Bioeconomy 101

The bioeconomy refers to the conversion of biobased feedstock (agricultural and forestry biomass, municipal and livestock waste) into biobased products like biofuels, renewable chemicals, biomass thermal energy, and BioCNG

Biofuels are fuels made from renewable materials like corn and soy. Advanced biofuels are renewable fuels designated by the US Environmental Protection Agency under the Renewable Fuel Standard to have lifecycle greenhouse gas emissions that are at least 50 percent less than gasoline. Examples include cellulosic ethanol, biodiesel, butanol, biogasoline, and biogas.

Renewable chemicals are chemicals, polymers, monomers, or plastics that are not sold primarily for use as food, feed, or fuel and are composed of at least 51 percent biobased feedstock. Examples include plastics, PVC, 3D printing, specialty chemicals, household chemicals, fabrics, and paint.

Biomass thermal energy is heat produced from biomass (living or recently living biological materials that can be used for fuel or industrial production). An example is combusting solid biomass in a boiler to supply heat for a business.

BioCNG is compressed natural gas derived from biological sources, often through anaerobic digestion.

What are the benefits?


To help demonstrate the importance of the Minnesota Bioincentive Program prior to its adoption, the Great Plains Institute contracted the University of Minnesota Extension in 2014 to analyze economic impacts of 14 potential biobased industry products facilities. The study found that growing the bioeconomy in Minnesota could boost the economy by over $830 million per year and create more than 3,000 jobs. Testing those results after the Bioincentive Program had been operating for a few years, GPI contracted the University again in 2019 for a subsequent report on the economic contribution of the biobased industrial products industry in Minnesota. Results from the 2019 report demonstrated that the Bioincentive Program contributed to $1.2 billion of economic activity in the state and supported over 8,000 jobs between 2015 and 2019.

Compared to the 2014 analysis, the 12 facilities studied in 2019 contributed over $600 million to the economy and supported over 2,400 jobs annually. Had 14 facilities been operating, the study indicated they would have contributed over $700 million to the economy and supported over 2,800 jobs annually.

Table 1: Total Economic Contribution, 2014 Estimates Compared to 2019 Actuals, Operations Contribution

Source: University of Minnesota Extension Center for Community Vitality, “Economic Contribution of Biobased Industrial Products Industry in Minnesota:2019”, November 13, 2020.


Between the two studies, the 2014 estimates came close to actual economic contributions made by the facilities utilizing the Bioincentive Program between 2015 and 2019. The 2019 study pointed to two main reasons for slightly lower annual economic contributions: “1) the companies reported lower general operating expenses than predicted and 2) the companies used a slightly different mix of corn versus wood as feedstock.”

The bioeconomy also improves energy security by reducing out of state energy imports, which grows the economy further because it keeps money in the state.


The bioeconomy offers environmental benefits through lower emissions and improved water quality. Advanced biofuels offer a 50 percent reduction in greenhouse gases compared to gasoline, and renewable chemicals offer greenhouse gas emissions reductions compared to petroleum-based chemicals. By focusing on using biomass feedstocks for industrial products, particularly perennial grass feedstocks, it can improve soil quality, water quality, and wildlife on a landscape scale.


Minnesota companies are developing safe alternatives to the most common toxic chemicals found on the market by producing renewable chemicals from biobased feedstocks. Opportunities exist to continue phasing out toxic petroleum-based chemicals with renewable chemicals.