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Over the last 2 years Chile’s government has invested
over US$30 million to develop biofuels.
Chile has an advantage because the biofuels we develop
don’t compete with food products,
like in Brazil or the US,
where fuels are produced from corn or sugar cane.
For more on this, we’re here with the president of
the Chilean Association of Biotechnology Companies (ASEMBIO).
Felipe Camposano, thanks for joining us.
Thanks for having me.
Does Chile have a real chance to play a global role in biotechnology?
And in biofuels in particular?
Yes, the biorenewables industry has allowed a lot
of this technology to come into developing countries.
Chile has the right conditions
- from the north, where the climate suits micro-algae,
to the south for cellulose and macroalgae -
to be a relevant player in the early stages of these technologies.
What do you mean by early stages?
These technologies keep advancing
and improving their production costs in order to compete,
so you have to start testing them
in countries that can produce them at lower costs.
Chile could be one of the best places
to start developing these technologies.
So the idea is to start developing the technology here
- to create it, not import it -
and use and export the technology, not the biofuels?
Exactly. Biofuels are normally produced locally
and different places have different biomass supplies
and different feedstock.
We’ll probably have to work with other countries
who are leading in this technology.
Chile has invested millions of dollars, as you said.
The US has already invested billions in this industry.
So what we have to do in Chile is to link up with those initiatives
and become a partner in taking these technologies
from the laboratory to their first commercial plants.
We can get involved at a technological level
doing commercial production trials,
and export this technology around the world.
You’ve been talking a lot about the future.
Is this already underway in Chile?
Technological development at a global level
has been underway for the last 10 years
with large investments from the public sector -
which has been pushing for these programs in some countries -
and from the private sector,
which has played an important role in investments so far.
But in terms of large-scale production of second-generation biofuels,
we’re still not there yet.
Today the nearly 100 billion liters of biofuels produced
are almost all “first generation.”
You mean produced from corn, and competing with food supplies?
Exactly, from corn and sugar cane, primarily in the US and Brazil.
What we’re talking about is second generation biofuels,
using feedstock that doesn’t compete with crops
and that allows much more stability.
They are still not ready for production.
But they must be ready somehow
because we already saw a LAN flight
powered by these second-generation biofuels.
Right, and that initiative is an important signal for the private sector.
It says, “We as consumers are demanding
these technologies and final products.”
It’s a great sign for our investments and what we want to develop.
But today our scale of production is still very small -
we don’t have the capacity yet to produce
a sufficient amount of biofuel, or jet fuel, for aircrafts.
So you’re saying there’s no business there.
No one has the capacity yet for large-scale production at the current costs.
The countries that have made big investments
are betting on their investments starting to bear fruit
in the next five to seven years
to truly replace petroleum-based fuel production,
both in the fuel and chemical fields.
Earlier you spoke of biorenewables and not biofuels.
What’s the difference?
Biofuels basically replace liquid fuels,
primarily those derived from petroleum.
Biorenewables covers this as well as chemicals and more,
all also primarily petroleum-based.
Since they’re produced at a lower volume and greater margins,
businesses using the same biotechnology have been able
to build pilot plants with less capital investment
to test how the technology reacts to chemicals
at lower-than-market volume but with greater margins,
so it’s quicker to test these before starting to work with fuels.
So we’ve seen that --
So it’s the first stage?
Biorenewables is the first step towards working with biofuels?
Biorenewables is a much bigger field,
so biochemicals are the first stage for many businesses
that later hope to develop fuels.
We’ve seen many companies in the US
that began with biofuels and today work with biorenewables,
producing things like cosmetic chemicals using the same technology,
but always keeping in mind fuel as the ultimate product.
So in the end this is a matter of business?
Exactly.
You’re president of the Chilean Association of Biotechnology Companies.
How is Chile doing in the field of biotechnology?
Are there enough professionals?
Is there a critical mass to continue developing these areas,
which seem very cutting-edge,
when people are always saying Chile is behind the curve?
There have been spectacular advances in the last 7 years
both in infrastructure and human capacity,
especially in the scientific field.
The developments have impressed everyone, even abroad.
We’ve had research published recently in important journals.
What’s missing is the business side of biotechnology,
and that’s what we have to keep building and developing in Chile.
We have to learn how to take the science we already have
and turn it into a real business if we’re going to be competitive.
We’re working to foster and promote this.
And how do we transform this basic science into an applied science
and turn applied science into a business?
Typically through entrepreneurship or some other method.
Entrepreneurship is always the most powerful.
And how has state funding worked so far?
Because it always starts with the state backing projects,
and loaning money to spur development.
How has it worked so far?
It’s worked very well.
State funding allowed us to first start developing biotechnology
at universities and technological centers some 5-7 years ago,
through grants and other tools to encourage research.
Now the private sector is also investing,
investing in an industry that didn’t exist 5 years ago.
Do you think the private sector sees this
as a real strategic business opportunity
or are they still just testing out something new and different?
I believe the private sector still needs to mature.
In the next few years we’re going to start seeing
results and profits from early investments,
and once those are validated
the private sector should begin investing much more aggressively.
Who is leading the pack in this research?
Is it the US, like always with this kind of research?
Absolutely, it’s the US.
And not just the US.
I’d say there are two parts of the US that are leading by far.
First is California and second, Massachusetts.
That’s where the major technology centers are, right?
Exactly.
Last year we signed the Chile-Massachusetts agreement.
This year the most important biotechnology conference in the world
will be held in Boston,
and Chile will be attending, staffing an information stand,
with an important delegation of Chilean companies.
We also have a Chile-California agreement,
so we’re working to link Chilean companies with these two places.
We spoke earlier about the US having mostly
first generation biofuels, competing with crops like corn.
Is the US also working on second generation biofuels?
I’d say the US is the most aggressive country right now,
not just subsidizing the development of necessary technologies, like cellulose,
but also establishing mandates
that require an important percentage of the industry’s liquid fuels
come from renewable sources that don’t compete with crops,
i.e. biofuels, between now and 2022.
So at the government level they’re generating incentives,
and mandates for the private sector to buy biofuels in the near future.
Plus the government itself is buying these biofuels today
through their Air Force and Navy.
The US is a great example for the world of how to develop this industry.
We’re running out of time, Felipe.
But one last question.
What role in the energy matrix
do you believe biofuels will play in Chile?
Do you have any estimates of percentages or time frames?
I’d like to work with the Energy Ministry
to develop a plan for Chile along exactly those lines,
because the benefits are not just economic
but also help improve commercial portfolios
and regional development.
We’d like to see 10% or 15% of this become a reality
in the not-so-distant future,
as has been the case in most countries in the region.
Great, Felipe. Thanks for speaking with us here on Agenda Economica.
Thank you very much.