Potential scale of Scottish seaweed-based industries: research paper

The current sector (based on 2020 data and consultation) is almost entirely dependent on the wild harvesting of seaweed. The majority of companies that engaged with the study indicated an intention to expand production and develop new products, particularly high value products in response to existing and emerging markets, from wild harvested resources.

In general businesses felt that the additional wild seaweed resource for such expansion was available (including in part due to some products requiring only low volumes of seaweed to produce high value products). Furthermore, the main species harvested from the wild is Ascophyllum nodosum, an intertidal species which is not cultivated.

At the time of consultation (2020) stakeholders advised that there was no commercial scale farmed seaweed production (whilst some farmed seaweed was entering the supply chain, the tonnages were small).

The BAU scenario is therefore based on future sector growth through increased production of existing seaweed products and the development of new high value products, with raw material over the next 20 years being supplied solely by wild harvesting within Scotland.

The calculation of the projected volumes of wild harvested seaweed required between 2021 and 2040 are presented in Appendix G.

'Commercial scale' farming of seaweed is not established and no substantial tonnage of farmed seaweed enters the supply chain (for the purposes of the scenario – farmed tonnage is assumed to be zero).

Increased raw material requirements can be met through sustainable harvesting of wild stocks between 2021 and 2040.

The main species harvested by volume in 2040 will still be Ascophyllum nodosum, although a wide range of other species will also be wild harvested (See Tables 10-14).

Raw material requirements 2040: 25,000 tonnes

Raw material source 2040: All wild harvested (under consent) within Scotland (no imported raw material).

There is a strong desire for the development of seaweed cultivation in Scotland and for developments in biotechnology that enable multiple high value products to be extracted from seaweed by companies based in Scotland.

The calculation of the projected volumes of wild harvested and farmed seaweed required between 2021 and 2040 are presented in Appendix G.

The constraints facing the cultivation sector are sufficiently overcome to enable substantial development of the industry.

The annual tonnage farmed is sufficient to feed into a novel biorefinery process, as well as some of the other product groups (e.g. food etc).

The main species wild harvested by volume in 2040 will still be Ascophyllum nodosum, although a wide range of other species will also be wild harvested (See Tables 10-14).

The main species cultivated by volume are Saccharina latissima, Laminaria digitata and Alaria esculenta, although there is diversification of the species that can be cultivated by 2040.

Raw material requirements 2040: 54,000 tonnes

Raw material sources 2040:

• - 30,000 tonnes wild harvested seaweed within Scotland (consented by Crown Estate Scotland wild harvest licence);
• - 24,000 tonnes seaweed cultivated in Scotland(consented by Marine Licence);
• - No imported raw material.

Snacks, condiments; beverages; food grade powders. Range of local, UK and global markets

9

Nearly all companies consulted (n=7) projected growth (projected increased turnover ranged from 2 to 5 times in next 2-3 years) between 2020-2023** based on demand from existing markets and new markets. Most intended to expand their product range. (confidence: medium – based on information about markets)

In general there has been a recent increase in demand for plant-based food products (e.g. increasing vegan trend). ValgOrize, 2019 states that the European market for seaweed food products is growing annually by an estimated 7-10%.

Assumed speciality products (£5-1,000/ kg))

Yes, European seaweed producers (mainly from France and Spain) supply 25% of the market for sea vegetables in Europe. France is the major producer of dulse for this market (90% of market) and Spain the leading producer for Undaria pinnatifida (wakame). However, it was assumed that this competition would not exclude Scottish products from the market, with some products already penetrating global markets. Furthermore, this product group could potentially benefit from promotion of Scottish branding / provenance (e.g. from an environmental standards/water quality perspective), due to high profile of Scottish food and drink globally.

Current species utilised: Ascophyllum nodosum (egg wrack); Fucus vesiculosus (bladder wrack), Fucus serratus (serrated wrack); Laminaria hyperborea (cuvie); L. digitata (oarweed); Chondrus crispus (Irish moss); Palmaria palmata (dulce); Osmundea pinnatifida (pepper dulce), Saccharina latissima (sugar kelp); Alaria esculenta (dabberlocks); Porphyra (laver); Ulva linza; Ulva Lactuca; Himanthalia elongata (thong weed);

Potential species of interest/importance over the next 20 years: Gracilaria and Gelidium species; Gracilariopsis longissimi.

