Published in Sept./Oct. 1998 Issue Of Industrial Biotech News
The Federal government is beginning to reinvent its method of achieving environmental goals by promoting the use and acceptance of "environmentally preferable" products. These programs may be particularly beneficial to the industrial biotechnology sector (primarily companies whose products result in lower environmental impacts than existing products and processes create) precisely at a time when this industry is struggling to expand its markets.
There are four primary forces that drive the market demand for industrial biotechnology. First, the cost of traditional methods of complying with existing environmental regulations has risen dramatically; now biotechnology alternatives that lessen air and water emissions or obviate the need, in most cases, for land disposal are cost-effective.
Second, there are increasing efforts to make environmental regulation more performance-oriented and less technology-specific. The old direct command-and-control paradigm for regulation not only specified the environmental goal, but often specified the method of achieving it. However, if there are two methods of complying with an environmental regulation and one is more expensive than the other, the cost difference can become a competitive disadvantage to the company using the more costly pollution-control approach. For example, presently enzymes have replaced the much more toxic indigo blue dye process and the use of stones to condition fabrics in the manufacture of blue jeans, thereby reducing the total amount of toxic chemicals entering the environment and decreasing solid waste disposal. The future holds even more fascinating possibilities. There is ongoing research on modifying the genetic makeup of trees to modify lignin (a substance that is in wood) in ways that would eliminate the need for a great deal of expensive end of pipe wastewater treatment. Such developments could both reduce pollution and lower the cost of producing paper. These technological innovations, however, must be accompanied by increased flexibility in the regulations so that companies can be "permitted" to modify its processes.
Third, there is a growing realization within industry that today's improper disposal practices are tomorrow's liabilities. The most certain method of avoiding future cleanup liabilities is never to produce the pollution in the first place. Interestingly, one survey of companies using a common industrial process indicates that 49 percent were motivated to replace equipment by the need to comply with environmental laws, 54 percent were motivated by the need to reduce operating costs, 50 percent were motivated by the need to improve the appearance of the product and 46 percent were motivated by the need to increase capacity.
Fourth, consumers (within the bounds of reason and within the limit of available and reliable information) are increasingly using their purchasing decision to select "green" products. The environmental ethic, once limited to an elite minority, is now embraced by national expert panels and by a significant portion of the U.S. public (as much as 75 percent in some polls). Private-sector green labels, the U.S. government's environmentally preferred product-purchasing program, and green advertising (extolling the lower environmental impacts of a product directly to the average consumer) are now commonplace, if not yet universal. Thus, consumers (including the largest single consumer, the U.S. government) can exercise considerable economic power by purchasing less environmentally damaging products.
Environmental technology programs
The government can influence the market in several ways: (1) by direct regulation (banning a product or its disposal without treatment); (2) by providing information to decision-makers (labeling requirements or simply educating industrial companies concerning the long-term and short-term economic savings that can be attained through process or product changes) or (3) by providing incentives (either by facilitating regulatory approvals for such technologies or providing financial assistance). Within the past few years, several government programs have been created to encourage companies voluntarily to switch to less polluting and/or lower risk products. Among these programs are the EPA's Environmental Technology Verification (ETV) Program, the federal government's Environmentally Preferred Products Purchasing Program, EPA's Project XL (which provides regulatory flexibility to implement environmentally beneficial methods of accomplishing existing environmental goals), the Green Chemistry Challenge Awards Program, the Cleaner Technology Substitutes Program and the Extended Product Responsibility Program.
These programs address different aspects of promoting pollution prevention. The common goal is to harness the economic power of the consumer so that market forces provide manufacturers and sellers with the economic incentive to reduce pollution. Some programs (such as the Extended Product Responsibility Program) facilitate communication between industry and other stakeholders (such as green technology developers). They may identify methods of lowering an industry's liability for environmental costs throughout the product chain. Where appropriate, these programs also can identify which regulatory changes will allow the companies to change their product or processes to designs that are less polluting at lower transaction costs.
Other programs involve a more direct role. Since all of the market incentives ultimately depend upon the decision-maker (whether it is the average consumer, an industrial company or a government purchasing official), EPA created the ETV program to obtain reliable, unbiased information about the environmental impacts of a product. In this program, environmental technologies are evaluated to ascertain their performance characteristics. EPA does not rank technologies or compare their performance and will not label or list technologies as acceptable or unacceptable in this program. Rather, the purpose is to "encourage rapid acceptance and implementation of improved environmental technology" through the creation of reliable, credible third-party review. ETV tends to focus its resources on technologies that are either in or ready for full-scale commercialization.
