From Petro to Agro: Seeds of a New Economy by Robert E

Defense Number 20 A publication of the Center for Technology and National HorizonsSecurity Policy OCTOBER 2002 National Defense University From Petro to Agro: Seeds of a New Economy by Robert E. Armstrong Overview twice that of our consumption of either coal or natural gas and four times greater than use of nuclear or renewable energy sources.1 Winston Churchill is said to have stopped predicting future events The bulk of our petroleum use goes to meet energy demands, because the future was just “one damned thing after another.” with approximately 90 percent of a barrel of crude oil going to gaso- Nonetheless, we need to keep an eye on the future and speculate line, diesel, and other fuels. Since 1949, however, the industrial con- as to what the next damned thing might be. One candidate is the sumption of petroleum for nonfuel use has increased nearly seven- changing raw material base for the economy. fold.2 The chemical industry, for example, relies on petroleum for Today, the hydrocarbon molecule is the basic unit of com- more than 90 percent of its raw materials to manufacture its myriad merce. In a biobased economy, genes will replace petroleum. So, of products, ranging from plastics, refrigerants, and fertilizers to just as we currently demand assured access to sources of hydro- detergents, explosives, and medicines. Virtually everything requires carbon molecules (oil), in the near future we will demand petroleum or petroleum derivatives for its manufacture. assured access to a broad-based, diverse supply of genes (plants We are beginning to see a shift from petroleum, however. As the and animals). This shift has security implications. Relations with 20th century was ending, Michael Bowlin, then-president of the Amer- oil-rich countries will be of less importance, and relations with ican Petroleum Institute, who was also chairman and chief executive gene-rich states—mostly the biodiverse regions along the equa- officer of ARCO, told industry executives that the world was entering tor—will assume greater significance. Conflicts may arise “the last days of the Age of Oil.”3 Estimates of the remaining life of between gene-rich, technology-poor countries that control the the reserves vary widely, but many experts agree that worldwide oil basic raw materials of a biobased economy and gene-poor, tech- production will peak between 2010 and 2020. Even if we agree with nology-rich nations that control the production methods. those who hold that the petroleum supply may be renewable, envi- American instruments of power will be challenged to meet ronmental pressures and economic incentives will remain that will the demands of a biobased economy. We already see diplomatic move us to newer technologies.4 Far from repeating the apocalyptic challenges with the United Nations Framework Convention on warnings of the 1960s and 1970s about the end of oil, Bowlin pointed Biological Diversity and controversy with Europe over genetically to new technologies that will replace petroleum. modified crops. Informational and economic challenges and opportunities will likewise appear. It may be challenging for U.S. land forces, especially the Army, to meet the demands of securing The Age of Biology access to large supplies of new genetic material. Prominent among the replacements for petroleum will be prod- Agriculture will become increasingly important as a part of ucts developed from biological sources. Using biological materials, the Nation’s industrial base, as it offers the most economical way that is, plants and animals, as raw materials for industrial and con- to produce large quantities of biological materials. Homeland sumer products is not a new idea. Before the rise of cheap oil, agri- defense will have to consider heartland defense, as agricultural culture was the dominant source of our raw materials. Indeed, when fields will assume the same significance as oil fields. the U.S. Department of Agriculture was established in 1862, its motto proclaimed, “Agriculture is the foundation of manufacture and com- The Age of Geology merce.” Even today, agriculture supplies raw materials for industry; for example, about 8 percent of the U.S. corn crop goes to industrial For much of the last century, and particularly since the end of World War II, petroleum has been the primary raw material for U.S. industrial and consumer needs. As a nation, our petroleum use is October 2002 Defense Horizons 1 uses rather than directly meeting food or feed requirements.5 More- products: adhesives, acetic acid, pigments, inks, and plastics. A com- over, the agricultural industry offers the most cost-effective way to parison of their cost when derived from petroleum with their cost manufacture large volumes of biological materials. when derived from plant materials generally shows not only a greater In its vision statement for the 21st century, the National Agri- cost for plant-derived materials but also great disparity in the cultural Biotechnology Council forecasts agriculture to be the source spread, based on which product