Transcript Genuine Investment and Irreversibility: The Maximum

Technische Universität München
The EU Bio-Economy
Justus Wesseler
Richard Smart, Thomas Venus, Philipp Wree
Technische Universität München - Weihenstephan
[email protected]
http://www.wzw.tum.de/aew/
08161 / 71-5632
Technische Universität München
Outline
• History
• Relevance
• Future
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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).
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Why relevant now and not 20 years ago?
• Advances in biological sciences
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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, …
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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
White
•
Yellow biotechnology
biotechnology industrial applications
nutritional biotechnology
Source: http://argosbiotech.info/biotech_colors.html
6
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Why relevant now and not 20 years ago?
• Advances in biological sciences
• Increase in horizontal and vertical integration
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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.
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GMO-free Dairies*:
… < 50 suppliers of GMO-free milk
… > 50 suppliers of GMO-free milk
* Dairies that offer some or all of their products GMO-free.
Quelle: Venus and Wesseler (2012). Deutschlandkarte von URL: www.stallwanger.net
9
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Current GM-free milk production
1600
Milk Production in Germany
[Amount]
Gentech
GMO-free
Gentech
nikfrei
6.6%
6%
Organic
Organic
3%
3.4%
GMO-free
nikfrei
5.2%6%
Organic
Organic
2%
2.0%
Convent
Conventional
ional
Conventional
Convent
90.0%
ional
90%
93%
92.7%
Amount of raw milk suppliers
1400
Milk supplying farms
[Number]
1200
1000
GM-free farmers: 6,326
800
600
400
200
0
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
Dairies sorted by the number of their raw milk suppliers
Figure 1: Percentage distribution of milk supplying farms and amount of milk production in Germany.
Figure 1: German milk producing firms, sorted by the number of GM-free suppliers
Table 1: Amount of GM-free dairies compared to conventional dairies separated by the milk amount produced
Amount of dairies
<50,000 kg
>50,000 kg
TOTAL
95
127
196
Amount of GM-free Percentage of GM-free
dairies
dairies per size group.
31
33 %
7
5%
38
19 %
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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
 Compliance costs: ex-ante regulation + ex-post liability
 Interesting for smaller farms and firms (dairy companies) (Venus et al.,
2012; Weaver and Wesseler, 2005)
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Why relevant now and not 20 years ago?
• Advances in biological sciences
• Increase in horizontal and vertical integration
• Increase in inter- and intra-industry trade
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Increase in trade
Intra-Industry Trade
Reported EHEC infections for Germany
Robert Koch-Institut: SurvStat, http://www3.rki.de/SurvStat,
Datenstand: 27.05.2011
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Source: James, C., 2012
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Why relevant now and not 20 years ago?
• Advances in biological sciences
• Increase in horizontal and vertical integration
• Increase in inter- and intra-industry trade
• Increase in globalization
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Increase in globalization
• Increase in interchange of world views, products, ideas,
and other aspects of culture.
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Environmental issues:
• increase in yield
• environmental benefits
• emerging issues
 target pest resistance
 secondary pests
 weed resistance
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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)
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Why relevant now and not 20 years ago?
• Advances in biological sciences
• Increase in horizontal and vertical integration
• Increase in inter- and intra-industry trade
• Increase in globalization
• Advances in ICT
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Advances in ICT
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Advance
s in ICT
Parameter /
Year
Region
2005
2007
2008
2012
2013
World population (billion)
6.8
7.1
World mobile-cellular subscriptions (billion)
2.2
6.8
Mobile cellular
Developing (%)
89
penetration rates
Developed (%)
128
World (%)
96
Number of internet users
Developing (%)
8
31
(per 100 users)
Developed (%)
50
77
World (%)
15
39
Developing (%)
28
Developed (%)
78
Households
World (%)
41
with
Africa (%)
1
7
internet
Asia and Pacific (%)
10
33
access
Arab states (%)
9
34
1
CIS (%)
9.9
46
The Americas (%)
31
61
Europe (%)
41
77
Fixed-broadband sub-basket
Developing (%)
164.6
30.1
as a percentage of GNI p.c.2
Developed (%)
2.5
1.7
World (%)
115.1
21.5
Fixed-broadband
Developing (%)
2.5
6
penetration
Developed (%)
19
27
World (%)
5
10
Active mobile-broadband
Developing (%)
0.8
20
subscriptions (per 100
Developed (%)
19
75
inhabitants)
World (%)
2.5
30
Source: International Telecommunications Union, 2013.
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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)
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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 bioeconomy 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.”
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History of the EU Bioeconomy Policy
• 2007: Cologne Paper – En route to the KBBE
(German presidency)
Technische Universität München
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 PresidencyCopenhagen Declaration)
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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 !
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Summary of comparative economic impacts of scenarios in 2025
SO2/SO1
Added value created
(bioeconomy only, %)
SO3/SO1
-0.27%
+0.61%
Added value created
(bioeconomy only)
- € 4 billion
+ € 9 billion
Employment created
(bioeconomy only)
-
+ 120 000
SO4/SO3
+0.14%
SO4/SO1
+0.75%
+ € 2.4 billion + € 11.4 billion
+ 11 000
+ 131 000
Scenario 1: business as usual
Scenario 2: A non-EU coordinated research and innovation in bioeconomy
Scenario 3: The bioeconomy is supported by enhanced efforts in research
and innovation
Scenario 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
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A number of controversies, e.g.:
• Consumer issues
• Political economy of regulations
• International dimension: developing countries
• Food versus fuel
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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 29
Academic Publishers.
