Policy Points: Renewable Chemicals Industry Reaches Economic Tipping Point

By Corinne Young

Chemicals are not simply the province of scientists in a lab. We are all surrounded by chemical products – they are in our homes, workplaces and every aspect of the environment. Whether it is the container in which food is stored, polymers and fibers for lightweight cars, personal care products we put on our bodies, polyesters and nylons in clothes we wear or the latent pesticides once used to protect crops – chemicals are ubiquitous and unavoidable.

In recent years, the nascent, yet fast-growing renewable chemical industry has already proved we can make higher performing, safer chemicals cost competitively and sustainably. Renewable chemicals are derived from a variety of bio-based feedstocks and can offer significant performance, health and environmental benefits. Beyond that, renewable chemicals offer critical economic promise, particularly as other manufacturing sectors decline and the U.S seeks to transform its economic capacity in a global innovation and low carbon market.

What a few years ago was merely a vision -- for a safer, sustainable, viable alternative to existing chemicals -- is today an emerging reality. The early stages of experimentation are moving to commercialization and growing consumer demand. Renewable chemical companies are ready to build their plants and hire workers to deliver exciting new products. The question is not when, but in this global economy, where they will do it. Other countries see the economic potential and are moving quickly to court the innovators who have developed breakthrough technology here.

In a perfect world, the renewable chemical sector with all its benefits would be encouraged to flourish in the U.S. The unfortunate truth is that, at best, this industry has been treated with benign neglect. Tax policy, funding support and other government mechanisms to encourage promising economic development have ignored the renewable chemical industry. That is beginning to change in Washington, with key champions in the Administration and Congress who understand the economic promise of this sector working to address federal policy. However, these efforts need to multiply, coalesce and accelerate – or we will lose our historic opportunity.

Pragmatic, actionable, bipartisan policy options that could dramatically affect the renewable chemical industry are on the table. These include tax credits to encourage U.S.-based production of these exciting new products and other financing mechanisms to provide access to capital and enhance speed to market. For example, Senator Debbie Stabenow (D-MI) included a provision for loan guarantees for renewable chemical production using bio-based materials in the version of the Farm Bill that has passed the Senate. She also co-sponsored a renewable chemical production tax credit bill, which spurred a bipartisan House companion bill introduced last week by Congressmen Pascrell (D-NJ) and Stockman (R-TX). But without a united voice demanding such policies, they could easily evaporate in the face of daunting fiscal challenges and powerful special interests.

For the promise of renewable chemicals to help drive a more vibrant and sustainable U.S. economy and deliver safer, higher performing products to us all, it is vital for business people to aggregate our voices, actively engage with the political process, and educate policymakers about the economic and other benefits of this industry. It is not enough to trust that Washington will eventually figure out the right way forward on renewable chemicals. We must make our case now.

And policymakers need to understand that there is a fleeting opportunity to leverage the economic, environmental and health benefits offered by the renewable chemical industry. The industry is at a tipping point. As more and more of this exciting technology scales, renewable chemical companies must decide where to build and expand.

The U.S. has competitive advantages but lacks federal incentives to compete in global innovation economy. As a result, significant U.S-based renewable chemical technology continues to be lured away for scale-up elsewhere.

With a few more years of federal inaction, the path for commercialization and value chains will be well established. Wherever the first commercial facilities are built, feedstock supply and other infrastructure will soon follow, along with thousands of jobs. If all this happens outside the U.S, so will all of the economic opportunities that go with it. The tipping point is ours for now, but we must seize it now. Otherwise, it will soon be gone.

Corinne Young, a long-time advocate for renewable chemicals is Chief Advocate of the  Renewable Chemicals and Advanced Materials Alliance (re:chem) She is also the Co Chair of the MassBio GreenBiotech Task Force and Advisory Board to The Institute for Massachusetts Biofuels Research (TIMBR) at UMass

Policy Points is produced by the American Sustainable Business Council. The editor is Richard Eidlin, Director – Public Policy and Business Engagement.

[image credit: Alvin Katek: Flickr cc]