPO - Ave Pay Berlard - 33405 TALENCE Cedex
ENTPE : Ecole Nationale Supérieure de Chimie Physique de Bordeaux Rue Maurice Audin - 69518 VAULX EN VELIN
ESAP : Ecole Supérieure d’Agriculture de Purpan 75 voie du Toec - 31076 TOULOUSE
Faculté de Pharmacie : LBM 5, rue Albert Lebrun - BP 403 - 54001 NANCY
Faculté des Sciences de Limoges Laboratoire CSN - 123, avenue A. Thomas - 87060 LIMOGES
Faculté des Sciences St Jérôme Case C12 - Laboratoire de Biochimie structurale - LASO Avenue Escadrille Normandie Niemen - 13397 MARSEILLE Cedex 20S
INPL : Institut National Polytechnique de Lorraine Laboratoire des Sciences du Génie Chimique - 2, avenue de la Forêt de la Haye 54501 VANDOEUVRE LES NANCY
INPT : Institut National Polytechnique de Toulouse Ecole Nationale Supérieure de Chimie de Toulouse - 118, route de Narbonne 31077 TOULOUSE Cedex 4
INSA Toulouse : Institut National des Sciences Appliquées de Toulouse Dpt GBA - Complexe Scientifique de Rangueil - 135, avenue de Rangueil 31077 TOULOUSE Cedex 4
ISPA : Institut Supérieur du Plastique Montfoulon - 61250 DAMIGNY
IUT Orléans : Institut Universitaire de Technologie d’Orléans Laboratoire de productique chimique - Campus universitaire BP 6729 - 45067 ORLEANS Cedex 2
141 LCMP LCMP UMR CNRS - INPL 7568-ENSIC - 1, rue Grandville - 54000 NANCY
LESOC LESOC, URA 406 CNRS - Université Nancy I - 30, rue Lionnois BP 3069 - 54013 NANCY Cedex
Université Claude Bernard Lyon I Laboratoire de Chimiométrie - 43, boulevard du 11 Novembre 1918 69622 VILLEURBANNE Cedex
Université d’Aix 1, place Victor Hugo - 13100 AIX EN PROVENCE
Université de Corse URA CNRS 2052 - Equipe “Chimie et Biomasse” - Route des Sanguinaires 20000 AJACCIO
Université du Maine Avenue Olivier Messian - 72085 LE MANS Cedex 9
Université de Montpellier Place Eugéne Bataillon - 34095 MONTPELLIER Cedex Y
Université de Poitiers CNRS UMR 6504 - Laboratoire de Catalyse en Chimie Organique 42, avenue du recteur Pineau - 86022 POITIERS Cedex Y
UTC Université de Technologie de Compiègne - Centre B. Franklin BP 60649 - 60209 COMPIEGNE Cedex
UPS Université Paul Sabatier - 118, route de Narbonne - 31062 TOULOUSE Cedex Technical Centres and Groups ADRIAC : Association de Coordination Technique pour l’Industrie Agro alimentaire Pôle Technologique Henri Farman - BP 1027 - 51686 REIMS Cedex 2
AILE 65, rue de St Brieuc - 35042 RENNES
AFOCEL : Association Forêt Cellulose 164, boulevard Haussmann - 75008 PARIS
ARB Normandie : Agence Régionale de l’Environnement de Haute Normandie 42, avenue du 6 juin - 14000 CAEN
AVIPA : Association pour la Valorisation des Produits Agricoles Haute Normandie Rue Limagrain - BP 1 - 63270 CHAPPES
Catar ENSCT - 118, route de Narbonne - 31077 TOULOUSE Cedex 4
CTIFL : Centre Technique Interprofessionnel des Fruits et Légumes Balandran - 30127 BELLEGARDE
142 CTP : Centre Technique du Papier Domaine Universitaire - BP 251 - 38044 GRENOBLE Cedex 9
CRITT CRITT Chimie Environnement Ile de France - 3, rue de Brissac - 75004 PARIS
CRITT CRITT Biotechnologie - INSA - Complexe Scientifique de Rangueil - 135, avenue de Rangueil - 31077 TOULOUSE Cedex 4
CVG : Centre de Valorisation des Glucides 33, avenue Paul Claudel - 80480 DURY Divergent Groupe UTC - Rond-Point Guy Deniélou - 66, avenue de Landshut - 60200 COMPIEGNE ECRIN Association ECRIN - 32, boulevard de Vaugirard - 75015 PARIS
ITCF : Institut Technique des Céréales et Fourrages 8, avenue du Président Wilson - 75116 PARIS
ITERG Rue Monge - Parc Industriel - 33600 PESSAC
PRABIL 13, allée du bois de la Champelle - 54500 VANDOEUVRE LES NANCY
VALAGRO 40, avenue du Recteur Pineau - 86022 POITIERS Cedex Public Research Bodies Amifel/Airel Amifel/Airel - Domaine de Lalande - 47110 SAINTE-LIVRADE / LOT
ANJOU RECHERCHE 52, rue d’Anjou - 75008 PARIS
CEA : Centre d’Etudes Atomiques Association Générale des Producteurs de Blés et autres céréales - 33, rue de la Fédération - 75015 PARIS
BEGHIN SAY/CNRS 27, boulevard du 11 novembre 1918 - BP 2132 - 69603 VILLEURBANNE Cedex
CEMAGREF 361, rue J.F Breton BP 5095 - 34033 MONTPELLIER Cedex 012
CERMAV / CNRS BP 53 - 38041 GRENOBLE Cedex 9
CIRAD Forêt Campus de Baillarguet - BP 5035 - 34032 MONTPELLIER Cedex 1
143 CIRAD / amis 73, rue J.-F. Breton - BP 5035 - 34032 MONTPELLIER Cedex 1 CNRS Centre - 3, rue Michel Ange - 75794 PARIS Cedex 16 CNRS Délégation Ile-de-France Sud - Avenue de la Terrasse - 91190 GIF-SUR-YVETTE Cedex CNRS-ECODEV 1, rue du Cerf - 92195 MEUDON CNRS 1919, route de Mende - 34033 MONTPELLIER Cedex CNRS Institut de Recherche sur la Catalyse - 2, avenue Albert EINSTEIN - 69626 VILLEURBANNE INA-PG 16 rue Claude Bernard - 75231 PARIS Cedex 5 INERIS Parc Technologique Alata - 60550 VERNEUIL-EN-HALATTE INRA Centre - 147, rue de l’Université - 75338 PARIS Cedex 07 INRA Laboratoire de Phytopharmacie et Phytobiologie Cellulaire - BP 1540 - 21034 DIJON INRA Plantes et Produits du Végétal - Rue de la Géraudiére - BP 71627 - 44316 Nantes INRA 9, place Pierre Viala - 34000 MONTPELLIER INRA SQUALE CPCB Moulin de la Housse - BP 1039 - 51687 REIMS Cedex 2 IFP 1 á 4, avenue du Bois Préau - BP311 - 92506 RUEIL MALMAISON Others Chambre d’Agriculture de Bretagne Station de Kerplouz - 56400 AURAY
Chambre d’Agriculture de Côte d’Or 42, rue de Mulhouse - 21000
Chambre d’Agriculture d’Ile de France 2, avenue Jeanne D’Arc BP 111 - 78153 LE CHESNAY Cedex
Chambre Régionale d’Agriculture du Centre 13, avenue des Droits de l’homme - 45921 ORLEANS Cedex
Europol’Agro Université de Reims / Villa Douce - 9, boulevard de la Paix - 51097 REIMS Cedex
144 Appendix B
AGRICE Project Titles by sub category.
