Technische Universität München The EU Bio-Economy Justus Wesseler Richard Smart, Thomas Venus,...

Technische Universität München

The EU Bio-Economy

Justus WesselerRichard Smart, Thomas Venus, Philipp Wree

Technische Universität München - [email protected]

http://www.wzw.tum.de/aew/08161 / 71-5632

mailto:[email protected]


Outline

• History

• Relevance

• Future


Bioeconomy

European Union Commission:

“…the production of renewable biological resources and their conversion into food, feed, bio-based products and bioenergy.”

Includes: agriculture, forestry, fisheries, food, pulp and paper production, parts of chemical, biotechnological and energy industries.

(European Commission Memo/12/97, 2012).


Why relevant now and not 20 years ago?

• Advances in biological sciences


Advances in biological sciences

• 1973: Cohen–Boyer r-DNA technique

• 1980: Diamond vs. Chakrabarty ruling, patents on

GMOs

• 1995: first GM crops

• Since 2000: genomics, synthetic genes, …


6

The colors of biotechnology

• Blue biotechnology marine and aquatic applications

• Brown biotechnology dessert biotechnology

• Dark biotechnology bioterrorism

• Gold biotechnology bioinformatics

• Green biotechnology agriculture biotechnology

• Grey biotechnology classical biotechnology

(fermentation)

• Purple biotechnology patents, IPR

• Red biotechnology medical biotechnology

• White biotechnology industrial applications

• Yellow biotechnology nutritional biotechnology

White

Source: http://argosbiotech.info/biotech_colors.html




• Increase in horizontal and vertical

integration


Increase in horizontal and vertical integration

• Seed industry e.g.: Limagrain, Monsanto,

Syngenta

Source: Schenkelaars, P. , H. de Vriend, N. Kalaitzandonakes (2011) Drivers of Consolidation in the Seed Industry and its Consequences for Innovation. The Hague, COGEM.


9Quelle: Venus and Wesseler (2012). Deutschlandkarte von URL: www.stallwanger.net

… < 50 suppliers of GMO-free milk

… > 50 suppliers of GMO-free milk

GMO-free Dairies*:

* Dairies that offer some or all of their products GMO-free.

http://www.stallwanger.net/

http://de.wikipedia.org/wiki/Milchwerke_Berchtesgadener_Land_Chiemgau

http://de.wikipedia.org/wiki/Milchwerke_Berchtesgadener_Land_Chiemgau


Current GM-free milk production

Figure 1: Percentage distribution of milk supplying farms and amount of milk production in Germany.

Conventional90%

Gentechnikfrei

6%

Organic3%

Milk supplying farms [Number]

GMO-free

6.6%Organic

3.4%

Conventional

90.0%

Conventional93%

Gentechnikfrei

6% Organic2%

Milk Production in Germany [Amount]

GMO-free

5.2% Organic

Conventional

92.7%

2.0%

Figure 1: German milk producing firms, sorted by the number of GM-free suppliers

0

200

400

600

800

1000

1200

1400

1600

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Amou

nt o

f raw

milk

sup

plie

rs

Dairies sorted by the number of their raw milk suppliers

Table 1: Amount of GM-free dairies compared to conventional dairies separated by the milk amount produced

Amount of dairies Amount of GM-free dairies

Percentage of GM-free dairies per size group.

<50,000 kg 95 31 33 % >50,000 kg 127 7 5 % TOTAL 196 38 19 %

GM-free farmers: 6,326


Firm challenges GM free products

• Securing GM-free products

– Agreements with suppliers (contracts, certification, monitoring, …)

– Agreements with buyers (contracts, certification, …)

– Risk of penalty payments and loss in reputation in case of mislabeling

Þ Compliance costs: ex-ante regulation + ex-post liability

Þ Interesting for smaller farms and firms (dairy companies) (Venus et al., 2012; Weaver and Wesseler, 2005)




• Increase in horizontal and vertical integration

• Increase in inter- and intra-industry trade


Increase in trade

Robert Koch-Institut: SurvStat, http://www3.rki.de/SurvStat, Datenstand: 27.05.2011

