What’s Next for the U.S. Bioeconomy? Defining It.
The U.S. government is currently focused on advancing the U.S. bioeconomy while simultaneously figuring out how to both measure and standardize. But this can only be accomplished if the U.S. tackles questions that it has yet to address: What does ‘bioeconomy’ actually mean?, What sectors does the bioeconomy include?, and What is the role of sustainability in the U.S. bioeconomy?
There is no doubt that the widespread effort of corralling different government agencies together to focus on the U.S bioeconomy is a massive win for the nation, but it remains to be seen if enough stakeholders are being tapped into these conversations. The bioeconomy is currently a large and vague grouping that encompasses a lot of different sectors, industries, and areas. Are the groups that have thought about natural capital accounting being consulted when thinking about the role of bioecology in the bioeconomy? Does it make sense to include the groups that have thought about sustainability for years into the conversation of the U.S. bioeconomy? Currently, conversations around the state of the U.S. bioeconomy are very insular, conducted by a select few people within a few industries and the U.S. government. But, in reality, the bioeconomy encompasses a much larger, and a much more diverse group of people than what is currently being considered. For the U.S. bioeconomy to prosper and boom, the U.S. needs to land on a single, working definition of the bioeconomy while considering the role of sustainability in order to be competitive at the global scale.
A recent Office of Science and Technology Policy report has outlined a “broad vision for the U.S. bioeconomy and what can be achieved with concerted action from industry, academia, nonprofits, the Federal Government and other organizations.” However, setting goals for the bioeconomy does not necessarily mean it will go in any strategic direction. To accomplish that, the U.S. will need to agree on 1) a definition; 2) how to track and measure the bioeconomy; and 3) creating standards so that analysis between sectors within the bioeconomy, companies, and others can be made to better understand the return on investments that the government is making.
Can’t Measure What You Can’t Define
Currently, there are two different approaches that are being considered by the U.S. government to measure the U.S. bioeconomy: changes to the North American Industry Classification System (NAICS) and North American Product Classification System (NAPCS) and the creation of a satellite account within the U.S. Bureau of Economic Analysis. Both these methodologies have hit the same roadblock – there is no encompassing, consensus definition of the bioeconomy.
NAICS and NAPCS codes are designed to capture economic activity by sector and product type, but they are not well suited to capture the economic activity within the bioeconomy because of the many different sectors and products are, in many cases, differentiated more by the process by which they were made than by their final characteristics.
The U.S. Bureau of Economic Analysis (BEA) published a report which discussed the feasibility of measuring the U.S. bioeconomy by creating a bioeconomy satellite account. A satellite account enables the BEA to measure a slice of the economy that is “not easily identifiable under the standard industry classification commonly used to organize U.S. economic statistics, the NAICS.” Ultimately, the report concluded that a satellite account could be technically possible to develop and would complement efforts in the EU and other international organizations, but refining it to accurately measure specific sectors of the bioeconomy was technically infeasible at this time due to a lack of existing data and due to a lack of general consensus on practical definitions.
How does the U.S define the bioeconomy? The 2022 White House Executive Order (EO) on the bioeconomy defines the bioeconomy as “economic activity derived from biotechnology and biomanufacturing”. A follow up brief to the EO created by the Congressional Research Service in 2022 defines the bioeconomy as “the portion of the economy based on products, services, and processes derived from biological resources (e.g., plants and microorganisms).” The National Academies recommended in their 2020 report “Safeguarding the Bioeconomy” that the bioeconomy should be defined as “economic activity that is driven by research and innovation in the life sciences and biotechnology, and that is enabled by technological advances in engineering and in computing and information sciences.” As a result of the 2022 EO on the bioeconomy, the National Institute of Standards and Technology (NIST) created a lexicon around the bioeconomy and defined the bioeconomy as “economic activity derived from the life sciences, particularly in the areas of biotechnology and biomanufacturing, including industries, products, services, and the workforce.” While all these definitions are similar, each definition lacks something a different definition includes, thus resulting in a lack of consensus.
The definitions listed above don’t consider some of the aspects of the bioeconomy that the European vision includes, specifically the idea of sustainability. In 2012 the European Commission defined the bioeconomy as “the production of renewable biological resources and the conversion of these resources and waste streams into value added products, such as food, feed, bio-based products and bioenergy. Its sectors and industries have strong innovation potential due to their use of a wide range of sciences, enabling and industrial technologies, along with local and tacit knowledge.” In 2018 the European Commission updated their definition to “the bioeconomy covers all sectors and systems that rely on biological resources (animals, plants, micro-organisms and derived biomass, including organic waste), their functions and principles. It includes and interlinks: land and marine ecosystems and the services they provide; all primary production sectors that use and produce biological resources (agriculture, forestry, fisheries and aquaculture); and all economic and industrial sectors that use biological resources and processes to produce food, feed, bio-based products, energy and services.” with an emphasis that the “European bioeconomy needs to have sustainability and circularity at its heart.” There is only one U.S.-based definition that includes the concept of sustainability in the definition of the bioeconomy and it is not a U.S. government definition. In April of 2022, Schmidt Futures release a Bioeconomy Task Force Strategy where they introduced the idea of a “circular bioeconomy”, defined as “an economy that forgoes the traditional linear economic model of “take-make-consume-throw away” for one that uses the power of biotechnology, design for bioproduction, and machine learning/artificial intelligence to create and economic system in which waste products serve as inputs to create highly valued products and materials that are used as long as possible, and reused without drawing down limited resources or generating waste that are disposed into the atmosphere, landfills, or rivers, lakes, and oceans.”