B. 1.1 Liquid Bio-fuels - Ester - Oils
1999 Modelling Nitrogen Fertilisation 1999 Impact of vegetables oil methyl esters (VoME) on the performance of direct injection “Common Rail” diesel automotive engines 1997 Optimising rapeseed cost-effectiveness: using urban wastewater sludge to fertilise rapeseed 1997 Environmental impact of urban use of bio-fuels 1997 Improving rapeseed genetic resistance to phoma : an insurance policy for bio-fuel production 1997 Impact of blending vegetable oil esters on non-regulated diesel motor emmission 1997 Use of 20% sunflowers ester blends on captive fleets 1996 New technical pathways for energy-use rapeseed 1995 Evaluation of deposition processes in vegetable oil combustion 1994 Rapeseed production in environmentally acceptable conditions 1994 Genetic improvement of rapeseed 1994 Using oil for energy 1994 Fuel Oil 1994 5% ester formulation in diesel fuel
B. 1.2 Liquid Biofuels – Ethanol - Ether
1999 Rheological behaviour of maize albumen 1998 Study of varying proportions of ethanol and premium gasoline in a flexible fuel vehicle 1998 Pentose fermentation by a recominant strain of Zymomonas mobilis 1998 Obtaining fuel ethanol from the cellulosic fraction of grain straw 1997 Estimation of nitrate and pesticide losses in areas of large scale crop cultivation 1997 Blending alcohol in diesel fuel: a study of the effects on fuel composition, engine performance, gaseous and particulate pollutant emissions and energetic characteristics 1995 Designing technical paths for obtaining ethanol from wheat 1995 Ethanol production from sugar beet substrates: controlling the fermentation stage 1995 Structural basis of fragmentation of cereal grains: influence of mechanical properties and aptitude for separation 1995 Optimised ethanol production from wheat by couples fermentation/ flocculation 1995 Identifying technological criteria in order to draw up terms of reference for improving the economies of producing ethanol from wheat 1994 Agronomic pathways for wheat production
145 B. 1.3 Liquid Bio-fuels – Miscellaneous
1999 Development of a cost-effective process for the synthesis of glycerol carbonate 1999 Marketable commodities from beet ethanol vinasse coproducts 1998 Hydrogen production by reforming ethanol in a membrane reactor to supply a fuel cell 1997 Extraction and purification of plant hormones derived from products and coproducts of rapeseed methyl ester processing, for cosmetics applications 1997 Use of beet pulp to treat heavy metal effluents 1996 Economic comparison of mass-market non-food uses in France 1996 Updated analysis of the VoME life cycle and VoME bio-degradability and ecotoxicity 1996 Producing fuel and fertiliser from rapeseed cake 1996 Energy balances of bio-fuel crops 1995 Environmental assessment of ethanol production 1995 Economic comparison of mass-market non-food uses in France 1995 Simultaneous processing of rapeseed methyle esters ( RME) and glycerol 1995 Use of protein-rich distillery sludge 1994 Bio-methanol production costs 1994 Non food uses for coproducts of wheat and beet biofuel production. Enzymatic pathways to new bio-materials 1994 Selection of non-food crops and uses based on hierarchical ranking of economic objectives and use of spatially projected agricultural data
B. 2.1 Solid Biofuels
2000 Modelling of cogeneration with bio-mass production 1999 Robust non-linear controls of methanisation processes 1999 Producing activated carbon for purification of liquids 1998 Growing SRC willow for purifying pre-treated water, white water and sludges 1998 Codigestion of swine slurry and fermentable agricultural products for energy use of bio-gas 1997 Conception and design of a thermal purifying process for gases released by bio-mass gasification 1997 Methanisation of lignocellulose 1996 Bio-fuel production: comparison of woody filler oprs and intercropping 1996 Competing with fossil fuels and competition between different usages of woody materials 1996 Miscanthus: the new green coal 1996 Treatment and value added processing of biomass by methane fermentation 1996 Production of activated carbon from cultivated plants for wastewater treatment 1996 Combustion of rapeseed derived oil, vinasse and heavy fuel-oil for heat production 1996 Thermochemical treatment of bio-mass to obtain value via pyrolysis 1996 Modelling grassy and lignocellulosic crop production on a regional scale 1996 Production of liquid fuel by pyrolosis of aqueous-phase bio-mass in the presence of hydrogen
146 1995 Evaluation of the potential uses and production costs for lignocellulosic and grassy plants 1995 Installation of an industrial pilot plant for producing methane fuel from bio- mass in a rural area 1995 SRC eucalyptus harvest modelling 1995 Co-firing of bio-mass with carbon-containing wastes. Impregnation of pollutants on lignocellulose. Evaluation of use for soil clean-up 1994 Research programme on SRC poplar plantations
B. 3.1 Chemicals/biomolecules – Surfactants
2000 A new crystallisation process for obtaining surfactants from plant raw materials 2000 Synthesis of new surfactants derived from alphahydroxy acids ( AHA) 2000 Enzyme production pathways to liposugars 2000 Selective synthesis of polyglycerols and polyglycerol esters 2000 New environmentally friendly solubility agents obtained from agricultural co-products 1996 Updated analysis of the VoME life cycle and VoME bio-degradability and ecotoxicity 1996 Producing fuel and fertiliser from rapeseed cake 1996 Energy balances of bio-fuel crops 1995 Environmental assessment of ethanol production 1995 Economic comparison of mass-market non-food uses in France 1995 Simultaneous processing of rapeseed methyle esters ( RME) and glycerol 1995 Use of protein-rich distillery sludge 1994 Bio-methanol production costs 1994 Non food uses for coproducts of wheat and beet biofuel production. Enzymatic pathways to new bio-materials 1994 Selection of non-food crops and uses based on hierarchical ranking of economic objectives and use of spatially projected agricultural data
B. 2.1 Solid Biofuels
2000 Modelling of cogeneration with bio-mass production 1999 Robust non-linear controls of methanisation processes 1999 Producing activated carbon for purification of liquids 1998 Growing SRC willow for purifying pre-treated water, white water and sludges 1998 Codigestion of swine slurry and fermentable agricultural products for energy use of bio-gas 1997 Conception and design of a thermal purifying process for gases released by bio-mass gasification 1997 Methanisation of lignocellulose 1996 Bio-fuel production: comparison of woody filler oprs and intercropping 1996 Competing with fossil fuels and competition between different usages of woody materials 1996 Miscanthus: the new green coal 1996 Treatment and value added processing of biomass by methane fermentation
147 1996 Production of activated carbon from cultivated plants for wastewater treatment 1996 Combustion of rapeseed derived oil, vinasse and heavy fuel-oil for heat production 1996 Thermochemical treatment of bio-mass to obtain value via pyrolysis 1996 Modelling grassy and lignocellulosic crop production on a regional scale 1996 Production of liquid fuel by pyrolosis of aqueous-phase bio-mass in the presence of hydrogen 1995 Evaluation of the potential uses and production costs for lignocellulosic and grassy plants 1995 Installation of an industrial pilot plant for producing methane fuel from bio- mass in a rural area 1995 SRC eucalyptus harvest modelling 1995 Co-firing of bio-mass with carbon-containing wastes. Impregnation of pollutants on lignocellulose. Evaluation of use for soil clean-up 1994 Research programme on SRC poplar plantations
B. 3.1 Chemicals/biomolecules – Surfactants
2000 A new crystallisation process for obtaining surfactants from plant raw materials 2000 Synthesis of new surfactants derived from alphahydroxy acids ( AHA) 2000 Enzyme production pathways to liposugars 2000 Selective synthesis of polyglycerols and polyglycerol esters 2000 New environmentally friendly solubility agents obtained from agricultural co-products
B. 4.1 Bio-molecules – Solvents
