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Industrial biotech: A field of dreams

(Tuesday, April 13, 2004 -- CropChoice news) -- The Economist, 04/10/04: HENRY FORD, that great American inventor, was fascinated by the soyabean. During the Depression, he spent many hours at a lab near Detroit trying to turn the humble bean into cheap plastic, so that more Americans could afford his Model T car. By 1941 Ford, who was known to wear suits and ties made of soyabean, unveiled a handmade car with a plastic body made completely from plants. A news report at the time called it "part salad, part automobile". Alas, like many who have tried to commercialise plant-based materials, he never figured out how to produce soyabean-based plastics that could compete on price with petroleum-based plastics, still the dominant variety of industrial polymers.

Now, the OECD, McKinsey, a consultancy, and a handful of big corporate converts, notably Dow Chemical, Cargill and DuPont, say that times have changed. They argue that savvy firms increasingly understand that the fossil-fuel era will come to an end, and are diversifying away from such raw materials. Scott Noesen, who directs Dow Chemical's sustainable-development efforts, says, "We're going to be in a carbon-constrained world, and there's going to be a cost for carbon dioxide." Carbon-emission trading will be common.

Governments are helping to drive change. (Indeed, their subsidies and regulations may be the main driving force.) America recently published draft rules to encourage federal purchasing of bio-based industrial products in 11 categories, from lubricants to fibres, plastics and paints. It also subsidises making ethanol from maize (corn) kernels. To meet European Commission targets under the Kyoto treaty, some 9.3m tonnes of ethanol will need to be produced annually in Europe by 2010. The EU has also adopted guidelines and production targets to expand the use of biofuels derived from agricultural, forestry and organic-waste products. The biofuels target for 2005 is 2% of vehicle fuel, rising to nearly 6% by 2010.

Most bio-based products now on the market rely upon traditional chemistry. But operations such as the glimmering new Cargill Dow joint-venture "bio-refinery" in Nebraska offer a glimpse of things to come. Cargill and Dow Chemical have invested $300m to produce plastic package wraps and textile fibres from maize and bacteria. The firms also say that they can use maize stalks and other crop left-overs to fuel their factory machinery.

Royal Dutch Shell and Iogen, a Canadian firm, are among those building an ethanol refinery that converts "residual biomass" -- leftover plant matter usually thought of as waste. Thanks to the creation of more efficient enzymes that cut fermentation costs, advances in genetically modified maize starch that have improved yields, and government subsidy, America's 75 ethanol refineries produced a record 2.8 billion gallons (10.6 billion litres) last year. At least a dozen ethanol refineries are now under construction in America.

Already, McKinsey reckons that about 5% of global chemical sales are derived in part from industrial biotech. That figure could reach 20% by 2010, says McKinsey's Jens Riese, if chemical firms, whose polymer innovation has stalled in recent decades, become convinced by the economics of bio-based products.

At last year's Detroit motor show, Ford, with a nod to its founder, introduced a concept known as the Model U "green car", with carpet mats made of maize, seat cushions from soyabeans, and engine oil from sunflower seeds. It may never go on sale, but is evidence of Ford's continued interest in bio-products. In January, Archer Daniels Midland, a huge agricultural firm, announced a partnership with Volkswagen to develop biodiesel fuels.

Not everybody views industrial biotechnology as the missing link in the evolution of the industrial complex. For every Dow Chemical, Cargill and DuPont, there are thousands of firms that know nothing of industrial biotech. And can any industry possibly be as clean and green as industrial biotech purports to be? Most farming requires millions of litres of pesticides, herbicides and fertilisers, which can leach into groundwater and then into nearby lakes, rivers and wells. Although motor fuels mixed with ethanol can cut hydrocarbon and carbon-monoxide emissions, they also produce increased levels of toxins called aldehydes and peroxyacyl nitrates, which can form brown smog.

Ethanol producers have previously fallen foul of America's Environmental Protection Agency for emitting volatile organic compounds such as formaldehyde and acetic acid (both suspected carcinogens) and methanol (a hazardous pollutant). Techniques for efficiently refining and safely disposing of huge volumes of petrochemicals produced by industry are now well understood. The same cannot be said for refining and disposing of similar volumes of fermented plant matter.

Crops grown in fields endure any number of natural fluctuations in soil chemistry, moisture and temperature. Plant biochemistry, as a result, changes -- in vanishingly subtle, yet demonstrable ways. Crop yield is also far from an exact science. This may scare off businesses that need their inputs to be reliably supplied, and of a consistent quality.

"Quality is all over the board," admits Steve Devlin of Iowa State University, who works for the government on product testing. Consumer acceptance is another issue. When an average consumer thinks of clothes and blankets made from maize, "cozy" and "soft" are probably not what comes to mind. On the other hand, new bio-fibres blended with older "biotech", such as silk and wool, produce fabrics far from the itchy hemp shirts of the 1960s.

Even "green consumers" are price-sensitive. "It's naive to think a green label is going to give you a big economic advantage unless it's legislated," says Charles Cooney of the Centre for Technology Innovation at the Massachusetts Institute of Technology. To cut manufacturing costs to truly competitive levels, further technology advances and more capital will be needed.

In the end, the commercial fate of bio-based products may hang on the price of oil, which has swung wildly in recent years. If prices remain high, industrial biotech may remain hot. If not -- and crop prices can be volatile too; soyabean prices have doubled in the past seven months -- bio-based products may fall out of favour, as they have done so many times before.