ETV current pilot program sectors include the Coatings and Coatings Equipment Program, wet weather flow technologies and carpet cleaners. Although none of these pilot programs now involve a biotechnology product, a brief description of the ETV Coatings and Coatings Equipment Program can provide an example of how the ETV program works. The objectives are to: (1) develop standardized test protocols to verify the acceptability of lower-polluting innovative coatings and coating applications techniques for metal, plastic, wood and other substrates in a broad range of industries; (2) provide credible third-party environmental, performance and cost data about potentially lower polluting innovative coatings and coating application technologies to end users; and (3) establish self-supporting technology verification at a pilot facility. The criteria being considered by EPA in this program are air emissions (both volatile organic chemicals and hazardous air pollutants), discharges to surface water or sewer systems, generation of solid wastes (such as sludge), transfers from one medium to another, and relative energy use.
The ultimate issue is the economic viability of using alternative coatings or equipment. An appropriate cost comparison cannot be limited to capital cost; it must include the cost of operation and maintenance, pollution controls, energy, personal injury and worker compensation, and damage to the environment from emissions and discharges to the environment. The last two factors are obviously the most difficult to evaluate; environmental damage assessment has been controversial in other applications.
Stakeholder involvement is essential due to the potential for bias that can be manifested in developed criteria. Such stakeholder involvement in the decision-making process is not unusual and, in fact, is mandated by EPA policy. In the case of the Coatings and Coatings Equipment Program, the stakeholders include representatives from various trade associations (e.g., National Paint and Coatings Association and Federal Societies for Coatings Technologies), the Department of Defense, some individual companies and a consultant to the coating industry, but -- oddly -- no technology developers. Clearly, the ETV project provides a very cost-effective focal point for any company's or an industry's effort to spread reliable information about the environmental, performance and cost benefits of the technologies.
In sum, just as the health care biotechnology sector is intertwined with the revolution in understanding and combating disease, the industrial biotech sector is an important player in combating pollution and thereby achieving sustainable development in the 21st century. Environmental biotechnologies provide products of the same or better quality while also preserving petroleum supplies, lessening the usage of other natural resources, lowering the net amount of greenhouse gas emission, decreasing the amount of hazardous waste created, and lessening air and water emissions. These benefits are achieved without abandoning economic growth or relative competitiveness. Industrial biotechnologies hold great promise that the developing world can bypass the pollution phase of economic development and not contribute to problems such as global warning. The goal is unquestionable -- lower costs and less pollution.
The question is whether government has sufficient information and sensitivity to real-world market forces to select policies and actions that will have a meaningful impact on the growth of the industry. The best method of ensuring that the biotechnology industry interests are adequately served is for companies in the industry to engage EPA in particular, and the administration and Congress, more generally (e.g., through its trade association, the Biotechnology Industry Organization.) To paraphrase Thomas Jefferson, the price of `economic' liberty is vigilance.
The potential actions that might be taken include:
- Increasing federal support for research.
- Bringing stakeholders together to overcome inertia and unfounded concerns.
- Highlighting success stories with visits from high-level administration officials.
- Involving green biotechnologies in environmentally preferable purchasing.
- Encouraging other programs that create economic incentives to use green biotechnologies.
- Publicizing and promoting the utilization of EPA's ETV program, Project XL, Commonsense Initiative and other programs to eliminate specific barriers to the use of innovative technologies.
- Creating a green biotechnology awards program.
- Ensuring that accurate information reaches decision-makers.
- Ensuring that U.S. and international regulations and guidelines are harmonized, streamlined and based on sound science, and that they address the unique circumstances of the biotechnology industry.
- Documenting benefits -- environmental, jobs and technology innovation.
- Encouraging export of green biotechnology.
- Opposing scientifically unsound trade barriers.
- Monitoring the government's development and use of life-cycle analysis to ensure that a biased procedure, inappropriate for industrial biotechnology, is not adopted.
- Seeking appointment of a representative from an industrial biotechnology company to the President's Council on Sustainable Development.
- Continuing dialogue between the biotechnology industry and industrial customers, agencies, Congress, environmental groups, international institutions such as the World Bank and other stakeholders.