Reported EHEC infections for Germany

Intra-Industry Trade

http://www3.rki.de/SurvStat


Source: James, C., 2012






• Increase in globalization


Increase in globalization

• Increase in interchange of world views, products,

ideas, and other aspects of culture.

http://en.wikipedia.org/wiki/File:Mac_Japan.jpg


Environmental issues:

• increase in yield

• environmental benefits

• emerging issues

Þ target pest resistance

Þ secondary pests

Þ weed resistance


Voluntary Labeling Regulations in the EU

• 1829/2003: Traceability and labeling of GMOs• 1830/2003: GM food and feed

• 834/2007: EG-Eco-regulation » – excludes GMOs

• EU Member states can introduce their own legal standards for “GM-free” products

• Four countries have introduced GM-free labeling regimes– Austria, Germany, France and the Netherlands (+ Guidelines in

Italy)






• Increase in globalization

• Advances in ICT


Advances in ICT


Advanc

es in

ICT

Parameter /Region

Year2005 2007 2008 2012 2013

World population (billion) 6.8 7.1World mobile-cellular subscriptions (billion) 2.2 6.8Mobile cellularpenetration rates

Developing (%) 89Developed (%) 128

World (%) 96Number of internet users (per 100 users)

Developing (%) 8 31Developed (%) 50 77

World (%) 15 39 Householdswithinternetaccess

Developing (%) 28 Developed (%) 78

World (%) 41 Africa (%) 1 7

Asia and Pacific (%) 10 33Arab states (%) 9 34

CIS1 (%) 9.9 46The Americas (%) 31 61

Europe (%) 41 77Fixed-broadband sub-basket as a percentage of GNI p.c.2

Developing (%) 164.6 30.1 Developed (%) 2.5 1.7

World (%) 115.1 21.5 Fixed-broadband penetration

Developing (%) 2.5 6Developed (%) 19 27

World (%) 5 10Active mobile-broadband subscriptions (per 100 inhabitants)

Developing (%) 0.8 20Developed (%) 19 75

World (%) 2.5 30

Source: International Telecommunications Union, 2013.


History of the EU Bioeconomy Policy• 2001: Life sciences and biotechnology: a strategy

for Europe.– “A revolution is taking place in the knowledge base of life

sciences and biotechnology, opening up new applications in healthcare, agriculture and food production, and environmental protection, as well as new scientific discoveries.”

• 2004: Life sciences and biotechnology: a strategy for Europe – second progress report and future orientations.

• 2005: Transforming life sciences knowledge into new, sustainable, eco-efficient and competitive products (UK presidency)


History of the EU Bioeconomy Policy• 2005: Transforming life sciences knowledge into

new, sustainable, eco-efficient and competitive products (UK presidency)

“The European bio-economy is a sector of a huge economic importance. There is a common vision and understanding that life sciences and biotechnologies are critical factors for the competitiveness of this bio-economy and for addressing major social and economic challenges:

- the growing demand for safer, healthier and higher quality food;

- the growing demand for sustainable production and use of renewable bioresources for eco-efficient products;

- the increasing risk - and need to prevent - epizootic and zoonotic diseases such as avian flu, as well as food related disorders such as obesity;

- threats to the sustainability and security of agricultural and fisheries production resulting, in particular, from climate change.”


History of the EU Bioeconomy Policy• 2007: Cologne Paper – En route to the KBBE

(German presidency)


History of the EU Bioeconomy Policy

• 2010: The KBBE in Europe – Achievements and Challenges (Belgium presidency)

• 2011: Survey – Bio-based economy for Europe

• 2012: Innovating for sustainable growth: A Bioeconomy for Europe (European Commission, Danish Presidency-Copenhagen Declaration)


Future EU Bioeconomy Policy

• Action Plan

– Investments in research, innovation, and skills

– Reinforced policy interaction and stakeholder engagement

– Enhancement of markets and competitiveness

• Horizon 2020: Research programme 2014 – 2020

– € 87.7 billion

– € 4.1 billion at least for bioeconomy in the field of food

security, plus climate, energy, health, and others => about

€ 10 billion !