Median tonnage: disaggregated information not available

Additional seaweed resource would be required; this would be supplied by wild harvesting and all interviewees felt that the additional resource was available. Some businesses would like to cultivate seaweed to include in their products but stated this is not currently economically viable.

Yes, most companies have their own processing capabilities (although investment for scale up an issue; see below)

Packaging costs (if want environmentally friendly packaging);

Supply chain logistics in remote locations;

Market demand (education will help generate);

Complexity of consent process and timescale of decisions (for consent for wild harvest (CES licence) and cultivation (marine licence); multiple stakeholder opinion);

Appropriate premises (size and cost) for scaling up close to shore;

Lack of finance and capital costs for scale-up.

Dried milled seaweed; Scottish and global markets

2

Assumed that there is no substantial change in market demand (low confidence).

No evidence was found relating to future trends in market supply and demand for seaweed-based animal feed products, although some wider stakeholders thought this could be a high growth area in the short-term (no evidence provided). This may relate to the interest in the probiotic effects of macroalgae supplements in animal feed and its potential use in aquaculture feed (see Stanley et al. 2019). Although there is some evidence of potential benefits of including seaweed as part of animal/aquaculture feed, further research is required to better quantify these benefits as well as any potential adverse effects. The influence of cultivating seaweed (e.g. in relation to physical conditions, water quality and timing of harvest) on the chemical composition of seaweed species for inclusion in animal feed also requires further research (Stanley et al. 2019).

As such, it has been assumed that feed would continue to be a 'staple' use for seaweed (as per its current application) with demand staying constant over the timescale of the scenarios.

Assumed low value (c. £1/kg)

Yes e.g. France. No information/data sourced on the number of companies involved or market share. It has been assumed that if feed/feed ingredients can be produced at a competitive price, competition from other countries will not restrict this product sector in Scotland.

Primarily Ascophyllum nodosum (egg wrack); also Fucus vesiculosus (bladder wrack)

Median tonnage: confidential

Additional seaweed resource would be required if sector expanded; this would be supplied by wild harvesting and interviewees felt that this resource was available (although the potential for the resource to be constrained as the whole Scottish sector expands was noted)

Yes (businesses have their own processing facilities)

Clear guidance and proportionate regulation of access to wild seaweed resources, with timely determination of consent (CES licences) (multiple stakeholder opinion);

Creation of required infrastructure (for new industry)

Supply chain logistics (especially on islands);

Skilled staff recruitment;

Dried milled seaweed; other (confidential); Scottish and global markets

2

Intend to expand to meet demand in current and new markets (medium-high confidence; based on confidential information provided during consultation)

No evidence was found relating to future trends in market supply and demand for seaweed-based horticultural products, although one other business consulted (not currently in this category) stated they may diversify into horticultural products. Some wider stakeholders thought this could be a high growth area in the short-term (no evidence provided).

Assumed added value (£1-£5/kg) to speciality product (£1-£1000/kg)

Assumed yes, although no information/data sourced on the number of companies involved or market share for this product group. It has been assumed that if horticultural products can be produced at a competitive price, competition will not unduly restrict growth of this product sector in Scotland.

Primarily Ascophyllum nodosum (egg wrack);

Median tonnage: confidential

Additional seaweed resource will be required with sector growth; this would be supplied by wild harvesting and interviewees felt that this resource was available (although the potential for the resource to be constrained as the whole Scottish sector expands was noted)

Yes (businesses have their own processing facilities)

Clear guidance and proportionate regulation of access to wild seaweed resources, with timely determination of consent (CES licences) (multiple stakeholder opinion);;

Creation of required infrastructure (for new industry)

Supply chain logistics (especially on islands);

Skilled staff recruitment;

Ingredients (e.g. dried milled seaweed) and finished products for nutraceutical and cosmeceutical products (e.g. skin care products, health supplements); Scottish, UK and global markets.

7

All companies project growth between 2020-2023** (projected growth rates not shown as only 2 businesses provided quantitative estimates), based on demand from existing markets and new markets. Most intended to expand product range (medium - based on information about market demand).

Growth of the European food supplement market, including seaweed-based nutritional supplements, has been estimated to be between 6-7% per annum up to 2025 (e.g. CBI, 2018 (not specific to seaweed).

