F. Sijbesma, Chairman EuropaBio, MB DSMLyon, April 10, 2003

White Biotechnology:Gateway to a More Sustainable Future

2

WHITE BIOTECHNOLOGY NOW READY FOR TAKE-OFF

Examples of white biotechnology

• Biological processes for vitamin production

• Bio-based polymers

• Enzymes for the textile industry

Market penetration

White biotechnology is the application of nature's toolset to industrial production

TimeToday

3

PROJECT SET-UP

Proposed policy measures

Individual case studies

McKinsey market perspective

Overall impact of white biotechnology

People

Planet Profit

*Not involved in policy recommendations

Scientific advisory board*

Dr. M. Patel (University of Utrecht, NL)

Dr. I. Gillespie (OECD)

Dr. O. Wolf(EC)

4

Biotechnological process

1-step fermentation process

ENVIRONMENTAL AND ECONOMIC BENEFITS – VITAMIN B2

Source:BASF, Oeko Institute

Life cycle assessment of Vitamin B2

Traditional process

8-step chemical synthesis

Impact

Environmental and economic

Environ-mental impact

Lower

Higher

LowerHigher

Costs

Traditional

Biotech

- 40%

- 40%

5

LESS ENERGY, MATERIALS AND COSTS – CEPHALEXIN (ANTIBIOTIC)

Traditional process

Source:DSM, Oeko Institute

Biotechnological process

Impact

Economic

Environmental

Variable cost reduction

- 50%

• Materials used

• Energy consumption

Savings

- 65%

- 65%

10-step (bio)chemical synthesis

Combination of a fermentation and an enzymatic reaction

6

IMPROVED SUSTAINABILITY – COTTON SCOURING ENZYME

Raw fabricRaw fabric

Biotechnological process

Use of scouring enzyme in water

Traditional process

Treatment with hot alkaline solution

Source:Novozymes, Oeko Institute

Scouring Finished fabricFinished fabric

• Primary energy demand

• Emissions to water

Environmental

Impact

Economic

Cost reduction

Savings

- 25%

- 60%

- 20%

7

LESS FOSSIL RESOURCES – BIO-BASED POLYMERS

Source:Cargill Dow, DuPont

NatureWorks™

• Bio-degradable polymer made from corn

Biotechnological process

Traditional process

• Polymers from oil

Sorona®

• Polymer based on dextrose from corn

Impact

Environmental

Economic

• Currently competitive in niche applications

• Future competitiveness highly dependent on feedstock costs

Average reduction of fossil inputs

- 17% to - 55%

8

FUTURE: LARGE-SCALE REDUCTION OF CO2 EMISSIONS – LARGE-SCALE APPLICATION OF BIOMASS

Source:Oeko Institute, McKinsey

Environmental

Impact

Economic

• Ethylene not viable today

• Breakthroughs in biomass conversion required

• Global waste biomass sufficient for up to 40% of all bulk chemicals

Reduction of CO2 emissions relative to traditional counterparts

Ethanol

Ethylene

- 108%

- 106%

Biotechnological process

Traditional process

Fossil resources

Renewable biomass

Binding of CO2

Production of

• Fuel

• Chemicals

9

10 - 20% IMPACT ON CHEMICAL INDUSTRY IN 2010

Source:McKinsey

McKinsey analysis: Chemical industry impacted by biotechnology

Impact*) dependent on:

• Technology development

• Overall demand

• Feedstock prices

• Policy framework

10%

20%

2010Time

Slow uptake

Fast uptake

2000 Today

*) Impact means the use of biotechnological process steps such as fermentation, biocatalysis, etc.

10

ENVIRONMENT: DECREASING THE FOOTPRINT

Environmental impactCase studies

• NatureWorks™(Cargill Dow)

• Sorona®

(DuPont)

• Vitamin B2(BASF)

• Antibiotic Cephalexin (DSM)

Energy efficiency

+

+

+

Raw materials consumption

++

++

++ +

CO2 emissions

++

+

Economicimpact

Production costs

0

+

+

++ ++ + +

• Ethylene from bio-mass (future scenario)

0 ++ ++ --

• Scouring enzyme

(Novozymes)

+ + 0 +

11

ENVIRONMENT: DECREASING THE FOOTPRINT

Impact of whitebiotechnology

Renewable feed-stock

Increased energy andprocess efficiency

Source: UNFCCC, McKinsey analysis

Reduction of:

• Greenhouse gas emissions

• Emissions to water

• Emissions to air

• Resource usage

12

ECONOMY: EUR 11 - 22 BILLION ANNUALADDED VALUE BY 2010

Source: McKinsey

McKinsey estimate of annual added value by the global chemical industryEUR billions

11 - 22

5 - 10

6 - 12

Impact of whitebiotechnology

Cost reduction

• Raw materials

• Process costs

• Investments

Additional revenues

• New products

• Value-added processes

13

SOCIETY: EMPLOYMENT, INNOVATION AND RESPONSIBILITY

• New technologies to meet future challenges

• Create new jobs

• Save valuable resources for future generations

Impact of whitebiotechnology

Employment

Innovation

Responsibility

14

POTENTIAL TO BE CAPTURED

Academia

NGOs

Politicians

Farmers

Consumers

Industry

Retailers

People

Planet Profit

15

HOW TO CAPTURE THE POTENTIAL

Current issuesCurrent issues

Examples for measures in the US

Examples for measures in the US

Long-term strategyLong-term strategy

Technological capabilities Technological capabilities

Framework conditionsFramework conditions

Long-term white biotech vision and strategy (2020)

Integrated technology roadmap and focused funding

Low feedstock prices

Europe has to define its approach

1616

PROPOSED POLICY MEASURES

• Benchmark Europe with other OECD countries on development of bio-based economy

• Create European white biotechnology vision and roadmap

• Create financial incentives and supportive regulatory framework

• Encourage competitive biological feed-stock prices

• Build public awareness and support

Create a stakeholders' Technology Platform to build a strategic alliance for white biotechnology