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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 slaughtered
at 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.
30
Source: Tramper, Johannes and Yang Zhu (2011) Modern Biotechnology. Wageningen Academic Publishers.
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GMO-free regions
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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
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Size of the EU Bioeconomy in 2009
Sector
Agriculture
Annual
Turnover
(billion euro)
Employment
(thousands)
381.0
12000
32.0
500
Forestry/Wood Ind.
269.0
3000
Food
965.0
4400
6.0
150
375.0
1800
50.0
150
0.8
5
Fisheries and Aquaculture
Biofuels
Paper/Pulp
Bio-chemicals and Plastics
Enzymes
Total
2078.8
22005
Employment: about 9% of EU workforce. Land-use: about 80%.
Source: European Commission (2012) Innovating for Sustainable Growth. A Bioeconomy for Europe. Luxembourg: Publication
Office of the European Union
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Gross Value Added of the EU Bioeconomy
(Mio. € current prices)
800000
700000
Manu of chemicals, chemical products,
man-made fibres (20%)
Mining and quarrying (20%)
600000
500000
Manu pulp, paper, paper products;
publishing and printing
Manufacture wood, wood products
400000
Manu leather, leather products
300000
Manu textiles, textile products
200000
Manu food products, beverages and
tobacco
100000
Fishing
0
Agriculture, hunting and forestry
Note: first attempt, excludes research and development and other subsectors. Source: Eurostat.
Others
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OECD
LEI
SOEST
„The Bioeconomy to 2030
(Designing a policy agenda)“
„Biobased economy; State-of-theart-assessment“
„Volkswirtschaftliche
Biotechnology applications
in:
• Primary production
• Health
• Industry
a) potential biobased
products
Biobased material
serving for:
• Energy
• Industry
b) Biotechnology to make
or modify products or
processes
agriculture as part of
agribusiness
Focuses on the
research sector
Focuses on
renewable resources and
research
Neubewertung des
gesamten Agrarsektors und
seiner Netzwerkstrukturen“
•
•
•
Upstream sectors
Agriculture, hunting
and fisheries
Downstream sectors
Focuses on
agribusiness
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Economic results of individual studies
OECD
LEI
SOEST (for Germany)
Gross domestic product
(GDP)
Market value EU-25
gross value added (GVA)
The current level of the
production of materials that
are entirely or partially
biobased
has a market value of around
450 billion in the EU-25
manufacturing sector.
% of national economy:
It is estimated
that the real value could be
even 610 billion. (p.9)
•
•
•
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)
(% of 2.239,08 Bio. €)
•
•
Agribusiness:
Agriculture:
6,63
0,72
% of agribusiness:
Agriculture:
Upstream s. :
Downstream s. :
10,90
9,68
79,42
(p.41)
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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
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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
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Biotechnology patent applications to the EPO by
priority year at the national level
7,000.00
6,000.00
5,000.00
United States
EU 27
4,000.00
Euro Area
Germany
3,000.00
2,000.00
Japan
Denmark
1,000.00
0.00
Source: OECD, 2008.
Source: Eurostat, 2013. Own calculations.
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Timeline of different periods in the approval process for all observations
(Canada)
24-Jun-94
20-Mar-97
15-Dec-99
10-Sep-02
6-Jun-05
2-Mar-08
27-Nov-10
Canola
Soybean
Cotton
Corn
Canola
Corn
Cotton
Corn
Potato
Cotton
Potato
Corn
Cotton
Alfalfa
Corn
Corn
Corn
Corn
Corn
Soybean
Soybean
Corn
first submission
- submission
Time
Difference
0
1000
Source: Wesseler et al. 2012.
2000
3000
4000
5000
6000
7000
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Timeline of different periods in the approval process for all observations
(USA)
Received date –
submission of petition
Submission of petition –
ruling and determination
Source: Wesseler et al. 2012.
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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:
Source: Wesseler et al. 2012.
+
= scientific process
= political process
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Time Trend in Approval Length for GMOs
6000
5000
Approval duration (days)
4000
Canada
3000
European Union
United States
Linear (Canada)
2000
Linear (European Union)
Linear (United States)
1000
0
0
1000
-1000
Source: Wesseler et al. 2012.
2000
3000
4000
5000
Submission since first submission (days)
6000
7000
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Time Trend in Approval Length for GMOs in the US and EU:
Differentiated
4000
3500
3000
Approval duration (days)
2500
EU EFSA
EU Commission
2000
US Petition
US Aphis
1500
Linear (EU EFSA)
1000
Linear (EU Commission)
Linear (US Petition)
500
Linear (US Aphis)
0
0
1000
2000
3000
4000
5000
-500
-1000
Source: Wesseler et al. 2012.
Submission since first submission (days)
6000
7000
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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
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If you want to know more…
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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.
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“If the 20th century was the century of physics, the 21st
century will be the century of biology”
Craig Venter
Technische Universität München
Many thanks for your attention!