MSU Extension Product Center

Executive Summary

The world economy is in a state of transition as it wrestles with the technological opportunities and societal issues surrounding biotechnology along side the high cost of and dependency on petroleum-based products. These two topics have thrust a new opportunity to the forefront of attention - a bioeconomy focused on the production of goods and services derived from materials from plants, animals, wood products, and other renewable resources often, but not exclusively, as substitutes or replacements for petroleum based goods and services. In tandem with this growing economic force is the recognition of academic opportunity to contribute in a significant manner, not only on a global front, but in a way that will initiate and sustain economic growth at the state level. Michigan State University's (MSU) President Simon has recognized this opportunity, and asserted her commitment to advancing the bioeconomy within the state of Michigan by recently stating "At MSU, research, development, and entrepreneurship for the bioeconomy are fundamental to who we are and what we do."

Recognizing this opportunity, MSU commissioned this study to evaluate, on a preliminary basis, Michigan's opportunities in the bioeconomy, and to begin crafting the role MSU could play in a growing and thriVing bioeconomy. To accomplish these objectives, Centrec Consulting Group, with the assistance of MSU's Product Center for Agriculture and Natural Resources and MSU's Office of Biobased Technologies, conducted over 30 interviews with stakeholders from Michigan's private and public sectors. In addition, research was performed to gather additional and supporting evidence of Michigan's strengths, weaknesses and opportunities relative to a role in the bioeconomy.

The aforementioned activities resulted in an articulation of Michigan's resources, providing an opportunity for the state to fuel an emerging bioeconomy, and challenges for MSU as it begins to define its role in the promising bioeconomy. These findings and conclusions are presented in this report.

There are a number of key elements necessary for a thriving bioeconomy. Michigan possesses many of the assets critical to successful bio-based industries. These can be categorized as the natural resource base, industrial infrastructure, intellectual capabilities, and leadership commitment. While these attributes do not make Michigan unique compared to other states or regions, Michigan can definitely be a contender in the bioeconomy.

As in the petroleum industry, feedstocks serve as the key input for manufacturing fuel, energy, and products from biosources. Feedstocks can be derived from agricultural- and forest-derived
biomass Michigan resources include ample supplies of biomass from both these sources due to its strong, diverse agriculture and a growing and sustainable base of forest resources. The state's diverse agricultural industry can be largely attributed to its culture, climate, and unique geographic qualities exemplified by relatively high-quality soils and numerous microclimates. This diversity is not typical of mid-western states and provides the opportunity for a diversified portfolio of agriculture-derived biomass and for future innovative feedstocks.

Michigan's abundant forestry resources, includmg available timber, harvesting and handling infrastructure, and mills capable of at least initial bioprocessing, is positioned to become a competitive biobased sector. Currently, the annual forest growth rate in Michigan exceeds harvest, thus providing an opportunity for greater harvest of fiber from the forests.

In addition to feedstocks, water is another required input for the processing of the feedstocks and manufacturing of the products. Michigan can provide the ample water required for industrial bioprocessing. Michigan's water resources also are of high quality.

Michigan has an established manufacturing industry that provides extensive industrial facilities, transportation and logistics infrastructure, and a skilled labor force. The state also possesses a budding biofuel industry with established bioeconomy support services. Another key element is Michigan's geographic location and access to consumers. It has proximity to major population markets, diverse manufacturing markets, Canada and the NAFTA highway.

Michigan is the home to extensive and vibrant research capabilities in the plant and biological sciences. MSU is a world-renowned university with particular strength in the crop and biological sciences. MSU's commitment to advancing the bioeconomy is made evident by numerous research efforts and centers throughout the university. Key independent research entities, such as MBI and NextEnergy, add to the dynamic capacity for discovery within Michigan.

There is a widespread understanding among leaders in Michigan of the potential importance of the bioeconomy to future economic growth. Further, there is a strong commitment to making  Michigan a bioeconomy leader. This support comes at many levels including from political leaders and state agency managers. Particularly impressive is the commitment of senior MSU administrators, as illustrated by the establishment of the Office of Biobased Technologies.

Throughout the interviews conducted within this study, there was a general sense that key research universities, such as MSU, have tremendous potential to assist in developing Michigan's bioeconomy. However, that conclusion was accompanied by the perception that much of the potential is unrealized today. This unrealized potential exists as a wide gap between invention in the lab and innovation in the marketplace. Therefore, a challenge
emerged to identify mechanisms and approaches by which MSU could close the gap between invention and innovation within Michigan's emerging bioeconomy.

Nonaka and Takeuichi (NT) developed a conceptual framework that can be used to understand the challenges faced by traditional research universities of moving from inventions to innovations. The framework, presented as the knowledge spiral, suggests that today's research universities excel at scientific discovery and invention; however, the institutional responsibilities do not include the conversion of those discoveries to marketplace innovation. The role of a successful R&D hub for a state's emerging bioeconomy will be to facilitate the movement of inventions from the labs to innovations in the marketplace. Thus, institutional responsibilities need to be expanded and the deficiencies need to be addressed.

Traditional Land Grant Universities have a history of an expanded outreach role within a relatively short supply chain. However, the biobased value chain is often characterized as having three general components: feedstock production; bioprocessing; and biomanufacturing. As a result, a university's institutional responsibilities need to be expanded across the feedstock, bioprocessing, and product levels if it is to focus on being a R&D hub for a state's bioeconomy.

Michigan is not alone in its quest to build a strong bioeconomy sector. Every state or region has a blend of resources which comprise their competitive position. Michigan has an attractive mix of natural resources that could foster growth in the bioeconomy. The industrial infrastructure in Michigan is well developed but currently exhibits excess capacity. Significant intellectual capabilities focused on the bioeconomy exist within Michigan's universities. MSU President Simon and her administration have made a strong commitment to cultivating and sustaining growth of the bioeconomy in Michigan, with the intent of becoming a vibrant research and development hub for that sector. Despite these strengths, achieving this aspiration is likely to
require organizational innovation, within the university, to link its science and technological capabilities better to the needs for innovation within Michigan.