is being considered.11 of not only our food, feed, and fiber, but also our energy, materials, A key problem with making cost comparisons is that the pro- and chemicals.6 In a 1999 report on biobased industrial products, the duction costs are based on using existing facilities designed for petro- National Research Council noted that U.S. farmers already generate leum feedstocks. When using biomass, some of the end products can annually about 280 million tons of waste biomass—leaves, stalks, be made through direct physical or chemical processing; others can and partially used plant portions. That is more than sufficient mate- be produced indirectly through fermentation (using microbial rial to serve as feedstock for all of the domestic industrial chemicals agents) or by enzymatic processing. What is needed are “biorefiner- that can be readily manufactured from agricultural sources.7 ies.”12 Like an oil refinery, a biorefinery would take carbon and hydro- Domestically, resources needed for food and feed production gen and produce desired products. The biorefinery’s economic advan- will not compete with resources required to grow our industrial raw tage will emerge from its dual capability. Along with the desired end materials. Our natural resource base of land and water is more than products, foods, feeds, and biochemicals could be produced. adequate to meet the demand. The United States has the largest Prototypes of the biorefinery already exist in our industrial base amount of arable land per capita of any country in the world (1.73 in the form of corn wet mills, soybean processing facilities, and pulp acres for the United States versus 0.99 for other developed countries; and paper mills. While the prototypes of full-scale biorefineries are the developing world average is only 0.49 only in the planning stage, two facilities acres).8 Additionally, through the U.S. the United States clearly designed for specific biobased end prod- Department of Agriculture Conservation ucts are presently coming online. Earlier Reserve Program, 35 million acres are left has the production this year, Cargill Dow opened a $300-mil- fallow each year, some of which could be lion facility in Nebraska to manufacture a used to grow crops specifically for biomass. capacity to process the bioplastic made from sugars found in corn While water does present some local raw materials for kernels.13 As the technology improves, the and regional challenges, groundwater company plans to extract the sugars from depletion rates in the United States have a biobased economy less costly agricultural waste, such as corn slowed overall during the last 20 years. As stalks, wheat straw, and rice hulls. the need for affordable water increases, improvements in irrigation Similarly, DuPont announced last year that it had successfully technology and the development of new water resources are likely to manufactured a key ingredient for one of its new polymers, using follow. One estimate suggests that improvements in irrigation tech- corn sugars instead of petrochemicals.14 The conversion was done in nology alone can reduce the anticipated worldwide demand for addi- a pilot plant using a fermentation technology. Anticipating the even- tional water resources by one-half during the next 25 years.9 Thus, tual cost competitiveness of biological materials, the company has while a concern, water availability is not likely to present a barrier to built a full-scale production plant for the polymer and designed it to expanded agricultural production. use either petrochemical feedstocks or biobased feedstocks. Technological innovations in agricultural production probably Is this biobased economy just a vision with a few immediate will continue to increase yields. Corn yields, for example, gained an examples, or is there a long-term probability for its success? In its average of 1.0 bushel per acre per year during the last century. In the 1999 report on biobased industrial products, the National Research last half of the century, the average increase was l.8 bushels per acre Council argued that a competitively priced, biobased products indus- per year. Depending on soil characteristics and water availability, try eventually would replace much of the petrochemical industry. As even something as simple as the spacing between cornrows can be an intermediate goal, the report suggested that by 2020, a biobased used to maximize yields. In the late 1990s, corn yields in the United economy could provide 25 percent of the 1994 levels of the Nation’s States averaged 134 bushels per acre. Some researchers believe that organic carbon-based industrial feedstock chemicals and 10 percent within the next 20 years, technology and cultural practices can of liquid fuels. The report suggested that, ultimately, 90 percent of increase yield averages to nearly 260 bushels per acre.10 the U.S. organic chemical consumption and 50 percent of our liquid The United States clearly has the production capacity to pro- fuel needs could be met by a domestic biobased economy.

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