Assumed range from added value (up to £5/kg) to nutraceuticals and cosmeceuticals (>£2000/kg)

Yes e.g. France (and other countries where cultivating red seaweeds in land-based tanks e.g. Portugal). No information/data sourced on the number of companies involved or market share. It has been assumed that if the seaweed ingredients/compounds etc can be produced at a competitive price, competition from other countries will not restrict this product sector in Scotland. Scotland may be able to benefit from promoting the provenance of its seaweed (e.g. from an environmental standards/water quality perspective) in more global markets or through local provenance for domestic markets.

Ascophyllum nodosum (egg wrack); Fucus vesiculosus (bladder wrack), Fucus serratus (serrated wrack); Laminaria hyperborea (cuvie); L. digitata (oarweed); Chondrus crispus (Irish moss); Palmaria palmata (dulse); Osmundea pinnatifida (pepper dulse), Saccharina latissimi (sugar kelp); Alaria esculenta (dabberlocks); Porphyra (laver); Ulva linza; Himanthalia elongata (thong weed)

Median tonnage: disaggregated information not available

Additional seaweed resource would be required; for 3 companies this would be supplied by wild harvesting: two felt this resource was available; one felt seaweed resources were generally constrained in Scotland (i.e. low standing stock compared to Norway). Two businesses looking to source 80-100% of seaweed from farms (i.e. cultivated seaweed)

Will need to invest as expand

Supply chain logistics in remote locations;

Market demand;

Clear guidance and proportionate regulation of access to wild seaweed resources, with timely determination of consent (CES licences) (multiple stakeholder opinion);

Appropriate (size and cost) premises for scaling up close to shore;

Speed of regional and government sector support (e.g. marine plan support)

Some specific innovative products are in development in Scotland (no detail presented due to confidentiality) for Scottish, UK and global markets.

Whilst it is not possible to know what novel and innovative products may be developed over the next 20 years, general examples may include:

• - Using seaweed as a feedstock for biotechnology processes that extract a range of high value products;
• - Novel applications within new industry sectors;
• - Replacement of substances (i.e. some platform chemicals) currently derived from oil refining

2

Utilisation of seaweed cultivated in Scotland to enable development of a zero-waste circular economy in which new processes enable multiple products to be extracted from seaweed, including high value/innovative products (low confidence)

In general, the demand for speciality horticultural, cosmeceutical, nutraceutical and pharmaceutical/medical products extracted from seaweed will continue to increase (e.g. Stanley et al., 2019).

Assumed added value (£1-5/kg) to special applications (>£5,000/kg)

Yes, likely from both European countries and Asia. In Europe it has been suggested that the future product and market focus will be on biorefinery processes and by-product valorization (EU Seaweed Strategy, 2020). For example, in France, the company Algaia is developing a biorefinery approach to develop proprietary processes and products, whilst in Indonesia there is a company focussed on producing biodegradable and edible seaweed-based food packaging (although it is not clear whether this is a commercial enterprise yet (stakeholder input)). It has been assumed that countries which have access to the high volumes of seaweed required for industrial / biorefinery processes, whether from wild harvested or cultivated sources, will have a competitive advantage. For biorefinery products such as alginate, the low-quality alginate market is dominated by China and the high-grade alginate market is dominated by one company in Norway (wider stakeholder communication).

It is assumed that the impact of this competition on Scottish businesses will relate to a range of factors such as the quality of products (including whether cultivated seaweed has the required chemical properties for the grade/quality of the intended products (see constraints)) and the ability to supply products at a competitive price and/or scale. In Scotland the latter will be influenced by the availability and cost of the raw material required for more industrial/biorefinery extraction processes.

Year-round reliable (constant) supply of suitable quality cultivated seaweed, with the appropriate biochemical properties (i.e. the same biochemical properties that wild harvested seaweed has). This will likely require diversification of the types of species that can currently be harvested to enable a continuous year-round supply of material, as well as further research into the properties of cultivated seaweed.

Raw material availability will depend on the processes and products being produced. For example, the biorefining of seaweed to make multiple products requires volumes of cultivated seaweed that are not currently available.

If specialist processing is required, this will require development in line with requirements of the products developed.

Availability of the required volumes (tonnage) of cultivated seaweed at a price enabling economic viability or market competitiveness of the end product;

Understanding of the effects of cultivation on the biochemical properties of seaweed (i.e. whether farmed seaweed has the same properties as wild harvested seaweed);

Determinations for a marine licence to cultivate seaweed made in a timely manner (stakeholder opinion).