SO2/SO1 SO3/SO1 SO4/SO3 SO4/SO1

Added value created (bioeconomy only, %)

-0.27% +0.61% +0.14% +0.75%

Added value created (bioeconomy only)

- € 4 billion + € 9 billion + € 2.4 billion + € 11.4 billion

Employment created(bioeconomy only)

- + 120 000 + 11 000 + 131 000

Summary of comparative economic impacts of scenarios in 2025

Scenario 1: business as usualScenario 2: A non-EU coordinated research and innovation in bioeconomyScenario 3: The bioeconomy is supported by enhanced efforts in research and innovationScenario 4: The bioeconomy is supported by reinforced policy interaction and enhanced efforts in research and innovation Source: European Commission (2012) COMMISSION STAFF WORKING DOCUMENT Accompanying the document Communication on Innovating for Sustainable Growth: A Bioeconomy for Europe


A number of controversies, e.g.:

• Consumer issues

• Political economy of regulations

• International dimension: developing countries

• Food versus fuel


29

Controversies: technologies introduced

• Intervet (NL) developed vaccine against swine diarrhea in 1984

• 1984 the Dutch Company Gist-Borcades (now DSM) started to insert the chymosin gene of a cow in yeast cells => yeast cultivated in large fermenters and used for cheese production. Late 1980s adopted in Swizerland, others followed, 1992 NL, 1997 Germany, 1998 in France.

• Mid 1980s Eli Lilly (US) manufactured human insulin using GM bacteria

• Early 1990s enzymes for improving bread produced by GM bacteria

Source: Tramper, Johannes and Yang Zhu (2011) Modern Biotechnology. Wageningen Academic Publishers.


30

Controversies: poor “Hermann”

• Late 1980s “Herman” the dutch bull by Pharming (NL), lactoferrin, an infection-inhibiting protein was transferred in the genome

• => extract lactoferrin from the milk and market as a drug for people with immune system problems (HIV-AIDS)

• Dutch law demanded he be slaughteredat the conclusion of his role in the experiment.

• Public and scientists rallied to his defense.

• Herman the Bull was one of the oldest bulls ever in the Netherlands.

• Died on 2 April 2004.

Source: Tramper, Johannes and Yang Zhu (2011) Modern Biotechnology. Wageningen Academic Publishers.


GMO-free regions


Scientific Challenge and Societal Relevance

• Measuring the contribution of the bioeconomy to

sustainable development at different levels

• Effect of policy changes on the contribution of

the bioeconomy to sustainable development


Source: European Commission (2012) Innovating for Sustainable Growth. A Bioeconomy for Europe. Luxembourg: Publication Office of the European Union

Size of the EU Bioeconomy in 2009

Sector Annual Turnover

(billion euro)

Employment(thousands)

Agriculture 381.0 12000

Fisheries and Aquaculture 32.0 500

Forestry/Wood Ind. 269.0 3000

Food 965.0 4400

Biofuels 6.0 150

Paper/Pulp 375.0 1800

Bio-chemicals and Plastics 50.0 150

Enzymes 0.8 5

Total 2078.8 22005Employment: about 9% of EU workforce. Land-use: about 80%.


19951996

19971998

19992000

20012002

20032004

20052006

20072008

20090

100000

200000

300000

400000

500000

600000

700000

800000

Manu of chemicals, chemical products, man-made fibres (20%)Mining and quarrying (20%)Manu pulp, paper, paper products; publishing and printingManufacture wood, wood productsManu leather, leather productsManu textiles, textile productsManu food products, beverages and tobaccoFishingAgriculture, hunting and forestry

Gross Value Added of the EU Bioeconomy (Mio. € current prices)

Note: first attempt, excludes research and development and other subsectors. Source: Eurostat.

Technische Universität München Others

OECD „The Bioeconomy to 2030 (Designing a policy agenda)“

LEI„Biobased economy; State-of-the-art-assessment“

SOEST„Volkswirtschaftliche Neubewertung des gesamten Agrarsektors und seiner Netzwerkstrukturen“

Biotechnology applications in:• Primary production• Health• Industry

Focuses on the research sector

a) potential biobased products Biobased material serving for:

• Energy• Industry

b) Biotechnology to make or modify products or processes

Focuses on renewable resources and

research

agriculture as part of agribusiness

• Upstream sectors• Agriculture, hunting

and fisheries• Downstream sectors

Focuses on agribusiness


Economic results of individual studies

OECD LEI SOEST (for Germany)

Gross domestic product (GDP)

2,7% of the GDP of OECD countries in 2030(mid 2000s: less than 1%)

• Main markets:- (1) Primary

production- (2) Industry- (3) Health (p.16)

Market value EU-25

The current level of the production of materials that are entirely or partially biobasedhas a market value of around 450 billion in the EU-25 manufacturing sector.

