Abstract
Just over one year ago, climate activist Greta Thunberg chided world leaders in Davos for “empty words and actions” on climate change and “inaction [that] is fueling … flames by the hour.” At the time, a wildfire had already been tearing through Australia for 7 months. It would rage for several more months and eventually burn an area equivalent to two Pennsylvanias. In July, higher temperatures drove excess snow melt in the Himalayas and rising ocean temperatures fueled an above-average monsoon season in Southeast Asia. The combined result was floods that killed over 1,000 in Bangladesh, India and Nepal. Local authorities estimated one third of Bangladesh was underwater at one point, with over 1 million people impacted. In the United States, the National Centers for Environmental Information (NCEI) reported 22 separate billion-dollar weather and climate disasters in 2020—crushing the previous annual record of 16. Combined, the 7 tropical cyclones, 13 severe storms, 1 drought, and 1 wildfire cost the country $95 billion in damages.
But these climate-driven disasters were not even the main plotline of 2020; they were background players to a deadly pandemic that swept across the globe. Some may have expected the COVID-19 crisis to distract the world from climate change, but the exact opposite occurred. The pandemic gave the world a glimpse of how quickly and drastically a global existential crisis could invade nearly every aspect of daily life, disrupt economies, and extract a deadly toll. And there is little doubt, climate change presents an existential crisis; the World Health Organization estimates climate change could kill over a quarter of a million people annually, from malaria, diarrhea, heat stress, and malnutrition, starting in 2030—just nine years away. Many climate scientists believe this figure to be an extremely conservative estimate.
Mitigating disastrous climate change will require all hands on deck: scientists, policymakers, corporations, and consumers. Industrial biotechnology, in particular, has a tremendous role to play as the world seeks to transition to a low-carbon world. The products of industrial biotechnology will be vital to feeding, clothing, and housing a growing world population without pumping ruinous amounts of carbon dioxide into the air. Biobased products also temporarily sequester carbon, which is preferable to using fossil fuels—essentially pulling carbon that is already sequestered and adding it to the atmosphere, too often for use in products with a very short useful life. Industrial biotechnology, however, has struggled in the past to compete with conventional, petroleum-based means of production. Expecting brand new technology to compete with the entrenched, mega-economies of scale the petroleum industry has achieved over the past hundred years was simply not a reasonable ask. In the late 2000s, spiking crude oil drove up interest in industrial biotechnology, but the 2008 economic crisis quickly turned the tide. Investors also tired of finicky organisms, high costs, and lack of revenue.
Many watching biotech believe the tide is turning again—this time in favor of industrial biotechnology and this time for good. The trends are enduring this time. Consumers continue to demand more sustainable products, but are not so easily appeased by greenwashing or meaningless tweaks to product formulations. “It is very clear that the sustainability imperative has intensified, even amid a pandemic,” Genomatica CEO Christophe Schilling says in an interview with IB. “The kinds of conversations we have today with brand owners are substantively different than I think it would have been years back. There's been more demonstrations of success, feasibility has been proven, and maybe the questioning of how the existing supply chain is going to transform or whether we need new supply chains has begun.” Schilling acknowledges the industry has experienced “a lot of ups and downs,” but adds, “I do feel like our time is now.”
The exponential growth of environmental, social, and corporate governance (ESG) investments is also driving intense corporate scrutiny. Between 2015 and 2018, investments into ESG funds were steady at about $5–6 billion, but in 2019 increased to $20 billion, according to Deutsche Bank (New York, New York). At the end of the second quarter of 2020, the figure was $71 billion. Some of this growth is driven by millennials who want to invest in companies that share their values, but generational differences are just part of the story. At its core, ESG investing is seen as a way to minimize risk, and companies with bold sustainability plans are seen as more innovative. Larry Fink, CEO of BlackRock, the world's largest asset manager, has been vocal about the shift in investor priorities. In a 2021 letter to CEOs, Fink said climate change “has become a defining factor in companies' long-term prospects” and stated his belief that “companies, investors, and governments must prepare for a significant reallocation of capital. … [E]very management team and board will need to consider how this will impact their company's stock.”