2000 Substituting solvents VOCs with isomerised methyl esters of sunflower in paints, resins and assimilated products 2000 Using raw materials from oilseed plants in road construction 1999 Synthesis of glucerine cyclocarbonate compounds and evaluation of their solvent properties in lithium battery electrolytes 1999 Substitute solvents that are totally or partially derived from vegetable oils 1999 Study of the combined biological activity and solvent and/or emulsifying properties of terpenes present in essential oils 1998 Perspectives for the development of industrial solvents based on fractionisation and transformation of agricultural products 1995 Study of the printing de-inking process to make easier substitution of vegetable-oil inks for mineral-based inks
B. 4.2 Bio-molecules- miscellaneous
2000 Production of 1,3 propanediol from renewable raw materials (starch, saccharose) using new bio-catalysts 2000 Setting up a resource centre-feasibility study 2000 Dyes, plant-based pigments and neo-pigments for textiles and paint 2000 Production of alpha-omega dicarboxylic acids from methyl esters by fermentation 1999 Amplification of the effects of vegetable oils used in plant protection by addition of natural terpenes 148 1999 New process for direct production of fatty acids from rapeseed 1999 Detecting industrial needs that could be filled by agricultural resources 1999 Amphiphilic heteroxylanes: rheo-thickening solutions and gels
1999 Production of butanol and butyric acid from cellulose 1999 Production of azelaic and pelargonic acid by oxidative cutting 1998 Marketable commodities using plant proteins in dermo/cosmetics and microbiology 1998 New de-oiling process by twin-screw cooker extruder 1998 Potential uses of oleic sunflower-derived products 1998 Production of vegetable oil with very high oleic acid content. Guaranteeing supply for industrial processing 1997 Bio-vectarisation of essential fatty acids and their derivatives 1997 Processing gold of pleasure (camelina) proteins and oils to be used as base materials in cosmetics and skin care products 1997 Obtaining 1,3 propanediol from glycerol by fermentation 1997 Selection of oleic and erucic rapeseed for non-food uses 1996 Optimised fermentation production of succinic acid 1996 Polymers for the formulation of non-polluting well-drilling fluids 1995 Obtaining marketable commodities by fermenation of glycerol: 1,3 propanediol 1994 Processing of surplus glycerol into 1,3 propanediol by Clostridium butyricum
B. 5.1 Bio-materials- Agri-materials
2000 Development of a hemp/polyuretahen sandwich composite for automobile industry applications 2000 Using superpressed ripened beet pulp in carboard production 2000 Analysis of the economic and industrial feasibility of an annual crops processing chain for the paper industry 1998 Development of agri-materials by binding of plant raw materials 1997 Wood/thermoplastic polymer composites 1997 Development of construction materials derived from hemp fibre 1997 Study of market outlets for fibres 1996 Agri-materials and controlled biodegradation: a study of the behaviour of agri-materials in composting 1996 Agri-materials from wheat straw and bran 1996 Design and characterisation of composite materials from modified wood particles 1994 Network of sorghum crops set up in several regions
B. 5.2 Biomaterials – biopolymers
2000 Design of paper/protein composite materials 2000 Study of the chemical reactivity of sunflower proteins: obtaining new bio- degradable materials 1999 Bio-nanocomposites derived from starch and cellulose microfibrillae 1999 Obtaining new injection formable natural composite bio-materials from beet pulp 1999 Obtaining bio-degradable materials from maize bran hemicellulose
149 1999 Experimentation and industrial-scale development of fibre-plast compatibilising materials 1999 Pilot project for the manufacture of injectable composite granules 1998 Analysis of work done on agri-materials 1997 Starch-lignin biomaterials: ways to improve thermoplastic starches for non- food uses 1997 Multilayer films from bio-polymers with high starch content 1996 Bio-degradable hydrophobic film from maize bran arabinoxylanes 1996 Assessment of the degradation, fate and ecotoxicity of bio-degradable agri- polymers 1996 Producing bio-materials from leguminous proteins( peas, horse-bean) 1996 New microbial polysaccharides from plant rhizosphere 1996 Objective evaluation of the bio-degradability of agri-materials: laboratory instrumentation and in situ testing 1994 Study and design of bio-materials: wheat gluten-based films and packaging 1994 Thermoformable modified starch with controlled hydrophillip tendency
Appendix C
Industrial Crop Producer Organisations
AGPB : Association Générale des Producteurs de Blé et autres céréales 8, avenue du Président Wilson - 75116 PARIS
Champagne Céréales 2, rue Clément Ader - BP 1017 - 51685 REIMS Cedex 2
CGB : Confédération Générale des Planteurs de Betteraves 45, rue de Naples - 75008 PARIS
CGPB : Confédération Générale des Planteurs de Betteraves USICA - 45, rue de Naples - 75015 PARIS
Coopérative Agricole Marnaise 3-4, avenue du Maréchal Leclerc - 51000 CHALONS/MARNE
EPILOR 15, avenue Charles Roth - 54380 DIEULOUARD
EPIS CENTRE 65 à 67, avenue de Lattre de Tassigny - BP 4052 - 18028 BOURGES Cedex
IFP : Institut Français du Pétrole 1 à 4, avenue de Bois Preau - 92852 RUEIL MALMAISON Cedex
Institut Textile de France 185, rue Illberg - 68200 MULHOUSE
ONIDOL/SOFIPROTEOL : Organisation Nationale Interprofessionnelle des Oléagineux 12, avenue George V - 75008 PARIS
150 UCAAB BP 10 - 02402 CHATEAU-THIERY Cedex
VIVADOUR Rue de la Menoue - 32400 RISCLE
Appendix D
Commercial Stakeholders in AGRICE
Action Pin ZI de Casalieu - BP 30 - 40260 CASTET-DES-LANDES
AHLSTROM Paper Group Research and Competence Center - ZI de l’Abbaye - Impasse Louis Champin - 33780 PONT-EVEQUE
ARD : Agro Recherche et Développement Route de Bazancourt - 51100 POMACLE
ARJO WIGGINS SA 117, quai du Président Roosevelt - 92442 ISSY-LES-MOULINEAUX
AUTOBAR PACKAGING 14, avenue du Maréchal Leclerc - 40140 SOUSTONS
AVENTIS 55, avenue René Cassin-CP 106 - 69266 LYON Cedex 09
BEVALOID 3, avenue de Suisse - 68930 SAUSHEIM
BIOEUROPE Route d’Oulins - 28260 ANET
Bolloré Technologies BP 607 - ODET - 29551 QUIMPER Cedex
CECA 4, cours Michelet - 92800 PUTEAUX
La Chanvrière de L’aube Rue du Général de Gaulle - 10200 BAR-SUR-AUBE
CRAY VALLEY Centre de Recherche de l’Oise - Parc Alata - BP 22 - 60550 VERNEUIL EN HALATTE
DANONE 7, rue de Téhéran - 75381 PARIS Cedex 8
DTA Rue Lafayette - ZAC de Fregy - 77610 FONTENAY-TRESIGNY
151 EDF : Electricité de France 6, quai Watier - 78400 CHATOU
ELF ATOCHECH Centre d’application - 95, rue Danton - 92300 LEVALLOIS-PERRET
FINA RESEARCH Zone Industrielle C - SENEFFE (Feluy) - 7181 – BELGIQUE
FUCHS Lubrifiants Industrie - 81, rue de l’industrie - 92565 RUEIL-MALMAISON Cedex
GERLAND BP 6 - 26130 - SAINT-PAUL-TROIS-CHATEAU
IDEALP Les Reys - 74520 CUSY
KALYS 39, avenue Jean Lebas - 59100 ROUBAIX
LIMAGRAIN BP 1 - 63720 CHAPPES
Linpac Plastics Pontivy SA Parc d’activités de Kerguilloten - 56920 NOYAL PONTIVY
MATER BI 49, rue de l’Amiral Mouchez - 75013 PARIS
MOBIL OIL FRANCAISE Centre de Recherche - BP no 37 - 76330 NOTRE-DAME-DE-CRAVENCHON
Novaol France BP 95 - Etablissement de Baleycourt - 55103 VERDUN Cedex
NOVANCE Venette - BP 609 - 60206 COMPIEGNE Cedex
Phytocos Service Administratif - BP 88 - 92704 COLOMBES Cedex
RATHO Station Horticole - 135, chemin du Finday - 69126 BRINDAS
Reckitt et Collman 98, route de Sours - BP 835 - 28011 CHARTRES Cedex
Rhodia Centre de Recherche d’Aubervilliers - 52, rue de la Haie Cop - 93308 AUBERVILLIERS
Rhone Poulenc CRIT Laboratoire Chimie des Polyméres - 85, avenue des Fréres Bdc Perret - 69192 SAINT-FONS Cedex
ROQUETTE Rue Haute Loge - 62136 LESTREMLE
152 SAFT Direction Scientifique - Rue Georges Leclanché - BP 1039 - 86060 POITIERS Cedex
SAINT LOUIS SUCRE 23, avenue Franklin D. Roosvelt - 75008 PARIS
SEPPIC 75, quai d’Orsay - 75007 PARIS
SIGMA Coating 2, rue Jean Jaurès - 90300 VALDOIE
SPRINT GIE BP 1 - 63720 CHARPES
STEARINERIE DUBOIS Scoury - 36300 CIRON Steinmüller Valorga 1300, avenue A. Einstein - BP 51 - 34935 MONTPELLIER Cedex 9
TOTALFINAELF 51, esplanade du Général de Gaulle - 92907 PARIS LA DEFENSE Cedex 97
TRIVALOR 367, avenue du Grand Ariétaz - 73000 CHAMBERY
ULICE ZAC Les portes de Riom - BP 173 - 63204 RIOM Cedex
VALLES IMPLUSION Batiment 1 - Prologue 1 - BP 2701 - Labège Innopole - 31312 LABEGE Cedex
VIANOVA 5, boulevard Blauregard - 21600 LONGVIC
153 154 Appendix 1.4 USA
Industrial Crops and Products USA
May 2002
Bruce Knight Innovation Management
155 1. Information Sources Used in this Report. This report is based on web sourced and other published information and the output from a one-week consultancy visit.
