The Bioeconomy: A green growth opportunity for Canada

Published on February 28, 2018

Takeaways

The industrial bioeconomy refers to the creation and commercialization of products such as fuel, electricity, paints, plastics and other products that are biomass- or carbohydrate-based, not hydrocarbon-based.
Canada has a massive biomass resource, however the key is to manufacture bio products domestically instead of exporting natural resources and importing value added products.
Canada lags behind Europe and the US when it comes to the bioeconomy, but we are moving in the right direction.

Action

In order to encourage faster growth of the bioeconomy in the most cost-effective, unobtrusive way, the Canadian government should more aggressively tax carbon, and implement a BioPreferred procurement program.

How would you define the bioeconomy and is it a new sector or the reinvention and evolution of a variety of sectors?

The bioeconomy clearly includes a number of areas such as forestry, agriculture, food, pharmaceuticals and so on, but the bulk of my focus is on the industrial bioeconomy. The industrial bioeconomy refers to electricity, fuels, chemicals, products, and materials coming from biomass. Essentially, it entails replacing more than 90% of the products and materials we consume every day that currently come from hydrocarbons, with those same products made from carbohydrates or biomass. These include things like paints, plastics, personal care products and energy.

“The bioeconomy entails replacing more than 90% of the products and materials we consume every day that currently come from hydrocarbons, with those same products made from carbohydrates or biomass. These include things like paints, plastics, personal care products and energy.”

Which stage of development is the bioeconomy currently at?

The industrial bioeconomy started to emerge possibly 10 years ago and some of the world leaders are Germany, France, the UK, Italy and Spain in the European Union, and the United States in North America. In 2009, Germany established a Bioeconomy Council to advise the government, devised a bioeconomy research strategy in 2010 and came up with a bioeconomy policy strategy in 2013. So the Germans have been active in this sphere for 8 to 10 years. Closer to home, the US Department of Agriculture has a BioPreferred Program, wherein the US government shows preferential treatment in procuring products that are proven to be at least 25% bio-based. This program was created in 2002 and offers over 3000 products ranging from fuels to detergents to bio-based diapers.

Recently, Canada has started to consider the bioeconomy. Last year, Natural Resources Canada (NRCan) Minister James Carr, together with his provincial colleagues, announced a Forest Bioeconomy Framework for Canada. Although it focuses on forestry and not agriculture or marine biomass, it is a good start.

“The main issue for Canada is to learn to manufacture domestically rather than exporting our natural resources. Canada has 9% of the world’s forests and millions of acres of agricultural land. We need to make products with that biomass here at home.”

Also, a Bio-Industrial Park is being established in Sarnia, Ontario to replace some of the petrochemical companies that have been leaving the city. We have seen companies like BioAmber already position themselves there. There are a number of other industry players like Conifex Timber in Western Canada, Ensyn in the Ottawa Valley and Iogen in Ottawa that are doing work in this space.

The main issue for Canada is to learn to manufacture domestically rather than exporting our natural resources. Canada has 9% of the world’s forests and millions of acres of agricultural land. We need to make products with that biomass here at home.

What are some of the roadblocks for Canada’s bioeconomy and where is it positioned in the global market today?

Canada is not really on anybody’s radar internationally. However, the bioeconomy is becoming increasingly popular here and is sometimes referred to as a subset of cleantech. When I speak at international conferences, people are surprised to hear that Canada might be a place where they should consider locating their facility. Indeed, in the last couple of years, the Canadian Federal Government has been trying to stimulate cleantech by establishing a Clean Growth Hub and putting funds into Export Development Canada (EDC).

“The single most important thing the government could do to stimulate innovation and substitution is to penalize carbon creation. We need to be even more aggressive with our carbon tax.”

In the EU, the bioeconomy has created close to 14 million jobs and is a $1 trillion industry. It is starting to be big business and Canada needs to position itself to be part of that, otherwise we are just going to be importing everybody else’s hardware. Importing everybody else’s low carbon hardware might be good for the global environment, but it is not particularly good for the Canadian economy.

Officials in Ottawa are still learning about the bioeconomy and that is part of the reason I started “Scaling Up.” This conference is held every fall in Ottawa with the aim of informing attendees about the extent of the opportunity. The Canadian Forest Service is starting to see the opportunity here but overall, Canada is a little too focused on oil, gas and hydrocarbons because of their abundance. We have a lot to learn but we are moving in the right direction; and the government is very interested in cleantech.

What measures would you want the government to put in place to boost Canada’s bioeconomy?

The single most important thing the government could do to stimulate innovation and substitution is to penalize carbon creation. We need to be even more aggressive with our carbon tax. The carbon tax is supposed to go to $50 a ton by 2022. Price drives substitution and innovation. If a company has to pay a high carbon tax, then it is going to invest in innovation to avoid having to pay that tax.

People think governments have a lot of levers at their disposal, but frankly they do not. They can tax, regulate, spend, procure, and inform. Apart from taxation, Canada should take a page out of the American book and create a federal biopreferred program wherein the government actually shows preferential treatment to procuring products and materials that are bio-based rather than hydrocarbon-based.

“In the developed world, the bioeconomy is growing faster than the economy as a whole – as much as 10% annual growth. So a bio-based world can accomplish both government goals of innovation and lower carbon emissions.”

Thirdly, the government needs to provide more risk funding. I know governments do not have much money, but there are a number of companies that are challenged to get to the commercial stage. Biorefineries are costly. Public-private partnerships to share some of the risk of commercializing can make Canada globally competitive.

This government is trying to grow through innovation and at the same time, lower its carbon emissions. In the developed world, the bioeconomy is growing faster than the economy as a whole – as much as 10% annual growth. So a bio-based world can accomplish both government goals of innovation and lower carbon emissions. If I had to identify one sub-sector to focus on, I would put my money into green chemistry. We already have a successful renewable fuels mandate with considerable market penetration, and we understand biomass for power generation. But the real growth now is going to come from biochemicals.

What is your vision for the future of the Canadian bioeconomy?

First, to see a culture that links economic growth to environmental sustainability. I believe the bioeconomy allows us to do that.

I want a culture in which my four grandchildren can look me in the eye 15 years from now and say, “Grandpa, what do you mean all these products. I am currently buying at Canadian Tire and the grocery store used to come from hydrocarbons? I do not understand. How stupid was that?” In other words, they will take for granted that all the products they buy come from sustainable biomass, and that we live in a bio-circular economy.