While Aotearoa New Zealand has an extremely important bioeconomy both domestically and internationally, it’s currently missing out on an estimated $30 billion economic opportunity as well as co-benefits for climate and biodiversity. Here we explore how this can be unlocked.
In May 2022, the New Zealand Government published the Emissions Reduction Plan, which outlined how it will achieve its 2030 and 2050 emissions reduction targets. Within this plan is an entire chapter that contains a bold vision to achieve a more circular economy and a thriving bioeconomy by 2050.
What is a circular bioeconomy?
Broadly speaking the bioeconomy is an economic system that uses biological resources such as plants, animals, and microorganisms, to produce goods and services. As you can imagine, this encompasses a wide range of sectors, including agriculture, forestry, fisheries and biotechnology - for which Aotearoa New Zealand is already renowned globally.
Layering the circular economy concept onto the bioeconomy entails promoting the use of renewable natural capital over non-renewable resources, regenerating nature and operating in a way that emphasises resource efficiency by minimising waste at source and by cascading waste to utilise as inputs to other processes.
It also implies the application of a level of science, technology and innovation to the production and utilisation of biological resources.
Environmental benefits of a circular economy
50% of all GHGs and 90% of biodiversity loss are due to resource extraction, resource processing and associated pollution. The potential of circularity - when applied to any sector - to both reduce GHG emissions as well as prevent biodiversity loss is impressive.
For example, in the automotive sector, the materials-related emissions of cars could be reduced by 57-70% by applying circular approaches. A circular food system could reduce annual greenhouse gas emissions from the global food system by 49% in 2050 (EMF), while in the buildings sector, circular economy actions can lead to emissions reductions of up to 61%.
In Aotearoa New Zealand, Scion estimates that the bioeconomy could help reduce emissions by 12.5 Mt CO2-e by 2030.
Circular economy interventions in forestry, textiles, food and agriculture could stem biodiversity loss and restore biodiversity to 2000 levels by 2035. While at farm level studies suggest that applying a circular approach to food (which involves fundamentally redesigning the food system to fully utilise outputs of food production, as well as applying the fundamentals or regenerative production) increases farm level biodiversity by 50% compared to simply applying better sourcing (i.e. sourcing from regenerative production alone).
Circular value creation for a greener GDP
Just as compelling as the environmental benefits are the significant value creation opportunities from a circular bioeconomy. In Aotearoa New Zealand, estimates suggest the standard bioeconomy could create an additional NZ$30 billion in GDP by 2030. Worldwide, the resource-efficient circular bioeconomy is projected to reach a value of USD $7.7 trillion in 2030 (WBCSD, 2020).
Currently, our GDP contribution from the bioeconomy is estimated at 23%, or $US47b, with 38% from food, 8% from forestry, 26% from construction, 15% from support services, and 13% from wastewater treatment. A significant proportion of this is destined for export, and is based on traditional primary production, although this is changing with the development of genetic markers and livestock breeding, new biomaterials and biotech.
While the economic value specifically from developing a circular bioeconomy in Aotearoa New Zealand remains to be quantified, there is a clear opportunity to develop a higher value circular bioeconomy.
What could be done in Aotearoa New Zealand?
Currently goods that are sold in international markets for $US167b earn the Aotearoa New Zealand economy just $US25b. That is a potential value capture loss of 85% for Aotearoa New Zealand primary sector goods. This loss is due in part to the current focus on commodity goods, missed opportunities to capitilise further on provenance, and domestic competition within and between industries and sectors.
There is huge potential to expand on existing primary bioproducts and establish sophisticated new biomarkets such as biomaterials, biofuels, biotech and biochemicals, bio-based packaging and biofertilisers. In Aotearoa New Zealand, we are already seeing some of this innovation emerge. Within the >$US 67 billion global crop protection market, ag-biotech company Biotelliga provides biologic-based crop protection as an alternative to synthetic pesticides, through fungal biology solutions (where active molecules are applied to soils) and seed integrated solutions (where active biomolecules are coated onto the seed, or where bioprotective organisms are inoculated into the seed). In the context of global concern around soil degradation and food security, demand for such biotech solutions is likely to increase as growers look for crop protection that maintains soil health while maximising crop performance and yield.
Another Aotearoa-born business, Mint Innovation, which uses chemicals and microorganisms to extract precious metals from old electronics, saves >90% of the carbon produced when compared to conventional mining or smelting. Electronic waste is the fastest growing global waste stream; worth 60 billion USD. Just 2% of Aotearoa New Zealand’s e-waste is currently recycled and there is a significant untapped economic opportunity for solutions which can recover value from waste.
In the biorefining space, Scion, the New Zealand Forest Research Institute, is leading a research programme to demonstrate bark biorefinery technologies that can convert millions of tonnes of bark into high-value biomaterials and products, creating new value from under-utilised slash and piles of bark. Biorefining of forestry, agricultural, process and post-consumer biomass residues is a key part of the circular economy with benefits for climate and the economy. Utilising biomass residues that would otherwise decompose reduces emissions, and new high value materials can be created.
Overseas, a number of circular biotechnology processes are being launched in the biomaterials and biofuels space. Danish company Haldor Topsoe has developed a technology which converts concentrated sugars into chemicals which can replace oil based chemicals in a wide range of applications, including bottles and food wrapping. In Israel, biotech company TripleW utilises food waste to produce polylactic acid (PLA) bioplastics used in packaging, car parts, toys, textiles, and kitchenware. In the US, a partnership between NREL, the Massachusetts Institute of Technology, and Washington State University is investigating the extraction of lignin from biomass waste to create circular aviation fuel.
In addition to providing new revenue streams, a circular approach can also bring environmental and economic efficiency gains to production processes and supply chains, through horizontal collaboration across sectors. This can involve utilising wastes as inputs to other processes, joint marketing for export access, joint transportation, port and warehouse storage. In China, circular eco-innovation parks have been running for a number of years, with tangible efficiency gains in energy and water usage, land use and solid waste utilisation.
Transitioning from a linear to a high value circular bioeconomy can provide Aotearoa New Zealand with a range of economic and environmental benefits, paving the way for a sustainable, prosperous future. Efforts should be directed towards leveraging the existing biological resources for which Aotearoa New Zealand is known worldwide, and developing a higher value circular bioeconomy. This will require innovation from businesses, and the right regulatory environment to support it - are we bold enough to grasp the opportunity?
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