The visit covered two in depth discussions with key Research Management and Policy people in the US Department of Agriculture and the Department of Energy in Washington DC. Two USDA Research centres were visited: Eastern Region Research Center, (ERRC), Philadelphia and National Center for Agricultural Utilisation Research, (NCAUR), Peoria, Illinois.
Additionally a further seven commercial and producer group organisations and universities were interviewed.
2. Agricultural/Economic Background Development of new industrial uses of crop products was of interest in the USA as early as the 1920s when Henry Ford started a new initiative for the motor car industry.
Today, crop based materials for industrial and non-food markets is a small but growing business. The traditional American non-food crop, is of course, cotton.
However the most important plant-derived or Bio-based (the term generally used in the USA) industrial products consumed annually are as follows:
Product group Million tonnes
Industrial starch 3.0 Vegetable oils 1.0 Natural rubber 1.0 Wood extractives 0.9 Cellulose 0.5 Lignin 0.2
Source: The carbohydrate economy. 1992
In terms of agricultural commodities the main focus is currently based on corn for bio- ethanol production and surpluses from the wet mill process. Surplus soya bean oil is the other important source.
Bio-ethanol use of corn is around 650 million bushels (17 million tonnes), annually. Total US corn production is of the order of 240 million tonnes. Soya bean production for bio- diesel is projected to reach 51 million bushels in 2002 (1.4 million tonnes). Cotton fibre production is around 3 million tonnes.
There are two important drivers encouraging the continued development of bio-based products:
1. The need to support agricultural industries and the rural economy. Producers of staple crops such as corn and soya beans are actively searching for added value opportunities based on these commodities.
156 2. There is also a very strong strategic need in the USA to minimise dependence on imported energy and fossil fuel products. This factor strikes a major political resonance.
According to the National Corn Growers Association dependence on foreign oil for domestic use is expected to grow by 65% by 2020. This is an argument used to support the continued production of bio-ethanol and latterly the interest in bio-diesel.
Current consumption of bio-fuels, bio-ethanol and bio-diesel is 1.9 billion US gallons (7.2 billion litres). Even so this accounts for only about 1.2% of all motor fuels.
3. Legislative Influences on Research Policy The 1996, Federal Agriculture Improvement and Reform Act, “The Freedom to Farm Act” gave growers much more opportunity to respond to market forces and removed restrictions to growing minor oilseed crops such as crambe, meadowfoam etc.
In August 1999 the Clinton administration issued an Executive Order (13134) and Executive Memorandum which encouraged the development of bio-based products. A target was set to triple the use of bio-based products and bio-energy by 2010. It was estimated that meeting this goal could create $15-20 billion in new income for farmers and the rural economy.
3.1. The Bio-mass R&D Act of 2000
The Bio-mass R&D Act of 2000, tabled by Senators Lugar and Udall, when passed by Congress established the setting up of an R&D Biomass Technical Advisory Committee. The Act also gave a strong encouragement for the relevant Government departments, Agriculture, Energy and Science, to work together in order to achieve the objectives.
Already in place is Executive Order 13149 which calls for a 20% reduction in petroleum, used by federal vehicles, by 2005. There may also be labelling directives, DoE rulings etc.
The Bush administration, although outwardly not seen as environmentally supportive, has in fact generated a new language on the topic. “The push-pull approach” i.e. Government initiatives to push from the agriculture industry – and to pull from the market. Such terminology had not been seen in this way for many years. (The concept of push pull is not new – the electronics industry and NASA were kick started by Government).
A Federal register of bio based products was due out at the end April, 2002. Standards such as ASTM, ISTM were introduced.
Democrat Senators are currently tabling a Bill which, if implemented, could lead to a four- fold increase in bio-fuels consumption, up to 4% of total motor fuel demand by 2016. The benefit to the US farm economy is projected at $6.6 billion with the creation of 300,000 jobs.
In terms of fiscal policy. Corn ethanol (as ETBE) receives a tax break of 5c/gallon. Bio- diesel does not - yet.
Implementation of agricultural research programmes follows the guidelines from the overarching Farm Bill.
157 3.2. The 2002 Farm Bill
The 2002 Farm Bill was agreed in May. Section 9002, Federal Procurement of Bio-based products, gives encouragement for all Federal agencies to give preference to purchase items “composed of the highest percentage of bio-based products practicable, consistent with maintaining a satisfactory level of competition”. Products must be reasonably available, meet performance standards, and be available at a reasonable price. It also establishes a voluntary labelling programme.
Producers can use the label “USDA Certified Biobased Product”. The bill authorises $6million over six years for product testing to carry out this programme.
The US Government spends $200 billion on purchases annually.
The Bill also confirmed $75million over six years under the Bio-mass R&D Act of 2000 for USDA and DoE to collaborate and coordinate research programmes.
Other initiatives in the 2002 Farm Bill are:
• grants for development and construction of bio-refineries (from which one or more processes are used to produce chemicals)
• the bio-diesel education program - competitive grants to educate government and private vehicle fleet operators and the general public.
• continuation of the bio-energy programme, through incentives to enable bio- ethanol and bio-diesel producers to expand production through increased purchases of agricultural commodities.
3.3. The Importance of Lobbyists
It must be understood that research funds stipulated in the Farm Bill have to be appropriated by Congress and this invariably influences priorities as a consequence of State or industry sector political pressures.
Influencing Federal legislation and allocation of research funds is the domain of the Washington lobbyists. Industry sectors, including farm based organisations such as the National Corn Growers Association, devote considerable resources to Government Affairs activities.
4. Public Sector Research Organisations
4.1. USDA
(i) Policy Drivers
Traditionally the driving forces behind the USDA policy for research has centred on the need to support the farm based rural economy. In particular the effort has been geared to maximising the value of core crops such as corn and soya beans, which produce surpluses of by-products (corn starch and soya bean oil).
The USDA is now increasingly responding to the needs of an urban population - by ensuring safety in food processing and handling and by minimising the dependence on imported fossil fuel for energy and chemical feedstock. 158 It is these external factors, outside of the Farming industry, which help to shape the overall Research policy.
(ii) ARS
The main Federal Government agency responsible for industrial crops and products research is the USDA, Agricultural Research Service (ARS).
ARS manages most of its research in-house. In total there are 100 centres in the USA and a further 6 overseas.
Regional Utilisation Research Centres:
There are four Regional Research Centres which to a greater or lesser extent are working on bio-based product research.
• National Center for Agricultural Utilisation Research (NCAUR), Peoria, Illinois • Eastern Region Research Center (ERRC), Philadelphia, Pennsylvania • Southern Region Research Center (SRRC), New Orleans, Louisiana • Western Region Research Center (WRRC), Albany, California
The NCAUR was so named in 1990 before which it was the Northern Center.
Although bio-based industrial product research is not the only activity at these centres it is a major component. All are also actively involved in food research.
The centres are not new but were established in the late 1930s – early 1940s.