Social license both for the scale of seaweed supply required and for the end uses

Investment

Growth of this product type is driven by increasing consumer demand relating to environmental concerns (increasing demand for plant-based food) and health trends (increasing awareness of nutritional benefits).

The raw material (seaweed) continues to be sourced from wild harvesting, utilising the current species and developing new food products.

Whilst access to finance/investment remains an issue for Scottish businesses, they continue to access new markets, and benefit from promoting the quality and provenance of Scottish seaweed as consumer awareness increases.

Growth is assumed to be 5% per year over 20 years for existing companies. One new business is developed per year until 2030, then one new entrant every other year until 2040. Each new entrant takes 5 years to reach the current average turnover, then 5% growth p.a. thereafter.

Greater access to finance/investment for scaling-up production results in a faster growth rate.

The raw material continues to be sourced from wild harvesting, although faster growth of the sector (e.g. arising from investment to expedite production scale-up, increasing market penetration) may contribute to market demand for cultivated seaweed, and enable businesses to incorporate some cultivated seaweed into products, despite higher costs compared to wild harvested seaweed.

Growth is assumed to be 10% per year over 20 years for existing companies. One business is developed per year until 2030 then one new entrant every other year until 2040. Each new entrant takes 3 years to reach the current average turnover, then 10% growth p.a. thereafter.

Dried milled seaweed for animal feed / feed supplement is a low value product. Projected growth rates confidential

As per the BAU scenario

Growth of this product type is driven by increasing demand in existing and new markets.

The raw material (seaweed) continues to be sourced from wild harvesting, utilising the current species, although new higher value more specialised products are developed. The processing capability is developed and funded by the companies involved as required.

The more specialised higher value products support high growth over the short-term (i.e. up to 2025), although it is assumed that this level of growth is not continued over the 20 year time scale due to possible ceilings on the maximum tonnage of seaweed that can be wild harvested (the main seaweed species utilised, Ascophyllum nodosum (egg wrack), cannot be cultivated). Projected growth rates confidential

As per the BAU scenario, growth of this product type is driven by increasing demand in existing and new markets and the raw material continues to be sourced from wild harvesting.

As the seaweed-based industry expands in Scotland, public acceptance of sustainably managed wild harvesting increases, enabling new entrants or expansion of the current sector in other locations around Scotland.

Projected growth rate confidential. Assumed one new business/plant is developed in other locations around Scotland every 5 years.

Growth of this product type is driven by increasing demand in existing and new markets.

Raw material continues to be sourced primarily from wild harvesting, due to the main species utilised not being suitable for cultivation (e.g. Ascophyllum nododusm; egg wrack) or requiring cultivation in land-based tanks with associated high energy costs (e.g. red and green seaweed species).

However, relatively low tonnages are required and in general this does not limit the growth of this product type.

New specialist high value seaweed-based products/ingredients for the nutraceutical and cosmeceutical industries are developed.

Growth is assumed to be 7% per year over 20 years for existing companies. In addition:

1 new entrant (microenterprise) is established in 2025, increasing to full turnover in 2029, then 7% growth p.a. thereafter

1 new entrant (microenterprise) in year 2030 increasing to full turnover in 2034, then 7% growth p.a. thereafter

As per the BAU scenario, except in response to market demand growth is assumed to be 10% per year over 20 years for existing companies. In addition:

1 new entrant (microenterprise) is established in 2025, increasing to full turnover in year 2029, then 10% growth p.a. thereafter

Due to growth in the sector and associated increased demand, 1 new entrant (SME) is established in 2030, increasing to full turnover in year 2034, then 10% growth p.a. thereafter;

1 new entrant (microenterprise) in 2035, increasing to full turnover in year 2039, then 10% growth p.a. thereafter.

This sector is not included in the BAU scenario based on the assumption that the volume requirements for raw material (seaweed) that would be required is not available (via wild harvesting or cultivation).

This scenario assumes there are two major developments:

i) biotechnological developments enabling multiple high value products to be extracted from seaweed, for example, via a biorefinery approach;

ii) seaweed cultivation develops in parallel with the biotechnology, to enable the volume of raw material required to be supplied from seaweed farms.

Assumed that one biotechnology business is operational by 2025; projected growth rates confidential.