BlackRock is not alone in noting the importance of ESG. Climate Action 100+ (CA 100), an investor-driven initiative launched in 2017 and now signed by 545 investors managing $52 trillion in assets, lists the worst greenhouse gas (GHG) emitters to pressure them to not only be transparent in their carbon disclosure but also reduce emissions in line with Paris Agreement goals. Corporations are already responding. For example, Oil major Royal Dutch Shell, which owned 55 refineries worldwide in 2004, now operates 14. By 2025, it will operate just 6. The company is targeting net-zero emissions by 2050 or sooner. Shell CEO Ben Van Beurden sees “significant growth opportunities” for biofuels, hydrogen, and synthetic fuels. Shell is planning to add biofuel capability within its refining infrastructure, and is investing in new ways to produce biofuels from sustainable feedstocks such as waste products or cellulosic biomass, he says. “We will have some oil and gas in the mix of energy we sell by 2050, but it will be predominantly low-carbon electricity, low-carbon biofuels, it will be hydrogen, and it will be all sorts of other solutions too,” he adds
Government policy is also treating climate change like the existential threat that it is, and this will help drive interest in industrial biotechnology. China, the largest carbon emitter globally, has committed to net zero emissions by 2060 and vowed that its emissions would peak in 2030. Europe's massive European Green Deal aims to make Europe climate neutral in 2050. In the US, President Biden made good on his Day One promise to return the country to the Paris Agreement. He nominated Dr. Eric Lander as Director of the Office of Science and Technology Policy (OSTP) and to serve as the Presidential Science Advisor. Biden also elevated the role of Presidential Science Advisor to a cabinet-level position for the first time in history. Lander was a principal leader of the Human Genome Project and has been a pioneer in the field of genomic medicine. He is the founding director of the Broad Institute of MIT and Harvard. Biden also appointed Frances H. Arnold, a professor of chemical engineering at the California Institute of Technology and winner of the Nobel Prize in Chemistry for “the directed evolution of enzymes” to the President's Council of Advisors on Science and Technology (PCAST). Dr. Arnold is also a co-founder of Gevo (Englewood, CO, USA).
Technology trends are also contributing to optimism. In this issue of IB, Marcus Meadows-Smith, CEO of ag microbials firm BioConsortia (Davis, CA, USA), discusses how microbials can be edited to continually fixate nitrogen from the air. This allows farmers to reduce nitrogen fertilizer applications—half of which ends up lost to the environment, with negative impacts. The company has signed a partnership with fertilizer giant Mosaic to develop and commercialize the technology. The sustainability implications are clear as farmers face the massive challenge of feeding a fast-growing population without contributing to climate change. Interest in the sector is strong, and growing, Meadows-Smith adds. “Biopesticides today are about a $3.5 billion market, and biostimulants are about $1.5 billion. Growth estimates range from 10–15% per annum,” Meadows-Smith says. “Syngenta's acquisition of Valagro late last year shows that major companies are very interested in the space as well.” He notes that the tools available to develop these products have also improved drastically. “The big difference now is that these tools are very precise; you can change single base pairs within the genome of the microbe and be very targeted around what you're doing. In the past, it was akin to working in the dark and using a shotgun. You'd have to go through thousands and thousands of iterations and you'd often get unintended consequences, like inserting DNA into an important functional gene that as a result stopped working. Now, they're much more precise.
Yair Nativ, vice president of sales, STK bio-ag technologies (Petah Tikva, Israel) tells IB modern farmers often face tradeoffs between maintaining profitability, delivering crops in a sustainable way, and meeting increasingly stringent regulatory demands in terms of Maximum Residue Levels (MRLs). STK's biofungicide, extracted from the tea tree oil tree, helps address all three. “[T]he willingness to try biologicals is increasing slowly. When we first entered the market, nobody wanted to work with us and we had to go from farmer to farmer. And now, ADAMA, Syngenta, Sumitomo, BASF—all the giants of ag—are adding solutions like ours to their distribution chains,” he says. “Big ag companies are definitely eager to distribute biopesticides, acquire biologicals companies, or collaborate with us. We are filling a gap for them.”
Botanical Solution Inc. (Santiago, Chile) is also working with botanicals, but is producing them via cell culture. The company's ABM-01 is an advanced botanical material based on native Chilean plant Quillaja saponaria Molina. ABM-01 is the active ingredient in BSI's broad spectrum biofungicide Botristop®. The product prevents and controls Botrytis cinerea, one of the most harmful fungal diseases in high-value crops worldwide, responsible for hundreds of millions of dollars in losses every year. Botristop is commercialized in Chile through a partnership between BSI and Syngenta since 2019, and will soon be registered in a number of key Latin American countries. CEO Gaston Salinas tells IB agriculture is facing challenging times. “The sector is facing pressure from sustainability macrotrends while at the same time having to figure out how to feed 9 billion people by the year 2050,” he says. “I think the way we are looking at botanicals will become much more common. We are not one more supplier of active ingredients; we are trying to change a broken paradigm. There are a lot of opportunities ahead to deploy this technology.”
Indeed, industrial biotechnology has seen ups and downs, but unlike high oil prices, the existential threat of climate change is not going away, nor will the need to sustainable meet the needs of 2.5 additional people by 2050 if we are to avoid an unprecedented humanitarian crisis. The coming years will see new technology completely change how we live, and for the better. The pandemic is certainly an indication that this transformation is long overdue.
I would like to take this opportunity to thank our readers for their tireless efforts to help create a more sustainable world. We at IB will continue our commitment to keeping you abreast of the latest developments and trends, but I would also encourage you to get in touch with me (