When established each centre focused on specific crop or livestock areas:
• NCAUR – wheat and corn • ERRC – dairy and animal products, oils and vegetables • SRRC – cotton • WRRC - wheat, rice
Today there is much more flexibility. ERRC and WRRC are involved in corn product research. NCAUR and ERRC are looking at soybean and other oilseed crops. The specialisation tends to relate more to scientific activity – genetics, fermentation, extrusion etc.
Further details of the current activities on two of the centres visited: ERRC and NCAUR are given in Appendix 1.
Programmes:
R&D programmes are co-ordinated nationally, usually each runs on a five year cycle. There are currently 22 programmes.
Dr Frank Flora, ARS, Beltsville is the programme leader for product quality/utilisation. He described how the programmes are developed through a series of ARS workshops and planning sessions. These workshops are held regionally and give an opportunity for producer groups, industry sectors and other stakeholders to interact and to help decide priorities.
159 The selection of projects for in-house research goes through a number of criteria.Generally the key factors are:
• performance potential of the product or process • the cost of life cycle analysis • involvement of a life cycle analysis - environmental impact • future emphasis within USDA may be to focus more on project development and demonstrations rather than on discoveries per se
(iii) CSRES
The Cooperative State Research, Education and Extension Service is responsible for Research and Extension work at State level. Funding passed through from the USDA is used for competitive grants for projects, which are evaluated on their value added potential.
(iv) Other USDA Research Activities
Some research funding from USDA is managed via external agencies. For example the Forest Products Research Center, Madison, Wisconsin is part funded by USDA.
(v) Budgets
USDA Research Budgets for Bio-based Products and Bioenergy Programmes – non food uses
Additionally, for 2001 and 2002, but not for subsequent years, nearly $200m was allocated to bio-energy incentive payments to encourage production of fuel ethanol and bio-diesel.
4.2. Department of Energy
The Department of Energy (DoE), Office of Industrial Technologies (OIT), controls very significant budgets for Research into bio-based products and bio-energy projects.
For the most part the DoE provide funds for contract research through collaborative programmes rather than managing in-house projects. There are however DoE centres such as the Natural Resources Laboratory, Golden, Colorado; Argon National; Oak Ridge and Battelle.
(i) Policy Drivers
The over riding driver behind research into bio-based products and bio-energy is to safeguard the nation’s energy supply. The USA currently imports 60% of its annual petroleum consumption and the proportion is rising. The policy is part of the National Energy Strategy under the Energy Efficiency and Renewable Energy (EERE) Network.
160 (ii) Research Organisation
The Department of Industrial Technologies has recently been reorganised. The three core activities, Fuel, Power and Products, previously run as separate departments, are now merged into one department.
This reflects a move away from dependence on research into specific feedstocks towards a greater emphasis into conversion technologies: gasification, extraction processes and examination of the bio-refinery concept.
(iii) Research Priorities
The move away from feedstock research per se is in contrast to the approach adopted by the USDA ARS.
DoE is funding work with USDA looking at conversion technologies based on corn stover, wheat straw, oilseed crops. DoE also funds research and demonstration projects based on Energy crops such as Switchgrass.
The main priorities for DoE research are based on:
• cellulose to ethanol conversion methods • gasification • new products
The bio-refinery concept, whereby all crop derived materials are put to economic use, is considered an important element in all DoE work.
Mark Paster, team leader bio-based products, pointed out that the petrochemical industry was sustained by the fact that all outputs from the oil well are put to use (supplying a wide range of industries). Bio-based feedstock has to be managed in the same way.
(iv) Specific Projects
Examples of particular assignments underway are:
1. Vegetable oils for use in polymer manufacture and as lubricants - research based new crops and processes 2. Thermo chemical processes. C5-C6 cellulose to polyols. e.g. Cellulose glycol 3. Pyrolysis of wood - aiming to replace phenol formaldehyde resins in the timber industry 4. Polyhydroxyacetate - biodegradable polymers. Identifying new feedstock and processes • Enzyme research and collaborative projects with enzyme companies are important for the DoE • Identification of a castor oil replacement from C3 Sorghum is a current project underway • Considerable work is underway examining handling and transportation issues of energy crops post harvest.
161 (v) Budgets
The annual budget for DoE research into bio-based products and bio-energy is of the order of $150-200million. During April 2002 a call for projects relating to new products and processes was published with a budget of $30million over the ensuing five years.
4.3. Other Federal Government Departments
The National Science Foundation can be involved in bio-based research projects, including those where the DoE is the main funding agency. Work on the corn genome is an example. The Department of Commerce, National Institute of Standards, Advanced Technology Program, has provided funds for specific projects. In particular the development of Poly Lactic Acetate biopolymer by Cargill-Dow benefited from support from this agency.
The Environmental Protection Agency, EPA, is primarily responsible for funding where regulatory issues have to be addressed.
4.4 University Research
Traditionally the Land Grant Universities were set up in each State and funded from State taxes to ensure that a proportion of research would benefit the local economy, particularly the agriculture industry. Today an increased proportion of research funding is coming from Federal funds or from private industry.
A number of Universities have active departments involved in bio-based product research.
For example Iowa State University, Ames incorporates the Center for Crops Utilisation. Around 60% of the effort of 50 scientists is on non-food research. Funding comes more or less equally from three sources: Federal Government, Producer Group organisations and private companies.
Other Universities active in the field include: University of Nebraska Texas A & M University of Illinois Kansas State University
5. Bringing Products to the Market Bringing products and processes to the market from discoveries made under Government initiatives remains a major challenge in the USA as elsewhere. For the most part the major breakthroughs have occurred relatively recently and from company’s own initiatives.
5.1. AARC
A new initiative was instigated in the 1990s. Although it is no longer in existence some useful lessons were learned.
In 1990 a national New Uses Council was formed to promote commercial development of industrial products from renewable sources. This was followed in 1991 with the formation
162 of the Alternative Agricultural Research and Commercialisation (AARC) programme. This encouraged collaborative research projects through the “pump priming” of new product development. The AARC was in effect a venture capital organisation funded by the USDA together with significant financial input from industrial companies and farm based organisations. The board was made up of both industrialists and USDA representatives.
Product development areas described at the time were quite numerous:
In 1996, the USDA took total control of AARC. Furthermore products marketed by companies which were supported by AARC were supposed to be given priority for purchase by Federal Government departments.
During the first four years of its existence AARC invested $28million in projects and had leveraged an additional $112million from private funds. It was claimed that 5000 rural jobs had been created. 25% of AARC’s projects were in the construction sector. The first paybacks from companies to the AARC started in 1995.
Some of the first products coming out of AARC projects were:
163 These product developments were largely filling niche market opportunities. In 2000 the funding for AARC was discontinued. No major new product developments had come forward and the USDA was encouraged to focus on policy driven activities.
During the visit in 2002 the reasons for the perceived failure of AARC were given by USDA managers:
• too many projects each with its own champion and not enough management courage to reduce the number of projects to those with the highest probability of commercial success
• management was not controlled by Business and Finance people but by Scientists
• lack of accountability by managers
• tended to favour low tech product developments - with shorter term payback
• possibly insufficient funds applied
There was also some resistance from the entrepreneurs that developments were too freely transferred and that their intellectual property could be lost.
5.2. CRADAs
As previously described the role of Public sector research bodies, whether through collaborative funding or from in-house research, is not to develop products but to provide companies with choices.
The Federal Technology Transfer Act of 1986 encouraged Federal laboratories to form partnerships with commercial companies.
Technology Transfer of ARS developments is managed under Cooperative Research and Development Agreements, CRADA, and licensing agreements.
CRADAs can be set up in order to allow commercial firms to further develop ARS technology, to merge an ARS discovery with their own technology or to jointly discover and develop new technology. The agreement can be implemented in various ways. For example it may cover the funding of an ARS scientist, placement of a company scientist in a Government laboratory or use of the company’s pilot scale production facilities.
The commercial collaborator has the unique opportunity to negotiate for exclusive rights to a product or process coming out of a CRADA.
One of the major benefits for ARS is that close contact with commercial companies gives a much better understanding of the market place opportunities for their technology, helping to shape research policy.