It is estimatedthat the real value could be even 610 billion. (p.9)

gross value added (GVA)

% of national economy:(% of 2.239,08 Bio. €)

• Agribusiness: 6,63• Agriculture: 0,72

% of agribusiness:

• Agriculture: 10,90• Upstream s. : 9,68• Downstream s. : 79,42 (p.41)


Scientific Challenge and Societal Relevance• Measuring the contribution of the bioeconomy to

sustainable development at different levels

– genuine investment (Arrow et al., 2012)

– uncertainties and irreversibilities

– property rights: legal systems, patents, plant breeders rights, open innovation

http://www.upov.int/portal/index.html.de


Scientific Challenge and Societal Relevance• Effect of policy changes on the contribution of

the bioeconomy to sustainable development

– demand for regulation increases: the financial crisis, volatile agricultural and commodity markets, BSE, EHEC, GMOs, climate change, renewable energy, greening of the CAP, use of chemicals, rural development policies

– efficient regulation: property rights, ex-ante compliance,ex-post liability rules, labeling, supply chain

– implications for the sector: choice of location, industry structure


Biotechnology patent applications to the EPO by priority year at the national level

Source: Eurostat, 2013. Own calculations.

19771979

19811983

19851987

19891991

19931995

19971999

20012003

20052007

20090.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

United StatesEU 27Euro AreaGermanyJapanDenmark

Source: OECD, 2008.


Timeline of different periods in the approval process for all observations (Canada)

CornSoybeanSoybean

CornCornCornCornCorn

AlfalfaCotton

CornPotatoCottonPotato

CornCotton

CornCanola

CornCotton

SoybeanCanola

0 1000 2000 3000 4000 5000 6000 7000

24-Jun-94 20-Mar-97 15-Dec-99 10-Sep-02 6-Jun-05 2-Mar-08 27-Nov-10

first submission - submissionTime Differencetime line

Source: Wesseler et al. 2012.


Timeline of different periods in the approval process for all observations (USA)

Received date – submission of petition

Submission of petition – ruling and determination



Timeline of different periods in the approval process for all observations (EU)

Submission to EU Member State – Submission to EFSA

Submission to EFSA – Decision EFSA

Submission to EU commission – Decision EU commission

Note: + = scientific process

= political process



0 1000 2000 3000 4000 5000 6000 70000

1000

2000

3000

4000

5000

6000

Time Trend in Approval Length for GMOs

CanadaLinear (Canada)European UnionLinear (European Union)United StatesLinear (United States)

Submission since first submission (days)

Appro

val dura

tion (

days)



0 1000 2000 3000 4000 5000 6000 70000

500

1000

1500

2000

2500

3000

3500

4000

Time Trend in Approval Length for GMOs in the US and EU: Differentiated

EU EFSALinear (EU EFSA)EU CommissionLinear (EU Commission)US PetitionLinear (US Petition)US AphisLinear (US Aphis)

Submission since first submission (days)

Appr

oval

dur

ation

(day

s)



In conclusion• EU has a strong focus on innovation for 2014 to

2020

• Bioeconomy plays a central role

• Measurement needs substantial improvements– current assessments underestimate the size– do not reflect well enough horizontal and vertical inter-

linkages

• Innovation policies (IPRs, regulations) seem to be crucial, not only for Europe


If you want to know more…


I like to thank my colleagues:

Emmanuel Benjamin, Matthias Blum, Jaqueline Garcia-Yi, Maarten Punt, Qianqian Shao, Richard Smart, Thomas Venus, Phillip Wree.

Most of the research has been funded by the EU through the framework programs.

The views expressed in this presentation do not necessarily reflect the views of the funding agency nor of my colleagues.


“If the 20th century was the century of

physics, the 21st century will be the century

of biology”

Craig Venter


Many thanks for your

attention!

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