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Biobased Economy Continues to Grow: USDA Secretary Announces NC State-Duke Study Results on Monday

I’m writing to share an exciting new report released today entitled “An Economic Impact Analysis of the U.S. Biobased Products Industry: 2016 Update.”

This new report shows how the U.S. biobased industry continues to grow and generate substantial economic activity and American jobs.

A full copy of the report can be downloaded here.

Key takeaways from the 2016 report include:

  • The biobased products industry contributed $393 billion to the U.S. economy up $24 billion from the most recent year measured.
  • The biobased products industry supports a total of 4.22 million American jobs (direct and spillover jobs combined)
  • For every biobased product industry employee in the U.S., nearly two other jobs are supported in other sectors of the economy
  • The production and use of biobased products replacing petroleum-based products has the potential to reduce GHG emissions up to 10 million metric tons of CO2 equivalents.

Agriculture Secretary Tom Vilsack, the only original member of President Obama’s cabinet still serving in the administration, spoke at a National Press Club Luncheon on today at 12:30, as the report was being released.  Vilsack, a former governor of Iowa, briefly ran in the 2008 presidential race and was considered by Hillary Clinton as a potential running mate in 2016.  Vilsack also leads the President’s Rural Task Force, coordinating White House efforts to fight heroin use in rural communities. As head of the U.S. Department of Agriculture, he is working toward opening Cuba to American agriculture exports and aiding economic development in small towns.

Agriculture Secretary Tom Vilsack announced the release of a report completed by the SCRC and Duke’s Sustainability Center that shows the U.S. biobased industry is generating substantial economic activity and American jobs, and supporting the Obama Administration’s efforts to improve the rural economy, promote creation of sustainable jobs, and combat environmental threats like climate change.

“This report exemplifies the effect of the growing U.S. biobased products industry from an economics and jobs perspective. In 2014, America’s biobased industry contributed a total of 4.22 million jobs and $393 billion to our economy” Vilsack said. “Better economic opportunities, like those offered by the biobased product manufacturers, are creating wealth in rural America. The rural unemployment rate has dropped below 6 percent for the first time since 2007, and from 2012-2014, we saw rural child poverty fall by 3 percentage points.”

According to An Economic Impact Analysis of the U.S. Biobased Products Industry, the contribution of the industry is growing. It directly supported 1.53 million jobs in 2014, with each job in the industry responsible for generating 1.76 jobs in other sectors. Between 2013 and 2014, the industry’s total employment contributions increased by 220,000 jobs to support a total of 4.22 million biobased related jobs directly and indirectly throughout the United States’ economy

When compared to the 2013 results (presented in the previous study), the direct value added contribution of the biobased products industry grew by 0.2 percent. Year to year percent changes in direct value added were measured using Producer Price Index for all commodities to account for inflation. The direct jobs contribution to the U.S. economy from the biobased products industry grew 0.5 percent from 2013 to 2014. Figure 6 shows the growth in total jobs and total value added to the biobased products industry from 2013 to 2014.

The biobased products industry experienced steady growth from 2013 to 2014. The growth in the direct value added was smaller than the growth in the total value added. This contributions-based total value added growth is predicated on the strengthening of inter-industry linkages between the biobased products industry and other parts of the U.S. economy. The steady growth of the biobased products industry is particularly impressive given that the price of oil dropped to roughly half its January 2014 price by December 2014.

One would expect that as the price of oil decreased and petroleum-based products became relatively cheaper, the biobased products industry would see a decrease in demand for the products that compete with petroleum-based products. The growth in the biobased products industry proves that the industry is robust and diverse enough to grow even in the face of a sharp decrease in oil prices. It is likely that the biobased products industry will experience even greater growth when the cycle of low oil prices turns around.

Interviews conducted for this report indicate that pricing pressure from petroleum-based products resulted in challenges to profitability, but, in spite of that, revenue and jobs increased and the biobased products industry expanded.

It is apparent that growth is occurring increasingly in specialty sectors (as exemplified by several of the case studies in the report). The methodology used to create this report involved scaling the outputs from IMPLAN using estimates of the biobased portion of each sector from the 2015 study.


NC State recently hosted Mark Costa the CEO of Eastman Chemical who spoke at Wells Fargo series, and I had an opportunity to ask Mr. Costa about the biobased sector.  Specifically, I asked the CEO about the fact that East;man had to cease production of biobutanol this past year. He was open and candid in stating that specialty chemicals has been a real grind – a tough year. Have had to cut some people, as there hasn’t been the demand and pricing pressure is constant. However, he sees a rosy future ahead.  Just like the report does as well…