5.3. Business Incubators
The concept of business incubators for bio-based products is beginning to develop with some Universities. At Iowa State University companies can rent pilot plant and other facilities at the Center for Crop Utilisation. Engineering scientists can help design the plants. The aim is to develop market-ready technology. Expertise gained at the pilot plant scale can then be transferred to the company for full scale production.
164 5.4 Economic and Market Analysis
There appears to be little emphasis on economic and market evaluation as a means of prioritising research projects which are managed by the federal agencies. Several managers suggested that this is a weakness. However, it is generally felt that the company people are the more appropriate to provide feedback on markets and economic factors. Their knowledge of their specific markets can influence the direction of research projects at the concept stage of programmes and in collaboration with project leaders at the laboratory level. There is, nonetheless, frustration amongst some scientists when they do not have knowledge of the commercial potential and value of the products or processes that they are working on.
The Economic Research Service (ERS), within USDA has provided an overview of the potential of new crops and agricultural commodities in non-food markets. Until 1997 annual reports were published. This no longer appears to be available. ERS does not provide information relating to specific projects.
ARS is not mandated to employ economists hence any information on markets or production economics has to be through bought-in services from Universities etc. Costing Engineers are appointed in some of the ARS Research centres which helps to project production costs of new processes.
The service provided by the United Soya Bean Board (USB), helps to give economic and, particularly, market opportunity parameters to different product groups (see 6.1(ii)).
6. Company Strategies
6.1. Commodity and Producer Group Organisations
Two of the main organisations which fund research into industrial products from crops are the National Corn Growers Association (NCGA) and the USB. Both distribute funds raised through levies or check off payments.
(i) The National Corn Growers Association
The NCGA has a membership of 30,000 and, depending on the State, receives a proportion of the check off paid by farmers. This amounts to 1/ 4 c per bushel and brings in additional revenue from another 300,000 growers.
Ethanol from corn is a major industry in the USA. The NCGA plays a key role in lobbying for maintenance of legislation such as the Clean Air Act. It is also actively lobbying for the Renewable Fuels Standard, which calls for 5% of transportation fuels to be from renewable sources by 2016.
Research funding for new products and processes from the NCGA is both direct and as part of collaborative programmes.
The NCGA’s role seems to be more to represent the needs of corn industry, in order to maximise utilisation, rather than to develop specific corn based products. There are just three people concerned with R&D projects. A major part of their job is to influence the appropriations granted by Congress.
165 The major thrust of corn-based research is based on more efficient cellulose conversion processes to ethanol or other chemicals.
Specific NCGA supported projects include:
• Polyol extraction - for ethylene glycol (anti freeze), propylene glycol (food and health products) • Fiber Utilization Project - joint venture with private industry to produce chemicals and ethanol • Development of microbes for simultaneous conversion of glucose, xylose and arabinose to ethanol • Production of 1,3-Propanediol for the plastics industry
A key programme is the corn genome project in collaboration with the National Science Foundation.
The NCGA is an influencer at national and regional level in helping to shape the ARS programmes. It was also the body that, in 1996, initiated the strategic vision that led to the “Renewable Resources 2020” vision workshop and publication (1998) and the subsequent “R&D road map to 2020” (2000) (See Section 8.1).
An emerging trend is for the NCGA to be working closely with large agri-businesses such as Archer Daniels Midland in funding research projects.
(ii) The United Soybean Board
The USB was formed in 1990. It is run by a committee of farmer members to promote soya beans. The funding is from a farm based check-off and some State appropriation. The levy is 0.5%. Typically a State will retain 50% of the levy within the State and pass the other 50% to the USB.
The USB has responsibilities for international market development, domestic market development and new industrial uses of soya beans. The sister organisation, the American Soybean Association, covers educational and Government Affairs activities.
For the development of new industrial products the main function of a small staff is to establish projects which bring together companies, Universities and other Research Institutes.
Although many of the collaborations are with small or start up companies, increasingly larger groups are becoming involved.
The intellectual property element of any USB funded project is managed so that patent income reverts to the USB. The organisation has not taken a financial stake in any new ventures.
The USB web site states that it has a target to commercially develop eight new industrial uses for soya beans by 2005 and to gain markets for 10million bushels, 0.3million tonnes, of beans.
The main emphasis is on products from soya bean oil. Work on soya bean protein is quite limited.
In support of the development, promotion and marketing of soya bean based products the USB carries out opportunity analysis of different market sectors. The outcomes of these
166 studies are published in the form of Market Opportunity Summaries. Reports are available on lubricants, paints and coatings, thermoset plastics, building composites, solvents, wood adhesives, emulsifiers and wetting agents, printing inks, pesticide carriers and adjuvants.
Additionally technical data sheets listing the main features and research status of the soya bean product groups is made available. A catalogue of products and a list of 160 specialist suppliers is also published.
The more important product groups are:
• wood adhesives - with a target to replace 20-30% of the urea formaldehyde market
• lubricants
• polyols for carpet backing
• printing inks
Bio-diesel, although very high profile, is still only a relatively small outlet for soya bean oil – 20,000 tonnes.
Soyflour as an anti-foaming agent, replacing animal blood, is one of the few soya bean protein developments under review.
(iii) Other Trade Associations
The US Grains Council is responsible for promotion of wheat and other cereal grain. In that wheat grain is not in surplus in the USA there is less obvious effort in supporting bio- based product research.
The Corn Refiners Association represents companies who process corn for starch or ethanol.
There are only seven members, reflecting the fact that corn processing is in the hands of large national and international groups. The role of the CRA in funding research is relatively small in comparison with their members’ activities, some of which are $10 billion turnover companies.
Projects tend to be in the $50-200,000 category but provide important leverage for further funding.
The CRA tends to be more involved with longer-term industry-wide projects rather than specific product or process development.
6.2. The Involvement of Industrial Companies
In general the companies developing, manufacturing and marketing products into the industrial or non-food markets fall into three broad categories. Each type of company has its own approach to research and marketing determined by their particular circumstances.
(i) Entrepreneurial organisations, marketing products for niche markets.
Companies may be large or small. Those marketing the various soya bean based products fall into this category as do a few companies marketing specialist fibre products, composites etc.
167 • many operate at a regional level close to the source of raw materials
• generally the companies achieve competitive advantage based on relatively low technology processes
• many have based their business around a single product
• some, but relatively few, have emerged from Government funded research
• some others have taken advantage of Federal or State support schemes for capital investment
• many have and are benefiting from collaborative agreements and support from producer group organisations
• most products offer some specific functional benefits in the particular niche market
(ii) The large agricultural commodity processors whose core business is based on large scale processing of corn or other commodities.
This group mainly embraces those companies producing ethanol for transport fuel. In future it will include the production of bio-diesel from soya bean oil.
• they operate large dedicated processing plants close to the source of raw materials
• their skill is based on the efficient low cost processing and trading of commodities derived from commodity crops
• their main activity has not been based on innovative research
• they have responded to market opportunities based on the legislative support in the form of tax breaks for ethanol for transport fuel and the Clean Air Act.
• Companies have gained experience in improved fermentation technologies in the production of ethanol. They now have staff and laboratories equipped to develop new processes and opportunities
• their culture is based on trading rather than marketing of specialist products
(iii) Large multinational chemical groups who have developed new innovative products and processes with worldwide potential but based on feedstock from agricultural crops. Such activities are relatively new with the arrival of PolyLactic Acetate, (PLA) plastic from Cargill Dow the most important so far.
• these are research based companies with product development and marketing skills in a wide range of industrial markets
• generally their aim is to gain market penetration based on the competitive advantage and functionality of the products
• RM supply is only relevant if it provides products with novel performance characteristics
• reliance on Government initiatives and collaborative programmes has not been important
168 6.3. Evolving Research and Marketing Strategies Developments over the last two years coming out of the major US based multinational chemical and biotechnology companies are likely to have a major impact on the future of bio-based products in the USA and globally.
The most noteworthy was the development of polylactide plastic through a fermentation route from corn sugars, dextrose, by Cargill. This led to the formation of the joint venture company Cargill Dow. Cargill have the expertise in accessing and processing agricultural commodities, in this case corn. Dow have the global presence in marketing of polymers.
