Prepared for: BIO World Congress on Industrial Biotechnology 2017 Montreal, Canada July 23 – 26 2017 Prepared by: Jeff Passmore, CEO, Passmore Group Inc.
Context for the bioeconomy market According to the OECD, in the 2025 – 2030 period, the
bioeconomy will command an estimated world market of
between US$ 2.6 and 5.8 trillion. At that time, bio-chemicals will
reach 22% - 28% of the potential global chemical market of US$
2.2 trillion.
If developed sustainably, the bioeconomy can simultaneously
deliver jobs, industrial development, reduced GHGs emissions,
and national security.
But this won’t just happen on its own.
To take advantage of this opportunity, both the public and private
sectors need to get our collective and collaborative skates on.
If you want to scale-up to a commercial project in the bio-economy space…
…Capital
will be the beginning and the end
of every discussion
Technology evolution - From idea to market adoption
1] Fundamental Research $
2] Applied Research $$
3] Pilot Facility $$$$
4] Demonstration Facility $$$$$$$$$$$$$$
5] Commercial Demonstration $$$$$$$$$$$$$$$$$$$$$$$$
(first ~full scale plant)
6] Commercial Rollout $$$$$$$$$$$$$...$$$$$$$$$$$$$$
(multiple plants; material impact on markets)
You’ve all heard that…
Necessity is the mother of invention
Well…
Certainty is the mother of investment
In the absence of (policy) certainty…
The private sector has fear of
change of law = stranded assets
Roles of public and private sectors…
Must be complimentary and
clearly defined
The private sector should assume…
Market risk: Technology risk
Feedstock supply risk
Project completion risk
Performance risk
Off-take risk
Management team risk
x Stranded Asset risk
And allocate those risks…
To those best qualified to manage them
(Unmanaged risks = higher cost of debt)
The public sector should assume…
Regulatory risk: - Long term regulatory certainty
(think tax system)
- Protection against future change of law
(think grandfathering)
Scaling up to commercial…
…means assembling project capital:
Equity:
Is about the future – what are you promising to deliver?
Comes in first and can range from 20% - 50% of project cost
Needed to demonstrate project sponsor/proponent skin in the game
Remainder from committed Strategic investors/Corporate balance sheets
Debt:
Is about the past – do you have a track record?
Comes in after equity
Senior debt - Commercial banks – expect timely payment of principal and interest (think mortgage)
Subordinated, non-recourse debt - Governments grants, loans, loan guarantees
(Typically last in - follows the private sector investment)
Scale up commercial success also requires that…
…You know your customer
Ensure your brand is firmly set in your customers’’ and prospective customers’ minds…
Why?
…Because you will need customer preference for bio-products to drive demand quickly enough to generate cash fast enough for your business to survive
… But really, why are we all here? Because I imagine a future in which my three grandsons live in a world that protects the environment AND grows the carbo-hydrate economy!
And why Scale up in Canada?
You perhaps know Canada as offering:
Best country to do business in the G20 - Forbes and Bloomberg
Strongest growth record among G7 from 2006 - /’15 - OECD
Most highly educated workforce among OECD members – OECD
Lowest business taxes among G7, and 46% lower than in the US - KPMG
Lowest business R&D costs among G7 with 27% cost advantage over the US – KPMG
“Most sound” banking system in the world – World Economic Forum
Easy transportation access to US markets (NAFTA)
A fun place to live, work and play – Best quality of life in G7 – OECD
But let’s drill down…
Canadian Agriculture Total crop & pasture land:
Canada - 160 million acres
Saskatchewan ~62 million acres (39% of total farm area in Canada)
Alberta ~50 million acres (31% of total farm area in Canada)
Ontario ~12 million acres
Gross farm receipts in 2010:
Alberta - $11.4 billion
Saskatchewan - $9.4 billion
Ontario - $11.9 billion
From a feedstock perspective, the best locations for a cellulosic sugars bio-refinery in Canada are:
- the black soil zones of Alberta and Saskatchewan
- SW Ontario
Canada Ag Biomass Wheat (straw) growing areas
NOTE: SW Ontario (lower left portion of large area in blue) also grows two million acres of corn (stover)
Map – Courtesy, Agriculture Division, Statistics Canada / Foreign Agricultural Service, USDA
Canada’s forest cover: 10% of world’s (348 million hectares)
Want to learn more? – Attend “Scaling Up” Canada’s 2nd annual Bioeconomy conference
Look who’s speaking:
World Bank, Washington, DC International Energy Agency (IEA), Paris EcoSynthetix Inc. Genome Canada Bio-based Industries Joint Undertaking (BBI JU), Bio-based Public-Private Partnership, Brussels Special Advisor for Climate Change, Ontario Ministry of Environment Former Acting Assistant Secretary, US Department of Energy and Acting Under Secretary, US Department of Agriculture Comet Biorefining Clariant Ensyn Natural Fibre Technologies Alberta Enterprise Corporation Iogen Conifex Timber. Future Fuel Strategies Bio-Innovation Canada Ontario Federation of Agriculture CelluForce Forest Products Association of Canada Advonex ECOSTRAT Industrial Biotechnology Innovation Centre, Glasgow, Scotland Citigroup, New York Ikea of Sweden Sustainable Development Technology Canada
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Contacts:
Email [email protected]
Web www.passmoregroup.ca
Mobile +1 613 614 8568
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