The New Biomassters - Convention on Biological Diversity

Counting the Bioma$$ Economy
Turning straw (and other cellulose) into (financial) gold is not
new. A 2008 report from the USDA points out that
worldwide, over $400 billion worth of products are already
produced annually from biomass including pulp and paper,
lumber, paints, greases and lubricants. 47 <strong>The</strong> only consolidated
estimate publically available for how much money can be
made from the new bio-based energy, chemicals, plastics, fuels
and associated markets is from <strong>The</strong> World Economic Forum
that guesses at a $300 billion dollar market by 2020. 48 A
sampling of predictions (below) total around one half-trillion
dollars by 2020 – possibly considerably more.
Bioma$$ electricity – According to Pike Research, the
market value of electricity generated from biomass in the
United States will increase steadily to $53 billion by 2020, up
from approximately $45 billion in 2010. 49 <strong>The</strong> World
Economic Forum puts global value of biomass heat and power
combined at $65 billion by 2020. 50
Bioma$$ fuels – Pike Research claims that biodiesel and
ethanol markets account for $76 billion dollars in sales in
2010 and that figure might rise to $247 billion by 2020. <strong>The</strong>
total global biofuels market could surpass $280 billion by
2022. 51
Bioma$$ and bio-based chemicals – In 2005, McKinsey &
Company estimated that bio-based materials and products
(for example, bioplastics, bio-derived chemicals, and chemicals
refined using biotechnology) accounted for 7% of global sales
and $77 billion in value within the chemical sector. 52 By 2008
the value had increased to $170 billion and was predicted to
reach $513 billion by 2020. 53 A 2008 estimate by USDA
(based on 2006 figures) predicted that bio-based chemicals
would account for 22% of all chemical industry sales by
2025. 54 <strong>The</strong>se figures, however, do not distinguish between
biomass-based chemicals and biotech-aided production. A
study by Frost & Sullivan in March 2009 found that revenues
for the global bio-renewable chemicals market (that is
chemicals made from biomass rather than petroleum) reached
only $1.63 billion in 2008 (only 4% of sales) but may climb to
$5.01 billion by 2015. 55 <strong>The</strong> World Economic Forum reports
that bio-based chemicals are expected to increase their share in
overall chemicals production to some 9% of all chemicals by
2020 citing a $6 billion figure. 56 According to bullish analysis
from Helmut Kaiser
Consultancy, bioplastics
already account for 10-15% of
the total plastics market and
could increase their market
share to 25-30% by 2020. 57
Bioenergy: energy from biomass; refers to any process that
transforms biological material into energy including
production and use of biofuels, generation of biomass
electricity and biomass for heating and cooking.
<strong>The</strong> Bioma$$ Boondoggle – One inescapable conclusion
from analyzing the biomass economy: at this stage its most
aggressive backers are governments that allocate billions of
dollars to subsidize biofuels, in particular. Surveys by the
World Bank and the Global Subsidies Initiative (GSI) suggest
that annual government subsidies for biofuels are currently in
excess of $15 billion and could rise to over $50 billion by
2020. 58 “For the years ahead, governments seem to have
signalled that the sky is the limit,” explains GSI’s Director
Simon Upton. According to the World Bank, 24 countries
have mandated biofuel targets, while 12 countries plus the
European Union offer tax exemptions and credits on biofuel
use and production. 59
Bioma$$ investments – <strong>The</strong> emerging biomass industry has
positioned itself on a hot spot of venture capital funding – socalled
‘clean tech.’ A study by Lux Research of over 100
venture capital investments in the biosciences sector
documented a marked upturn in investment deals in
bioenergy when the U.S. government set ethanol mandates in
2005. 60 Between 1998 and 2008, at least $4.17 billion of
venture capital flowed into the field. Many of the leading U.S.
venture capital firms that had bankrolled the Internet boom
switched over to “environmentally-friendly technologies,”
particularly solar energy and biofuels. 61 Silicon Valley’s Draper
Fisher Jurvetson, which originally funded Skype and Hotmail,
were among the earliest investors in synthetic biology,
providing start-up capital for Craig Venter’s Synthetic
Genomics, Inc. (focused primarily on biofuels). Another
Silicon Valley venture house, Kleiner Perkins Caufield &
Byers, whose previous successes include Google, AOL,
Amazon.com and Sun Microsystems, had reportedly backed
five different cellulosic biofuel companies by 2008, 62 advised
by luminaries Al Gore and Bill Joy. Meanwhile, Bill Joy’s
former business partner Vinod Khosla of Khosla Ventures is
dubbed “the baron of biofuels” for seeding over a dozen
biofuel startups, mostly in ethanol production, of which at
least five are synthetic biology companies.
According to the Renewable Energy Policy Network for the
21st Century (REN21), biofuels received $19.6 billion of
asset finance in 2007, though financing dropped to $15.4
billion in 2008 and plummeted to just $5.6 billion in 2009.
REN21 sees the trend reversing, however, with large
investments in Brazilian biofuels now underway. At the same
time, private investments in
bioelectricity projects have
risen from $9 billion in 2008
to $10.4 billion in 2009. 63
<strong>The</strong> <strong>New</strong> <strong>Biomassters</strong> 13