The formation of Cargill Dow, in 2000, is a recognition that different skills are needed to manufacture and market bio-based products. This may well have set a precedent for the future.
Furthermore the first large-scale production of PLA is being centred in Nebraska, a state remote from the main chemical production regions but a corn growing one. Nebraska was chosen because it can produce corn at a lower cost than most other mid-western states.
The success of PLA is predicted largely because the plastic can compete on price and the fact that it offers functional benefits. It can be processed and moulded without requiring high-pressure extrusion.
In the early stages Cargill invested some $25million in R&D. Even so there were technical problems to overcome in controlling the crystallisation of PLA and its impact on applications. A grant of up to $2million was received from the Department of Commerce, National Institute of Standards. Further support for Cargill-Dow from the DoE, OIT in the form of collaborative projects amounted to $6-8million over four years.
Du Pont have also linked up with Tate and Lyle, major corn starch processors producers in the mid-west, for a novel process in the production of 1,3 - propanediol which is then treated with terephthalate to make Sorono® a new polyester type fibre. The bio-engineered microbe critical in the fermentation process involved collaboration with Genencor, the leading enzyme company.
There is clearly a trend towards inter-company collaborations and the formation of consortia even with the largest chemical group in the world.
Both Monsanto and Du Pont, through the subsidiary Proteins Technologies International, are active in the development of enhanced soya and rapeseed oils through plant biotechnology. Dow are also working in the field.
The growing importance of genomics and enzyme technology is resulting in new collaborations between large and small companies, pooling skills in research and development consortia.
7. Specific Activity by Project Sector
7.1. Oils
The main activities have centred around development of new oilseed crops, use of biotechnology to produce enhanced traits in soya beans, rapeseed etc and developing new processes.
169 The soya bean oil derived product groups are listed in Section 6.1. under USB. There is relatively little growth in the ink market where soya oil based inks offer advantages mainly in the manufacturing process with low VOC emissions.
Soya bean oil products developed at NCAUR include Soy Gel, a safe to handle paint stripper. SoyOyl is a foam derived from soya bean oil and polyurethane. A recent product launch funded from USB has been a metal-working fluid from Desilube Technology Inc, PA.
Crambe oil production is now on stream. Around 20,000 hectares of crambe are grown, mainly in North Dakota. AgGrow oils was investing in a $8million processing plant. The crop is grown for Erucic acid production to supply the slip agent market.
The first Elite variety of cuphea was grown in Illinois in 2000 in collaboration with Oregon University - for a detergent manufacturer.
Pilot scale production and utilisation of meadowfoam oil for use as hydraulic fluid, lubricating oil and cosmetics has also started.
Other companies known to have interest in the vegetable oil sector are:
Cargill, Minn - numerous locations and products Renewable Lubricants Inc, OH International Lubricants Inc, WA Archer Petroleum, NE International Flora Technologies Ltd, AZ National Sun Industries, Minn - Crambe Central Soya, IN
7.2. Fibres
With the ample supply of wood products and the indigenous supply of cotton fibre development is less critical. However applied research into methods of utilising waste wood and recycled paper products is continuing. 37 million tonnes of paper and wood materials were recovered annually in the mid 1990s. Incorporation with wheat straw and natural polymers is a particular outlet.
Kenaf is an annual hibiscus fibre crop related to cotton. The fibre from Kenaf, as an environmentally favourable source of paper pulp, has been under evaluation since the 1970s. However acceptance has been slow. In the mid 1990s about 5000 acres were grown.
Today the area in Texas is about 15000 acres. Yields are about 45 tonnes per acre.
Milkweed, as a source of floss as a replacement for the goose down market, is grown on a small scale.
Companies involved are: Kenaf International, TX Agro-Fibers Inc, CA Northern Fibers Corp, NE - Milkweed
170 7.3. Carbohydrates
(i) Functional properties of starch
In the 1970s starch research in the USA focused on identifying opportunities to replace dependence on fossil fuel derived chemicals. The most striking success was the hydrolysed starch-polyacrylonitrile graft polymer, developed at NCAUR, generally known as Super Slurper. This has unique absorption properties. Newer types of starch polymer have absorption properties of water up to 5000 times by weight. Sales of around $3billion were achieved in 2000. However, today Super Slurper is produced from lower cost synthetic chemicals rather than from starch.
A number of important developments based on new routes to bio-degradable plastics and fibres have evolved in the last two years, as already reported in sections 6.1 and 6.3.
• new uses of Polyol chemicals derived from glucose
• using corn starch as a feedstock for 1,3 -propanediol a polymer currently manufactured from fossil fuels
• corn starch as a feedstock for polylactide, PLA, plastic production
• improved butanol separation
(iii) Companies
Companies involved embraces most of the starch groups:
Archer Daniels Midland Company - ILL Cargill, Minn Novon, NJ Xylan Inc, WN Midwest Grain Products, KS
7.4. Proteins
Soya bean is the main crop used as a source of protein derived industrial products.
Adhesives, structural composites, and coatings are established markets.
PRF/ Soy 2000 is an adhesive based on soya protein blended with resins and used for gluing wooden joints.
Environ, used for moulded ornamentation and indoor furnishings is one successful niche product.
In 2002, John Deere will start using soya based polymers and soya-corn based resin panels in their combine harvester range.
The NCAUR Plant Polymer group is looking at co-product utilisation, chemical and physical modification of polymers.
A limited amount of corn zein is used as a coating for medical pills.
Companies:
Phenix, MO - Environ Cargill, Minn 171 Du Pont/PTI, MO 7.5. Bio-fuels
By far the most significant non-food application of corn is the production of ethanol for the transport fuel industry. Ethanol is the third largest market for corn, consuming about 6%- 7% of the crop, and is valued at $3billion annually at farm level. Thirty-nine ethanol plants are scheduled to be in operation by the end of 2003.
The success of ethanol, whether used as a blend with petrol or in the form of ETBE as a replacement for MTBE anti knocking agent in unleaded petrol, is due to the 5c/gallon tax incentive.
The recent acceptance of ETBE by the American Petroleum Institute is considered as a significant step in breaking down the barriers between the petroleum industry and the bio- based product industry.
The main research work is aimed at improving production processes and utilising corn fibre and other waste materials. Use of modified enzymes is a core part of the research programme. ARS engineering research is based at ERRC, Philadelphia. Enzyme research is at WRRC, Albany, CA.
The National Biodiesel Board has been the main driving force behind the, as yet, modest production of bio-diesel from soya bean oil. There are 10 bio-diesel plants in operation in the USA. Most bio-diesel is used as a 20% blend, B20, some 100% is used in marine engines. Only about 2% of bio-diesel is used on farms.
Research work on bio-diesel now is mainly aimed at demonstrating environmental benefits and economic impact.
Companies:
Cargill, Minn Archer Daniels Midland, ILL Central Soya, IN Interchem Industries Inc, KS
7.6. Animal by-products
There is little evidence of any major developments in the development of industrial products from livestock by-products.
Work on improvements in processing and tanning of leather is being carried out at ERRC.
Animal fats are used in a wide range of industrial markets from plastics and paints to cosmetics.
Research into milk as a potential source of industrial products is most active at the University of Wisconsin, the main dairy State. Casein was once used as a source of plastic. Lactose as a carbohydrate source may have some potential for a feedstock source. A new research project looking at possibilities for casein from milk has just started at NCAUR.
Companies:
Cargill, Minn Land O’Lakes, Minn
172 8. Trends for the Future
8.1 The Technology Road Map
A vision document was published in 1998: “Plant / Crop Based Renewable Resources 2020”. This came about from an initiative commencing in 1996 by the National Corn Growers Association.
A series of workshops were held involving representatives from Industry, Producer groups, Universities and independent consultancies. The resultant document was then reviewed by managers from USDA and DoE.
The document aimed to set out targets for maximising the opportunity at three levels based on :
(i) existing systems and existing crop materials
(ii) modified processes of existing crops and
(iii) modified processes of modified crops
The next stage completed in 2000 was funded by the DoE and set out a “Technology Road Map to 2020”. Following detailed workshop sessions and collection of statistics, research priorities were set out as a strategic guideline for both Government and Industry to follow.
