Biobased industry growing, but needs more federal help, report says

By Philip Brasher

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, Oct. 3, 2016 - Production of biofuels and biobased products such as plant-derived plastics already support 4.2 million jobs, but the industry's future growth rate depends in part on oil prices and the availability of new government incentives, according to a study commissioned by the Agriculture Department.

The study, authored by experts at Duke University and North Carolina State University, also said that the federal government itself has been slow to use the products despite USDA's efforts to promote them.

USDA Secretary Tom Vilsack said the biobased industry has helped turn around the rural economy while benefiting the environment. "This is an industry that has helped move the employment rate in rural America down from its high over 10 percent to less than 6 percent for the first time in approximately 10 years," Vilsack said in a speech at the National Press Club where he announced the report's release.

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The job estimate includes 1.6 million jobs directly involved in the biobased sector. Another 2.6 million jobs are indirectly created in its supply channels or through additional purchasing by households that benefit from the industry's impact on employment and production.

The industry added $393 billion to the economy in 2014, including $127 billion from sales, the study found. USDA's definition of biobased products excludes livestock, food, feed and pharmaceuticals.

Vilsack said it would be "wise for future administrations to continue investing" in the biobased sector.

“In addition to the clean energy aspect of this, in addition to the job creation opportunities, this is really about taking advantage of the natural resource advantage that we have in rural America and expanding its capacity,” Vilsack said. “For far too long we've relied simply on agricultural production and exports to support the rural economy.”

The study, which updates and expands on a 2015 report, predicted that the industry would continue to grow over the next five years even with low oil prices, but it warned that some biobased projects may be delayed or canceled if petroleum markets remain down for an extended period.

The value of the industry grew from a total of $369 billion in 2013 despite a decline in prices for petroleum-based products. “The growth in the biobased products industry proves that the industry is robust and diverse enough to grow even in the face of a sharp in oil prices,” the study said. “It is likely that the biobased products industry will experience even greater growth when the cycle of low oil prices turns around."

But the study also found that biobased products remain relatively unknown in the federal government, despite USDA's efforts to promote their usage. The products also face challenges with the public because of widespread opposition to GMOs and concerns about the use of crops for fuel and other products, the authors say.

The study said there is a “lack of widespread awareness” within the General Services Administration and federal agencies about the availability and use of biobased products. One company executive, who was not named, told the researchers that the USDA Certified Biobased Product level is important but “is not providing the level of market benefit and impact at the consumer level that it was believed would emerge.”

Another executive said that the lack of a “top-down federal policy” promoting the use of the product has discouraged private companies from making long-term investments.

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More than 14,000 products have been certified by USDA in 97 product categories.

The study also said that states need to put more money into the biobased products industry because there are currently an insufficient number of pilot plants to promote innovation in the sector.

Authors of the report said it was the first study to detail the state-by-state impact of biobased products. California has the largest number of jobs attributable to biobased products,145,080, followed by North Carolina at 90,040, Texas with 88,680 and Georgia at 80,520.

Vilsack indicated that he is particularly optimistic about the growth of biobased jet fuels because of the relatively small distribution system required: About 40 airports account for 90 percent of the aviation fuel usage. “The future is quite bright,” he said.


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