The EU Bio-Economy

1. The EU Bio-Economy Justus Wesseler Richard Smart, Thomas Venus, Philipp Wree Technische Universität München - Weihenstephan Justus.wesseler@tum.de http://www.wzw.tum.de/aew/ 08161 / 71-5632

2. Outline • History • Relevance • Future

3. 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).

4. Why relevant now and not 20 years ago? • Advances in biological sciences

5. 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 • Bluebiotechnology marine and aquatic applications • Brownbiotechnology dessert biotechnology • Dark biotechnology bioterrorism • Gold biotechnology bioinformatics • Greenbiotechnology agriculture biotechnology • Grey biotechnology classical biotechnology (fermentation) • Purple biotechnology patents, IPR • Redbiotechnology medical biotechnology • White biotechnology industrial applications • Yellow biotechnology nutritional biotechnology White Source: http://argosbiotech.info/biotech_colors.html

7. Why relevant now and not 20 years ago? • Advances in biological sciences • Increase in horizontal and vertical integration

8. 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 theSeedIndustryanditsConsequencesfor Innovation. The Hague, COGEM.

9. GMO-freeDairies*: … < 50 suppliersofGMO-free milk … > 50 suppliersofGMO-freemilk * Dairies that offer some or all of their products GMO-free. Quelle: Venus and Wesseler (2012). Deutschlandkarte von URL: www.stallwanger.net

10. Current GM-free milk production GM-freefarmers: 6,326

11. 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)

12. 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

13. Increase in trade Intra-Industry Trade Reported EHEC infections for Germany Robert Koch-Institut: SurvStat, http://www3.rki.de/SurvStat, Datenstand: 27.05.2011

14. Source: James, C., 2012

15. 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

16. Increase in globalization • Increase in interchange of world views, products, ideas, and other aspects of culture.

17. Environmental issues: • increase in yield • environmental benefits • emerging issues • target pest resistance • secondarypests • weed resistance

18. 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)

19. 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

20. Advances in ICT

21. Advances in ICT Source: International Telecommunications Union, 2013.

22. 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)

23. 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 andeconomicchallenges:- the growing demand for safer, healthier and higher quality food; - the growing demand for sustainable production and use of renewable bioresourcesforeco-efficientproducts;- 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.”

24. History of the EU Bioeconomy Policy • 2007: Cologne Paper – En route to the KBBE (German presidency)

25. 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)

26. Future EU Bioeconomy Policy • Action Plan • Investments in research, innovation, andskills • Reinforcedpolicyinteractionandstakeholderengagement • Enhancement of marketsandcompetitiveness • Horizon 2020: Research programme 2014 – 2020 • € 87.7 billion • € 4.1 billionat least forbioeconomy in thefield of foodsecurity, plus climate, energy, health, andothers=> about € 10 billion !

27. Summary of comparative economic impacts of scenarios in 2025 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 Bioeconomyfor Europe

28. 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.

31. GMO-free regions

32. 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

33. Size of the EU Bioeconomy in 2009 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

34. Gross Value Added of the EU Bioeconomy(Mio. € current prices) Note: first attempt, excludes research and development and other subsectors. Source: Eurostat.

35. Others

36. Economicresultsof individual studies

37. 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

38. 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

39. Biotechnology patent applications to the EPO by priority year at the national level Source: OECD, 2008. Source: Eurostat, 2013. Own calculations.

40. Timeline of different periods in theapprovalprocessfor all observations (Canada) Source: Wesseler et al. 2012.

41. Timeline of different periods in theapprovalprocessfor all observations (USA) Received date – submission of petition Submission of petition – ruling and determination Source: Wesseler et al. 2012.

42. Timeline of different periods in theapprovalprocessfor 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 Source: Wesseler et al. 2012.

43. Source: Wesseler et al. 2012.

44. Source: Wesseler et al. 2012.

45. 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

46. If you want to know more…

47. 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.

48. “If the 20th century was the century of physics, the 21st century will be the century of biology” Craig Venter

49. Many thanks for your attention!