We kick off the year by assessing how much the US bioeconomy is worth. We investigate different estimates for its value and how much certain sub-sectors are predicted to grow over the coming years. We also dive into why different agencies have put out different valuations of the sector.
How much is the US bioeconomy worth?
Biological materials have always been central to economic activity, whether in the form of food or goods. However, the private sector and governments around the world are increasingly looking to grow the higher-value, R&D-led segments of the bioeconomy as they search for renewable versions of petroleum-based materials.
The US is no exception to this. Market research agencies and government departments are unanimous in forecasting that its bioeconomy as a whole will grow over the next decade. However, estimates differ in how fast it will grow and how much it is worth today.
There are a couple of different estimates out there on the current value of the US bioeconomy. The reason they vary is because they measure different parts of the bioeconomy. As an example, we can look at two of the most recently calculated estimates for the value of the US bioeconomy.
5.1% of GDP, says the National Academies of Sciences
According to Safeguarding the Bioeconomy, a 2020 report from the National Academies of Sciences, Engineering, and Medicine, the US bioeconomy had a value of $959.2 billion in 2016 or 5.1 percent of the US GDP, and is set to steadily increase.
The report worked with an expansive definition of the bioeconomy, using the term to include any economic activity driven by research and innovation in the life sciences and biotechnology. This ranges from agriculture to pharmaceuticals. The study also accounted for investment into biobased research and commercial innovation in the US, stating that this is a vital component of assessing value in a sector that depends so closely on basic research into science and innovation.
Another important feature of the National Academies’ methodology was to account for both the direct and indirect economic contributions of the bioeconomy. It concluded that of the $959.2 billion total value of the 2016 US bioeconomy, $402.5 billion came from direct means while the rest came from indirect and induced effects.
Indirect economic effects refer to how one unit produced in the biobased industries has an economic impact on activities in other industries due to interdependencies between them.
Indirect effects are an important part of assessing the bioeconomy’s overall value because the sector is not associated with a single product. Rather, the bioeconomy spans a wide array of industries, associated more with the types of raw materials used in them (renewable, of biological origin) rather than what exactly the outputs are.
The USDA estimate
Next, we can look at the USDA’s estimate of how much the US bioeconomy was worth in 2021. It said that $489 billion was generated by US biobased products and the biobased industries in that year. The report looks at agriculture and forestry, biobased chemicals, biobased plastics and packaging, biorefining, enzymes, forest products, and textiles.
The USDA figure is lower than the 2016 estimate from the National Academies of Sciences for two reasons. First, the year assessed by the USDA came in the middle of the COVID-19 pandemic when there was a major drop in economic activity.
Second, the National Academies’ report included the value of investments into both tangible assets (sequencing machines) as well as intangible assets such as (genomic databases) associated with the sector. The USDA estimate, however, focused on value added to the US economy by biobased products.
These methodological differences become clear to anyone who reads the fine print but can be opaque to the general public. Standardised ways of talking about and measuring the bioeconomy would introduce more clarity into discussions and make it easier for policymakers to support and monitor the sector. The next step would be for countries to decide upon an international standard for bioeconomy valuations.
The value of bioeconomy sub-sectors
Elsewhere, we get more specific estimates for the value of sub-sectors within the bioeconomy. There has been great interest in estimating the value of the processing and industrial sectors of the bioeconomy, the higher-value segments of the bioeconomy also known as the industrial bioeconomy. What this segment excludes are agricultural activities involved in growing and harvesting feedstock for industry.
The industrial bioeconomy specifically adds $210.4 billion to the US economy, according to a report by TEConomy Partners, creating nearly 644, 00 jobs. The report was commissioned by a coalition of manufacturers and trade associations committed to expanding the US Bioeconomy.
The biggest output of the industrial bioeconomy is biofuels. Other products include chemicals used in industrial manufacturing. The term does not include anything destined for biopharma or the food and beverages sectors as these constitute other categories.
The National Institute of Standards and Technology has produced even more granular estimates, breaking the entire higher value industrial bioeconomy into two segments: general biomanufacturing and then the smaller advanced biomanufacturing sector. The latter is estimated at $94.6 billion while biomanufacturing in general is meant to be $438.6 billion.
Advanced biomanufacturing is any industry that produces things by growing biological molecules, or by altering biological materials not with machines but with chemical processes found inside mimic living processes. Precision fermentation is one example, a biomanufacturing method that broadly uses the metabolism of bacteria to cultivate chemicals. Biomanufacturing more broadly might include the production of natural textiles and conventional approaches to producing food ingredients that do not just any metabolic processes.
Forecasts for the US bioplastics market
We can also zoom in on the market value for specific classes of products. For example, we can look at the forecast value for biopolymers.
Biopolymers are a diverse category, ranging across anything from corn-based bioplastics to home-compostable algae cups. They cut across the two categories studied in the National Institute of Standards and Technology’s report since a biomaterial could be a bio-product made through advanced biomanufacturing processes or with more conventional, mechanical methods.
Grand View Research says that the US bioplastics market was worth $3.07 billion in 2023 and is expected to grow at a CAGR rate of 19.3% between then and 2030. This is compared to the much slower growth rate it forecasts for the US plastics market, at 3.5%.
While packaging holds the largest share of total US bioplastics revenue, the company forecasts that bioplastics destined for automotive and transport components are likely to exhibit the fastest revenue growth between 2024 and 2030.
The highest-value biobased materials of all are used to make biomedical implants. Although by volume a smaller market than the industrial biomaterials, Grand View Research expects the US market in medical biomaterials to grow at a CAGR rate of 14.8% from 2024 to 2030.
Algae bioplastics: an emerging niche
We can zoom in further to look at a biomaterial niche: the algae bioplastics market. Algae is a next-gen biomaterials feedstock and materials made from it are currently in the early stages of scaling.
Future Market Insights forecasts that the algae-based bioplastics market in the US will grow at a CAGR rate of 2.7% through to 2034. Yet if algal bioplastics are to grow, the entire algae supply chain will have to grow with it. This is because right now, there is still too little cheap cultivated seaweed in Western countries to feed entire industrial supply chains.
To stimulate investment into algae farms, there must be strong demand for the feedstock from multiple industries. Data Bridge Market Research believes that the whole microalgae market in North America would be over $721 million, a 6.60% CAGR increase from 2023. Meanwhile the company forecasts the entire algal products market – including food, supplement, and pharma applications – will grow 6.6% between 2022 and 2030.
Driving factors
Bullish forecasts for the US bioeconomy are partly based on actions by the Biden administration to invest in and expand the bioeconomy, from agricultural supply chains to higher-value industries.
One of these policy actions was the Bioeconomy Research and Development Act as part of the CHIPS and Science Act. There was also the 2022 Executive Order 14081, a whole-of-government approach to advancing biotech and biomanufacturing across agriculture and multiple industries.
China’s efforts to become a world leader in industrial and medical biotech is likely to become another spur to the US bioeconomy over the coming decade. Chinese capacity in biobased fuels, chemicals, and plastics has grown while the country is also investing in novel proteins while China is quickly catching up with Europe and the US on biotech patents. These dynamics mean that industrial biomaterials is fast becoming yet another arena of competition between the two economic superpowers, promising sustained investment into US R&D and scaling.