From the Ground Up

For Michigan's Economy

The Future Could Be Golden—If It's Green

By Dave Dempsey

November/December Issue, 2005

A state unemployment rate stuck at around seven percent. Thousands of workers thrown out of manufacturing jobs in the last four years. A near doubling of initial unemployment claims between May 2004 and May 2005.

And what will state government’s answer be to Michigan’s floundering economy?

If a small but growing number of entrepreneurs and policy advocates has its way, that answer will find gold in green.

In industries ranging from renewable energy technology to green chemistry and bio-based products, Michigan has an opportunity to create new jobs while helping the world improve environmental quality. But there’s urgency to this opportunity -- if other states get there first, Michigan may continue to lag the nation in the creation of jobs.

The Industrial Biotechnology Revolution

Bill Stough, CEO of the Grand Rapids-based Sustainable Research Group (SRG), a network of environmental leaders focused on providing environmentally sustainable solutions to business, governmental and institutional clients, has been crossing the state preaching the possibilities for Michigan in what he calls “the Industrial Biotechnology Revolution.”

“Michigan must become serious about its role in inventing this revolution,” Stough said recently. “We have the potential to generate new businesses that help solve environmental problems with ecologically restorative products and services. We need to provide access to scientific, technical, design, legal and manufacturing talent for any entrepreneur that wants to build a green business.”

Asked whether he thinks this is a high priority of federal, state and local politicians, Stough said simply, “No, this is totally off their radar screens.”

But he and others are determined to change that.

Green & Clean

The Ecology Center coordinated the launch of a campaign this spring to give a new direction to a $2 billion economic development proposal by Governor Jennifer Granholm. The proposal, now stalled in the Legislature, called for direct state investments in promising new industries. The Ecology Center and allies called for targeting much of the money at green industries with the potential to create jobs while helping solve the world’s daunting environmental problems.

“Michigan’s unique economic base, which includes manufacturing, agriculture and tourism, makes the state the ideal place to innovate in clean manufacturing, clean energy, and bio-based materials and fuels from agricultural products,” said Mike Garfield, Director of the Ecology Center.

In testimony before a legislative committee, Garfield pointed out that in nearly every industry sector, the growth of green products and services is expected to far outstrip the non-green alternatives. Bio-based materials are estimated to grow from .5 percent of current production to more than 12 percent by 2010, and 25 percent by 2030. Bio-based raw materials can come from agricultural products and waste, supporting farmers and farm communities.

Sales of so-called ‘green’ solvents are expected to grow by more than 5.7 percent per year, while sales for traditional (and often highly toxic) solvents will be flat. Growth in green energy and green building materials is also predicted to grow dramatically in the coming years.

Energy 'Future' is Now

The response in the State Capitol to this alternative vision of Michigan’s economic development has been cautious. But there’s hope, at least on the renewable energy front, according to Steven Arwood, a longtime participant in and observer of Capitol politics who headed former Governor John Engler’s Next Energy program, a $30 million center dedicated to the advancement of alternative energy research, manufacturing, education and economic development in Detroit. Arwood, also the former state director of the National Federation of Independent Business, is active in promoting environmentally sustainable industries in the Capitol.

“I’m optimistic we’re breaking through,” Arwood said, noting that in July, Republican State Senator Bruce Patterson of Canton, chairperson of the State Senate Energy and Technology Committee, declared the state needs a long-range energy policy that, among other things, will rely on clean technologies developed in Michigan.

“Our industry has been recognized as key by the [Granholm] administration and lawmakers as they craft an economic stimulus package,” Arwood observed. “The difference between now and just a few years ago is that there is a bipartisan willingness to listen because our energy ‘future’ is now, quite frankly, and the need for economic stimulation paramount.”

Leveraging Lansing

Like SRG’s Stough, Arwood said that green industries have had a hard time influencing state policy until now because of a lack of organization and sophistication in dealing with lawmakers and state officials.

“But that’s changing as the sector moves from nascent to highly relevant,” Arwood says, qualifying his optimism by pointing out that green industries “are not yet understood in a way that citizens and policymakers understand manufacturing in Michigan. We need to put our ability to create jobs and diversify the economy at the forefront and stress our industry as highly relevant in the discussion of economic diversification.”

Part of the problem in promoting a state-level policy favoring the emerging green industries is that the payoff is long-term, and politicians stand for re-election every two to four years in Michigan, observes Peter Plastrik, who designed former Governor James Blanchard’s economic development strategy and is now an organizational consultant and author. But it’s also important to recognize what government can and can’t do -- and to base decisions on a careful analysis, he says.

“This state has been searching, at least since Governor (William G.) Milliken started centers of excellence, to define what is going to be our number two industry and we haven’t found it yet,” Plastrik says.

To promote green industries, he adds, the state should identify and study the work of existing green entrepreneurs. “Who are they? What can we learn from what they have done? What are the dynamics that motivated them to do what they’re doing? What do they need to grow? I’d want a real decent sector analysis.”

A state energy policy promoting thedevelopment and use of renewable energies will still require “heavy lifting” in Lansing, Arwood says. “There will be de-tractors that will simply state that such policy change will raise the cost of electricity and therefore should not be done. Our industry doesn’t think that this is the case at all, and that other factors such as the positive economics of energy diversity, reliability, job growth and environmental impacts must be reviewed before such a judgment can be made.”

