Binkley on bio-economy

Alex Binkley is a foremost political and economic analyst whose website is www.alexbinkley.com. Readers will be aware that his columns in True North Perspective have foreseen political and economic developments in Canada. This week in ... 

The Binkley Report

Something old is new again and is very promising

By Alex Binkley
True North Perspective

02 March 2012 — In its fervent support for the oilsands industry, the Harper government has paid too little attention to a sector that could not only help with the country’s energy issues, but also create plenty of green jobs.

Known generally as the bio-economy, it involves transforming plant and tree material, even pond scum, to create fuel and many other products we use daily. Production of feedstock for the industry is renewable and sustainable and would provide benefits not only across the country, but around the world.

The term, bio-economy, been kicking around since the 1990s, kind of the overlooked cousin of the bio-fuel industry. Until now, ethanol and bio-diesel have been made from corn, wheat and oilseeds, which generates plenty of controversy about their true production costs and whether they are driving up food prices and creating shortages around the world.

However, the bio-fuel industry is the entrée into the much more promising world of the bio-economy, which could produce industrial chemicals, pharmaceuticals and car interiors, to name just a few of the potential products.

The ethanol and bio-diesel plants of today could become the bio-refineries of the future, churning out products we can’t even begin to imagine.

Farm Credit Canada (FCC), which provides loans and advice to farmers, has recently released a report that spells out the potential of the bio-industry. Bioenterprise Corp., a fast growing business in Guelph, Ont. helps startups mature into full fledged operations based on bio-products. It is trying to expand its operation across Canada.

Long before the term bio-economy had any cachet, it had a role big role in boosting the productivity of the agri-food industry, the FCC notes. “Today, there’s rising interest in its ability to enhance profitability and productivity through providing sustainable solutions to global issues such as water and food shortages, soil nutrient depletion and the need for affordable products and energy,” says the FCC document.

“Both biotechnology and traditional crop breeding have enhanced productivity and increased yields through new products such as drought-resistant crops,” it adds. “Today, resource shortages and rising oil prices are driving the search for bio-based alternatives that reduce dependence on petroleum. Future advances in science and technology will generate more possibilities.”

The FCC wants farmers and the food industry to understand their role in advancing the bio-economy and how it could generate badly-needed income to offset the normal ups and downs of world prices for their products. But it’s just as important for consumers, who want a dependable supply of safe food. The best way to ensure that is a profitable agriculture industry. Being able to supply bio-based companies as well as feed consumers would help accomplish that.

“Interest and activity in the bio-economy is growing, driven by scientific advances such as the manipulation of genes and the search for sustainable solutions to global resource shortages,” the FCC continues. “The economy has always derived value from a hybrid of chemistry-based and bio-based products and processes, with petroleum-based solutions being predominant in recent decades due to the availability of oil.”

In the coming decades, the scarcity of oil combined with political instability around the world, will drive up energy prices. A strong bio-economy can help cushion the blow.

The challenge is how quickly will Canada and other countries move to tap into the potential of the bio-economy. FCC says, “Factors such as the price of oil, access to capital, the pace of scientific innovation and changing regulations and infrastructure will determine how quickly the bio-economy grows.”

The federal government’s decision to establish minimum renewable fuel content for gasoline and diesel has encouraged the development of bio-fuel plants across Canada. While they are currently dependent on grains, the search for alternatives including ways to produce cellulosic ethanol continues.

A lot of research will be required to keep it growing and expanding. Unfortunately the Harper government is focused on short-term research ventures with private companies. In some instances that will work, but government, universities and industry need to undertake plenty of pure research to find ways to use products in the bio-economy.

A report from the Richard Ivey School of Business points out the bio-product industry has been challenged by undeveloped regulations, declining research and development expenditure following the 2009 financial crisis, inadequate capital and recent increases in the cost of biomass, the FCC notes.

If the government showed as much enthusiasm for the bio-economy as it does for exporting unrefined oilsands from Canada, it would provide the kind of boost the sector needs. And Canadians would better understand the importance of developing the bio-economy.

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