BUILDING A SUSTAINABLE BIOBASED ECONOMY? START WITH FEEDSTOCK

Biopolymers 2014PhiladelphiaMay 12, 2014

o New opportunities & new challengeso The Walmart Effect: new models for

actiono Field to MarketoBioplastic Feedstock Alliance (BFA)oBIOoCertification considerations

o Corn reconsidered

Agenda

New OpportunitiesNew Challenges

o Industrial biotechnology products moving toward commercial deployment

o Consumer brand owners see them as a means to:oReducing their supply chain carbon

intensityoReinforcing their brand sustainability

attributes

Positive trends converging

o Colors have emotional contento Animals and plants do, tooo Routine & regular NGO engagemento Claims are grounded & substantiatedo They can move the market

o P&G’s cold washing initiative

Adapting to “brand” thinking

Leadership goals

o Mission: “to refresh the world; to inspire moments of optimism and happiness; to create value and make a difference.”

o Tagline: “Open happiness”o 2020 goal: sustainably source all of its key

agricultural ingredients & work with WWF to implement its sustainability guidelines

Leadership goals

o Mission: “to make sustainable living commonplace. We work to create a better future every day with brands and services that help people feel good, look good and more out of life.”

o 2020 Goal: sustainably source 100% of its 10 key agricultural ingredients

o Prepare in advance – anticipate the blind tackleo Land use changeo Food securityo Carbon debt & net emissions

o Engage stakeholders relentlesslyo Your friends may become fierce critics overnighto Get over it

o Scale matters in the beginning o Gasoline: 136 Billion gallons (USA/year)o PET: 1 Billion gallons ethanol equivalent (No.

America)

Lessons from biofuels

The Walmart Effect: New Models For Action

o The “Walmart Effect”: private contracting replaces global governance

o “20-30 companies can change the world.” Paul Polman, Unilever CEO

o “100 global brands can make sustainability happen.” WWF

Public limits; private routes

o The Sustainability Consortiumo Sustainable Agriculture Initiative (SAI)o ISEAL Allianceo Bioplastics Feedstock Alliance (BFA)o BIO Sustainable Supply Chain Task Forceo Field to Market Alliance for Sustainable

Agriculture

Voluntary initiatives to note

o Prepare gap analysis of schemes & initiatives

o Investigate potential collective action as needed

Bioplastics Feedstock Alliance (BFA)

Objective: consider the challenges of acquiring renewable raw materials to meet the highest standards of sustainability & cost effectiveness• Analyze major feedstocks

o Corn, cane, sorghum, dedicated energy crops, soy, sugar beets, cassava & forest products

• Compare certification schemeso Field to Market, ISCCPlus, RSB, Bonsucro, Working

Landscape, CSBP, FSC, SFI, & ISEAL

BIO’s Sustainable Supply Chain TF

• BIO will be a catalyst for knowledge sharing & capacity building

• BIO members will actively support efforts to bring continuous improvement to production agriculture

• Members WILL prefer sustainably produced feedstock witho Performance indicators endorsed by a wide spectrum of

stakeholderso Producers operating under robust sustainability schemes or

BMPs developed for continuous improvement

• Members WILL NOT use raw materials that areo Food crops in food insecure regionso Originate in areas of high conservation value

Board adopted policy: highlights

o Sustainability criteria for 10 commodity cropso Representing the entire supply chain with

significant NGO engagemento Avoiding risk of de-commoditizing the supply

chaino Effort to stimulate widespread innovation &

adoption of best practices w/o regulatory drivers o Theory of change:

o If growers are have access to data allowing them to compare their performance with others, they will alter their practices to be more efficient.

Field to Market

Certification considerationsFor crops (plantation model)

o Bonsucroo Forest Stewardship Council (FSC)o Sustainable Forestry Initiative (SFI)

For direct sourcing o Sustainability criteria negotiated with your customero Criteria translated into supply agreementso Cost of compliance can be shared

Limitations (all)o Limited affect on shed level improvemento Transaction costso Legitimacy

International Sustainability & Carbon Certification (ISCC Plus)

o Global scheme covering all biomass forms for energy, biomaterials, & feed

o Sponsored by the German gov’t ministry of consumer protectiono Complies with EU biofuels directive (RED) & German sustainability

ordinances

Roundtable for Sustainable Biomaterials (RSB)o Global scheme covering all biomass forms for fuel & ,biomaterialso Complies with ISEAL’s “Good Practice Code”o Widespread support among NGOs

Process/product certification schemes

Is this what success looks like?

Corn Reconsidered: Sustainable Basin Project

Corn vs. cane: cost comparison for biochemical use

Proprietary analysis by Kyle Althoff based on FAPRI model forecasts

Luverne corn supply study, 2012

37% lower GHG emissions than US avg.

John Sheehan, PhD, Univ. of Minnesota & Keith Paustian, PhD, Colorado State University

Supply basin

Individual farm GHG footprints

Three big factors

1. Nutrient efficiency2. No till3. Manure use

Reducing fossil emissions from fertilizer

• Sponsored by TCCC• Prepared by Univ. of MN & Colorado State

Univ.• Review panel:

o Keith Alverson, farmer, NCGA boardo Joe Fargione, TNCo Suzy Friedman, Robert Parkhurst, EDFo Franklin Holley, Alix Grabowski, WWFo Mike Huisenga, WSP Environment & Energyo David Kolsrud, farmer/investor/coop pres.

Scenarios for low carbon corn, March 2014

BMP findings: soil carbon sequestration

o Nitrogen applied at optimum rate reduces GHG emissions 46% over current practices with no effect on yield

o Using no-till or strip till practices and optimum fertilizer rates accumulates or sequesters carbon in the soil at a significant rate

o With the additional practice of replacing 50% of the synthetic nitrogen with manure effectively doubles the GHG savings

Conclusions: BMP scenarios

o Create supply basin of voluntary growers in the So. Dakota/MN/Iowa region

o Share input-output data anonymously using FieldPrint Calculator & FTM indicators plus GHG

o Engage a stakeholder group of environmental, regulatory & conservation opinion leaders

o Report annually on performance

The project in development

o Michael P. Vandenbergh, Vanderbilt University School of Law, “The New Wal-Mart Effect: The Role Of Private Contacting In Global Governance.”

o Jody M. Endres, Univ. of Illinois Energy Biosciences Institute, “Legitimacy, Innovation & Harmonization: Precursors to Operationalizing Biofuels Sustainability Standards.”

o Helena Chum, NREL & IEA Bioenergy Tasks 38 & 40o Sheehan, et.al., ”Measuring the carbon footprint of Gevo’s

Luverne, MN corn supply,” http://iree.environment.umn.edu/wp-content/uploads/2014/03/Gevo-final-report-1.pdf

o Sheehan, et.al., “Scenarios for low carbon corn production,” http://soilcrop.agsci.colostate.edu/?p=2159

Acknowledgements & references

jhuttner@huttnerstrategies.com