MSU Extension Product Center

Executive Summary

Use of petroleum-based products has been a fundamental reality for much of the world’s economic growth for the last century. In recent years, the prospect that future global growth can be solely tied to the use of petroleum resources has become increasingly uncertain:

• Relatively rapid increases in energy costs have put pressure on economic growth, challenged consumer expectations, and heightened political awareness of the pressures facing the current reliance on petroleum-based products.
• The pace of economic growth in developing nations, such as China and India, has both contributed to high and volatile market prices for fossil fuel products in the short run and raised serious questions about the nature of future competition for those products.
• Environmental concerns associated with use of petroleum-based products and fossil fuels have intensified, globally and nationally. 

While presenting significant short-term challenges, these developments have intensified society’s interest in the potential use of alternative sources of energy and materials.

One attractive area of potential interest is the use of biobased resources as sources for products currently developed from petroleum, a bioeconomy. Production of goods and services derived from materials from plants, animals, wood products, and other renewable resources, is technically feasible today. The potential for technological advancement offers the promise of more efficient processes in the future. However, as with any significant change, economic, societal and environmental issues need to be addressed to move from technological possibility to innovation driven success.

The land grant university was established to assist society in evaluating and making progress relative to issues and potentials such as those the bioeconomy presents. Michigan State University’s President Simon has stated, “At MSU, research, development and entrepreneurship for the bioeconomy are fundamental to who we are and what we do.” Recognizing these opportunities, Michigan State University (MSU) and its Office of Biobased Technologies (OBT) commissioned Centrec Consulting Group, LLC, with the assistance of MSU’s Product Center for Agriculture and Natural Resources, to assist in evaluating the potential for the bioeconomy in Michigan and in developing approaches by which MSU could effectively assist in fostering a vibrant bioeconomy in Michigan.

The first phase of this effort resulted in a report titled “Linking Knowledge and Resources to Support Michigan’s Bioeconomy” which was released in April 2006. As the title suggests, that report was focused on defining Michigan’s physical resources and linking them to essential elements of knowledge creation. That report also included descriptive materials that have been used to support various meetings and presentations at the local, state, and national levels.

This second phase of the project focused on:

• Identifying key impediments to development of biobased value chains within Michigan and specifying actions to reduce such impediments. Special attention is directed to potential actions to reduce those impediments by the State of Michigan and by leading academic institutions such as MSU.
• Specifying opportunities by which MSU, through OBT could accelerate and solidify Michigan’s position as a leader in the bioeconomy.

The popular use of the term, bioeconomy, is quite broad, encompassing everything from medical to industrial applications. The primary focus in this report, however, is on those parts of the bioeconomy that comprise mainly industrial biotechnology applications. This includes all of the supporting platforms for the production of fuels and chemicals from biomass.  

The findings and recommendations contained in this report resulted from a number of informal and formal activities and sources. In addition to drawing from the growing academic and popular press literature on this topic, the project team conducted numerous one-on-one and small group meetings with key Michigan stakeholders, attended key conferences and workshops, developed quantitative models of potential bioeconomy value chains in Michigan and employed those tools in building scenarios, and conducted a two day Roundtable meeting with leaders of Michigan stakeholder groups. The results of those efforts were synthesized as findings and recommendations within this report.

Three concepts from the domain of strategic management are described in the report because they provide useful frameworks to both understand the justification for the report’s recommendations and to implement those recommendations. One refers to knowledge creation and the reality that knowledge-based innovation is a process that extends beyond invention to include adoption and improvement over time. The second demonstrates that innovation doesn’t occur in isolation but rather flourishes within an innovation ecosystem comprised of a set of interlinked entities. The third, strategic intent is an approach which can be employed to foster strategic change in the presence of extensive uncertainty from sources such as technological change or economic and social forces.