Which begs the question, why is there a stark lack of sustainability in the governmental U.S. definition of the bioeconomy?
Inherent Issues within NAICS & NAPCS Codes
Beyond the definition of the bioeconomy, the NAICS and NAPCS codes themselves do not do a good job of classifying the bioeconomy. Companies within the biomanufacturing sector tend to produce many different types of products,which is difficult to capture using a singular NAICS code. Due to NAICS and NAPCS codes are not updated regularly they do not accurately capture emerging or novel products, nor do they currently accurately capture advancements to the field (such as algorithms to predict binding interactions, CRISPR sequence prediction tools, and data sets). Because the industry and product codes are not fit for purpose, it is difficult for companies to determine which codes apply to them. This confusion makes it difficult to collate different bioeconomic activity together across sectors when using NAICS codes alone. It would be beneficial for the U.S Government to update the industry and product codes and to work with these companies in order to re-classify in a more systematic way.
In a recent panel hosted by FAS, experts had some suggestions for updating these classification systems:
- Designing classifications for what companies are doing and not what they are producing; this approach would likely involve developing new NAICS and NAPCS codes.
- Creating a tiered classification system to resolve discrepancies. One example: 1) biology vs not biology; 2) modified genome vs naturally occurring genome; 3) if modified, how was it done (breeding vs. direct modifications vs. engineering).
- Adding a two-digit code to the end of current NAICS codes to differentiate biological products and innovations from other products and innovations that are not biobased.
Standardization within the bioeconomy
The U.S.’s ongoing efforts to standardize critical and emerging technology will greatly impact standardization efforts within the U.S. bioeconomy. However, this is occurring without clear guidance on how the U.S. bioeconomy is defined and how it will be measured. There is no doubt that standardization would give a massive spurt in growth to the nascent bioeconomy sector, and for emerging technologies the return on investment could be upwards of trillions. However, setting priorities for standardization is no easy task. To better understand the complexity behind standards creation and standards setting, FAS hosted a group of expert panelists to discuss these issues.
During these discussions, a few panelists pointed out that Europe’s bioindustrial infrastructure is more appealing for industry than the U.S.’s precisely because they have set standards in place, which in turn leads to higher quality and more advanced facilities. Some areas where standards could greatly benefit the U.S. bioindustrial sector are standards around equipment and sanitary design. Additionally, the U.S. needs to improve its ability to redeploy facilities and standardization can help achieve this.
For consumers and investors, climate sustainability has grown as a prerequisite to doing business. To meet those needs, an increasing number of companies are claiming their products and methods are sustainable, but there are no rules in place to define sustainability. Marketing techniques, like labeling products “carbon smart”, are just that – marketing. There is no standard definition or body governing those labels. Standardization in carbon accounting during the biomanufacturing process would benefit not just the bio sector, but the entire economy, repairing trust amongst consumers.
Public-private partnerships have an opportunity to lead when it comes to adopting standards. However, it would be important to include vendors and large-scale developers, such as companies that provide the starting material or the equipment used and both large-scale fermentation companies and other large contracted manufacturing organizations, in order to create and establish a full value-chain in the bioindustrial sector. The role of research universities in this partnership would need to be evaluated and strengthened in order to facilitate the development of a workforce that has the technical expertise needed in the bioindustrial sector, such as in areas of scale and in technology transfer.
But what can we do right now? The experts we spoke to had a few ideas up their sleeves:
- There are current opportunities for standardization in both upstream (e.g., feedstocks for bioindustrial manufacturing) and downstream processes (e.g., purification and collection of resulting products), however, it will be easier to create standards in the upstream process than the downstream process.
- Communication standards would be greatly beneficial to the sector and could be created by looking at unit-operations and then determining the best way to communicate these processes.
- Standards for data security should be built into the bioindustrial sector, however these standards would need to continue to enable information sharing within the sector.
- Standardization of communicating the capabilities of facilities will be crucial for the bioindustrial sector. Currently, Europe has a better understanding of what their capabilities are and has the workforce trained in different bioindustrial areas to promote quick adaptation and innovation.
- Companies are willing to adopt standards as long as they are not restrictive and do not interfere with a company’s ability to innovate and produce products in a cost-efficient manner.
What’s Next?
The work currently being performed to advance the U.S. bioeconomy will quickly stagnate and not lead to any strategic advancement if the U.S. does not address the need for clarity on definitions, measurement, and standards. To achieve this, the U.S. government will need to reach consensus on a working definition – inclusive of sustainability – of the U.S. bioeconomy in order to be competitive at the global scale. Furthermore, the U.S. government should update the NAICS and NAPCS codes so that they better capture the all encompassing entity that is the bioeconomy. Congress should appropriate the creation of a satellite account within the BEA to measure the U.S. bioeconomy. Finally, the U.S. needs to work on creating standards within the different bioeconomy sectors that aid the biomanufacturing and biotechnology pathways in being more streamlined and efficient than what we currently have. Without addressing these initial challenges, no amount of bold goals will lead the U.S. bioeconomy in a strategic direction.
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