A significant part of the rationale behind the conclusions was based on an analysis of the factors and economic issues that shaped the petrochemical industry during the 20th century.
8.2 The Bio-refinery concept
The concept of the bio-refinery, whereby agricultural materials are utilised to their full potential was a key element coming out of the Vision 2020 study.
The bio-refinery is seen to have particular relevance in the application of emerging technologies, plant biotechnology, enzyme biotechnology, fermentation processes and separation technologies, genomics and, for energy conversion, gasification.
Support for bio-refinery projects is core to much of the funding provided by DoE. The 2002 Farm bill also announced grants from USDA towards investment in bio-refinery production facilities.
Multidiscipline projects calling on different scientific skills are well supported. A $7.5million project, funded by DoE, OIT, was established in 2001 with the aim of examining the feasibility of utilising sorghum, a crop grown in more arid marginal areas of the South West. Plant breeding, genomics, production processes and logistics skills are being pulled together with the aim of optimising the industrial outputs of sorghum and, ultimately, revitalising the crop.
173 9. Information Sources A number of networks and organisations are established which provide companies and research workers with information on bio-based products and technologies.
The BioBased Information System provides an online data base linkage to websites.
The New Uses Council is a voluntary organisation which provides news and information on line relating to industrial and energy uses of agricultural, forestry and marine materials.
The Association for Industrial Crops, represents the interests of the fibre and oilseed crops used by industry.
USDA and the Producer groups provide web based information pages on research in progress and products. Some of the more important web sites are listed:
www.ers.usda.gov www.nps.ars.usda.gov
www.ncaur.usda.govwww.oit.doe.gov/agriculture
www.ncga.com/research www.unitedsoybean.org/news
www.biobased.org www.newuses.org
174 APPENDIX I - The Regional Research centres Eastern Region Research Center (ERCC), Philadephia, Pennsylvania
175 APPENDIX I - continued National Centre for Agricultural Utilisation Research (NCAUR) Peoria, Illinois
Sevim/Erhan noxious gasses
176 Appendix 1.5 Italy/Denmark
Industrial Crops and Products Country Reports Italy
SAC/Innovation Management
177 Support for industrial crop research
Italy has seen a change in research funding over the last few years (2000-02). Five years ago (late 1990’s) research was funded by the Agriculture Ministry and Technology Ministry. Now private industries are working together to fund research.
This has produced useful research for industrial production. Projects can be managed from industry with research organisations commissioned to carry out work. This is good for exploitation of research and helps to support existing skilled research groups.
Government support has been from the Ministry of Agriculture and Research. The Environment Ministry is interested but has no RRM budget. Regional government is interested in developing technology/agriculture through the use of local taxes.
Drivers for industrial crop research
The main drivers in industrial crop research are a mix of industrial interest and environmental aspects. It is important that any new industrial crop projects are commercially attractive. Natural molecules are attractive, for example, in pharmaceutical’s taxol from INDENE.
Legislation is coming-in which will favour use of such crop products. The phasing out of methyl bromide may be an example.
Agriculture is an important driver in Italy. One million hectares is now involved in organic farms. Italy has a good climate and fertile areas for food production including fruit and vegetables. Agriculture policy is encouraging high quality organic farms. The average size of unit is only 10 ha - which is not extensive and production is not high. Industrial crops had been lower priority. There is some work to utilise industrial crops in organic systems.
Company involvement
Novamont was the most important company in industrial crops in starch and chemicals. Novamont’s core business activity is in biodegradable thermoplastic materials, commercialised as Mater-Bi. Expertise is in starch based materials.
Crops developed
The Italian Biomass Association (ITABIA) and has been involved with trials on a range of bio-mass crops.
With regard to the energy and alternative feedstocks driver, industry is interested in using crop oils for technical uses. Houghton is a company co-operating with technical research on oil, based on crop soils such as crambe.
Crambe has performed well technically. The problem is in the price with 1 kg crambe oil costing 1 and mineral oil costing half of this. There may be opportunities where an environmentally friendly certificate is required, e.g. where a worker is in direct contact with the oil.
Crops studied included oilseeds – oilseed rape and other brassicas. Sunflower work has declined. There was an attempt to produce a fruit juice from sunflower protein but this did not succeed. Within fibre crops, hemp (for higher quality uses) and kenaf are the main crops. Flax has been studied to a lesser extent. Starch uses have been studied at the
178 Research Institute for Cereals in Rome. Work with maize and potatoes has not been specifically for industrial use. Products for the organic sector have been developed.
Pharmaceutical uses are being studied, but will require only a small area. Biocides are now in the market and demand is increasing.
Industrial crop research structure in Italy
There are 23 different institutes involved in agriculture in Italy. 50 people work in Bologna at the Istituto Sperimentale per le Colture Industriali, the specialised industrial crop institute. Of these 20 - 25 are active in research. Fibre, oil and starch crops are covered. There is not so much work on energy crops. There are also a number of groups working on different projects involved in industrial crops at different centres in Italy. Work on processing is included and there is a pilot company involved.
Mainly small companies are involved in industrial crops. Previously they did not want to spend money on research, but they are now more keen to change. Funding from Government has declined, with private sources compensating for this over the last 5 years. There is an increasing frequency of patenting now with spin-offs also increasing.
The bio-refinery concept is an example of the type of work. This has studied ways of using all of the plant, using benign and novel processing methods.
Sources of information
Based on an interview with Sandro Palmieri, ISCI, Bologna and supplemented with web information.
179 180 Country Reports Denmark
181 History of industrial crop development in Denmark Ten years ago the Farmers Union persuaded the Danish Government to give support for industrial crops in Denmark. They initiated a 5 year programme which was intended to continue with more applied work. However, it was difficult to get industrial crops fully accepted the problem being that this was not a specific non-food programme. This programme has now been degraded. There is still a fibres section, with work carried out by the University of Copenhagen and funded by government. EU money also funds the work. Bio-mass and bio-ethanol from straw and cereals have also received attention. The Farmers Union tried to run a hemp factory to produce insulation board, but this has not yet received government funding. Drivers for industrial crop development The main driver for industrial crops in Denmark has been the agricultural industry. It is claimed that there is very little interest from mainstream industry in crop derived products. Environment has not been a large influence in developing industrial crops. Food has created a bigger pull for developments, in particular organics. A label has been created for organic products but Government has not authorised its use (June 2002). It is claimed that there are too many labels and another would confuse consumers. Crops evaluated With regard to industrial uses of oilseeds, the Bioraf system has moved to commercial production, and demonstrates one small success. Bioraf would still be recommended for small scale applications. Bio-diesel is made in Denmark, but from oil imported from Germany with the bio-diesel exported back to Germany. The driver here has been rural support Funding for bio-energy has declined from €150m to €40million. Bio-mass, bio-gas and straw are the main crops evaluated in energy programmes. There is an obligation for heatplants to have the capability of being run on straw. The interest of power companies in energy crops has faded as the Danish government changed to the political right and policies changed. The policy of building de-centralised power stations is now in trouble, as house owners had to cover the deficits that accumulated effecting house prices. Company involvement No companies in Denmark are presently using bio-based products and, according to Finn Rexen, they are not interested in changing. A web search indicates little company involvement in the industrial crops area. There are however, a number of consultancy companies, such as Konceptor, which are active in evaluating industrial crops. Multinationals will be working on some areas of industrial crops but will not disclose their activities. Bio-plastics look like one positive development in Europe. View to the future If the Directive on green sources of energy goes ahead, Denmark could import bio-energy. Danish farmers could produce bio-mass for bio-diesel and bio-ethanol. A sugar beet factory could be used for bio-ethanol production and could be combined with a petroleum refinery. There appears to be a declining interest in industrial crops from the EU. Agriculture has been reduced within the EU budgets. There is a focus on biotechnology and energy is possibly more positive. Once other countries join the EU food production, with increase again to a surplus situation, then there may be a possibility. Sources of information Interview with Finn Rexen, supplemented by web based information. 182 Appendix 2 Private Sector Organisations - Interview Reports
Appendix 2.1 UK company - Interview Notes
183 184 185 186 187 188 189 190 191 192 193 194 195