Green Chemistry

Although renewable energy sources are starting to get a closer look, other green industries have yet to get much attention in Lansing. One of the promising new industries promoted by the environmental community is green chem-istry, which involves research, development and manufacturing of benign alternatives to many of the chemicals andprocesses using chemicals in use today, says Tracey Easthope, the Ecology Center’s Environmental Health Director.

“Michigan can pull itself out of both environmental and economic decline by encouraging the development of green chemistry,” Easthope says. “This field has a lot of promise for replacing chemicals that we know are dangerous to human health, and especially to children, with benign alternatives. In the process the state could gain jobs and regain its reputation as an environmental innovator.”

She adds: “But we have to move fast to be that kind of leader by creating the rightincentives, and be wise in the way we allocate economic development dollars.”

Researchers at Michigan Technological University, Michigan State University and the University of Michigan are all engaged in work related to green chemistry. Pfizer, a pharmaceutical manufacturer that acquired the Pharmacia/Upjohn holdings in Michigan as part of a corporate takeover several years ago, has shown interest in the field. Sitting at the heart of the Great Lakes, and troubled by a legacy of toxic chemical contamination, Michigan has a logical role to play in growing the green chemical industry.

Bio-Materials

Perhaps the most exciting near-term opportunity to create jobs, according to Stough of SRG, is in bio-based materials, which use sugars, oils and fats from agricultural crops to create effective packaging, fuels and other products that reduce or eliminate many harmful environmental impacts resulting from conventional petroleum-based products. SRG has identified about a dozen existing producers of bio-products in Michigan, what Stough calls “an indication of a potentially emerging economy that needs to be encouraged and nurtured by the state.”

In April, over 70 environmental orga-nizations and leaders endorsed theSEED (Secure, Sustainable Energy andEnvironmental Demand) action agenda,calling for a broad market shift away from petroleum dependency, and towardbioplastics and biofuels that can be produced using renewable resources. Declaring it “the last century of petroleum,” the groups endorsed a set of technologies that manufacture materials and fuelswith agricultural resources from the Midwest, not the Middle East. Michigan, says Stough, can play a part in that.

Michigan companies and institutions that are already testing bio-based products include Interface Fabrics Group of Kentwood, which is using poly lactic acid fabrics; the Grand Rapids U.S. Post office, which has successfully experimented with powering some vehicles with soy-based engine oil; KTM Industries of Lansing, which is using poly lactic acid packaging material; and Herman Miller of Zeeland, which is using bio-based particle board and adhesives in office furniture manufacture.

Stough has also helped start or support sustainable business forums in Grand Rapids, Lansing, and Detroit, and is helping others to get off the ground in the Traverse City area and the Battle Creek / Kalamazoo / Benton Harbor region. Tying the networks together, Stough says, could amass over 250 businesses that have identified themselves as interested in sustainable products and internal processes.

In the end, the answer to the question of how Michigan can grow green and gold at the same time is clear, if you listen to Stough. “How can the state help? Do anything. Right now there are no formal actions to foster new bio-materials or green chemistry companies. We need to get started.”

S I D E B A R :

Green Fields of Economic Promise for Michigan

Two of the most promising potential environmental industries for Michigan are green chemistry and bio-based fuels and plastics:

Green Chemistry

What is it? The goal of green chemistry is to minimize or eliminatethe public health and environmental harm created in chemical manufacture by using safer materials and manufacturing processes. By considering chemical hazards in the design of products and processes, chemists can design chemicals to be safer.

What can it do? Pfizer, Inc., which has extensive holdings in Michigan, won the 2002 Presidential Green Chemistry challenge by redesigning the process used to manufacture Sertraline, the active ingredient in the pharmaceutical Zoloft. Among other things, Pfizer substituted ethanol as a solvent for the new combined process used to make the Sertraline. The change eliminated the need to use, distill, and recover four solvents (methylene chloride, tetrahydrofuran, toluene, and hexane) from the original synthesis. Pfizer’s new process eliminated approximately 140 metric tons per year of the problematic reagent titanium tetrachloride. The process change also eliminated 100 metric tons of 50 percent sodium hydroxide use, 150 metric tons of 35 percent hydrochloric acid waste, and 440 metric tons of solid titanium dioxide wastes per year.

Bio-Based Fuels and BioPlastics

What are they? Both are alternatives to petroleum-based products that can be produced using renewable resources while reducing U.S. dependence on oil. Some can capitalize on Michigan’s crops as a feedstock.

What are examples of these products? An example of bioplastics is poly lactic acid (PLA), a material made by converting sugars from crops to a special form of lactic acid. Mass-produced by Toyota and other companies, it can replace petroleum in the manufacture of plastics, fibers, clothing, and other materials. Bio-diesel and bio-ethanol are fuels created by the transesterification of fat or vegetable oil and the fermentation of corn and other grain products.They can be used as direct substitutesin current gasoline and diesel engines.

Dave Dempsey is a Great Lakes policy advisor for Clean Water Action in Minneapolis, Minnesota.

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