What does Trump’s return to the presidency mean for industrial biomanufacturing in the U.S.? It’s difficult to say at this early stage, but here we break down what to watch for.
What is at stake?
A major question hanging over bioeconomy policy is what the Trump administration will do with the Biden administration’s Executive Order 14081 of 2022. This was the biggest ever US government programme to develop domestic biomanufacturing capacity.
The package is unlikely to be scrapped wholesale under Trump. Climate issues and government regulation may be bêtes noires for the Republican agenda but certain biobased industries can support key priorities of the new administration: energy and import independence, the buildout of US manufacturing, and industrial competition with China – motivations that also spurred the previous administration. A large part of the Executive Order also centres around building supply chains around rural producers – a major base for the Republican party.
Some biomanufacturing funding resulting from the order has already been awarded, giving parts of the industry some independent momentum. For example, the Department of Defense has completed awards for providing resources to 25 different biotech companies to develop pre-scaling business plans.
The Department of Energy has already given awards for sustainable aviation fuel under the Biden administration, many of which have been done through Biden’s Inflation Reduction Act.
Midwestern bioproducers hope for continued support
The other major bioeconomy-relative legislation to watch is the Section 45z of the Inflation Reduction Act otherwise known as the renewable fuel credit. Effective from January 1 2025, it will consolidate the current patchwork incentives for clean fuel production and reward producers that make fuels in line with its emissions standards.
The biggest post-election question for climate tech and renewables is what Trump will do to the Inflation Reduction Act, its Section 45z included. Yet of all the biobased industries, biofuels (as well as the bioplastics made from the same feedstocks) would be the one safest from a Republican backlash against federal climate regulations.
Biofuels and bioplastics have long-established supply chains and are already economically important sectors. There are also political reasons why these industries are unlikely to suffer under a Trump government. Rural constituents have been crucial to both Trump victories and he will be keen to keep them on side. Iowa and Nebraska, the top two US bioethanol producers, are staunchly Republican.
Nebraska’s Republican governor Jim Pillen is an example of a pro-Trump politician with a stake in getting further investments into biofuels and biomanufacturing. Pillen has been actively building up Nebraska’s biobased economy over the last several years, vocally supporting Biden’s Executive Order 14081.
Under Pillen, Nebraska has been attracting large investments into biobased processing capacity – not just in biofuels but also biochemicals. He will be one of those in the Republican party trying to protect these gains under the incoming Trump administration despite a possible wider retreat from Biden-era climate targets or industrial incentives.
One change that the bioeconomy may see under the new government is a decline in federal support for sustainable farming and sustainable feedstock sourcing. This could increase the harmful environmental impacts of bioplastics and biofuels supply chains, particularly on biodiversity and habitats.
Tariffs hikes could be problematic
Trump has consistently promised to make import tariffs a pillar of his America First programme. On the one hand, this is not new – Trump initiated a trade war with China back in 2018 and Biden continued to tax strategic Chinese imports. Yet this time, Trump is willing to target a wider range of foreign countries, from export-dependent emerging Asian economies to traditional free trade allies like Europe.
In the last administration, China responded with counter-tariffs and we may see a similar back-and-forth. Backlash from Canada, the UK, the EU, India, and South Korea, could damage certain midwest and rural biofuels producers, since these are major destinations for their products. Last time Trump assuaged rural dissatisfaction resulting from the tariff wars by throwing subsidies at them to make up for net losses. He may opt for something similar again.
Biofuels in need of legislative resolutions
One outstanding legislative issue that the Republican administration will have to resolve, and which will impact biofuels production, are laws for determining the prices of domestic biofuels feedstock.
In recent years, cheap foreign feedstocks like used cooking oil (UCO) and tallow have weighed down prices and undercut domestic producers. To support US producers, congress has already been debating excluding foreign feedstocks from the 45Z tax credit.
Disqualifying foreign imports from federal subsidies are meant to help home producers but may in fact have the opposite effect. Lawmakers face a tricky balancing act here: if waste oil imports are limited, this could push up the prices of these imported feedstocks, enriching foreign producers rather than the domestic producers.
The issue highlights the problematic position that the Trump administration will find itself in over the coming months: though committed to US manufacturing, the precise policies that will best support this are still up for debate.
Novel proteins and next-gen materials
The close electoral relationship between large midwestern producers and the Trump administration could bring about new challenges for novel proteins. The novel protein is already in a fragile position today, after record investment into the sector crashed into post-pandemic inflation. It has also faced growing pushback from the livestock lobby during this time, whom Trump is ideologically and politically more inclined to keep on side.
Biden’s biomanufacturing order supported the novel protein sector primarily through the National Science Foundation, which is investing in R&D stage biomanufacturing projects. The NSF has given $75 million to support the biofoundry initiatives that will help innovate in academia and early-stage partners. This kind of funding activity is up for debate under the new administration.
The other segment to watch carefully are biomaterials made from unconventional feedstocks – naturally compostable bioplastics from algae, novel textile materials harvested from microbes, or packaging materials made from agricultural waste, to name a few. These embryonic products and methods need much higher levels of policy support to commercialise – something a Trump administration will question.
What about fossil fuels?
Trump’s wide base of support grants his administration a sweeping mandate. However, his broad popularity will make it tricky to formulate coherent policy as the government balances between rural bioproducers and the fossil industry, both of which are important backers of his programme.
In the first Trump presidency, the administration granted waivers to some smaller fossil oil refiners for the 2005 mandate, allowing them to opt out of having to blend a certain level of biofuel into their product. With fewer fossil oil producers buying biofuel, this cut overall US demand for biodiesel, dampening vegetable oil prices. It is largely expected that he will grant most outstanding small fossil oil refinery exemptions. This could further dampen vegetable oil demand and prices. This time, the impact could be worse since it comes at a time of slowed demand, low prices, and overcapacity.
Trump’s circle is firmly tied to fossil industry interests. However, while the new government will certainly not clamp down on fossil production, the biofuels industry can take solace in the fact that the executive cannot ramp up production at will either. Market prices and industry financiers will determine how much is drilled. Right now, the whole industry is on course to lower production by 2026 thanks to lower prices and demand.
Biobased demand
The military will be one safe harbour for innovative biobased materials demand over the next four years as competition with China continues to preoccupy the defence establishment. Circular and renewable materials are one way to secure the US’ import and strategic independence from adversaries and the Department of Defence has invested in a wide range of these products, including those in their pre-commercialisation stages.
At this early stage, it is difficult to know how the new presidency will impact the pace of change. The drive to compete with Chinese manufacturing may stimulate parts of the bioeconomy but the rightward shift in government may mean a lower chance of major demand stimulus policies.
Yet demand for sustainable biomaterials is likely to remain strong. One reason is that Biden never made it compulsory for industries to shift towards lower-impact materials. Nor did he implement incentives for high-emitting industries like construction to adopt biomaterials as he did for electrification and biofuels through tax credits. On the renewable materials front, therefore, there are simply fewer economic incentives policies for Trump to cut.
Finally, there is the bigger picture. While the renewable materials industry will weather the Trump administration one way or another, the same cannot be said of climate targets in general. Biobased production alone cannot combat the worst effects of climate change unless it sits within a comprehensive plan to keep fossil fuels in the ground.
With Republicans in full control over the White House, Congress, and Senate after November 5, the party has ample power to reshape policy. We observe with great interest and cautious optimism.