Realizing Potential -The production of bio-based chemicals and materials can create tens of thousands of new green jobs, increase resource efficiency and make a considerable contribution to climate protection and innovation.

Despite these benefits, the investment in industrial biotechnology and biorefineries in Europe remains low.

The political and economic framework in the EU does not support the industrial material use of biomass - this is in contrast to bioenergy and especially biofuels, which has expanded rapidly in the EU over the last 10 years.

Michael Carus of the Nova Institute explains why the EU needs to establish a level playing field for bio-based chemistry and materials in order to realize the potential of greening its process industries.

Making the Best Out Of Limited Biomass!

The analysis of recent studies on the macroeconomic effects of the non-food uses of biomass show that the potential benefits of the material use in terms of employment and value added are significantly higher than those arising from the use of biomass for energy. Material uses can directly support five to 10 times more employment and four to nine times the value added compared with energy uses.

These comparisons relate to the same raw material or the same-farmed area, respectively. This is due to the significantly more complex and longer supply chains arising from material uses.

This is even true for traditional applications of wood: Using wood for particle boards or pulp and paper supports greater employment and value added compared to the production of energy pellets. High resource efficiency in the use of renewable resources can only be achieved with bio-based materials (higher input/output efficiency than biofuels) and strengthened through "cascading utilization" (the sequential utilization of biogenic raw materials for material and energy uses). This starts with single or multiple uses (recycling economy) followed by energy use at the end of life. Material use first, then energy - you only burn it once!

Most lifecycle assessment studies show that the material use of biomass delivers greenhouse gas mitigation at least equal to first-generation biofuels (each based on the same acreage). Most deliver higher benefits, and the best are significantly higher than the benefits of second-generation biofuels. The environmental assessment is even more favorable to material uses if the effects of longer-term carbon storage and the potential of cascading utilization are included.

Also economies of scale in production and the technical optimization of processes also further improve the carbon balance. There is still a huge potential for innovation - involving thousands of small- and medium-sized enterprises as well as multinational companies.

While there are numerous options for the provision of renewable energy, such as solar and wind energy, hydropower and geothermal energy, the situation in the supply of raw materials to industry is precarious. The material use of biomass is a key technology to secure the supply of industrial raw materials, and its importance increases continuously.

The use of biomass for material use is as essential as their use in food - if the oil price reaches new record levels. Especially the chemical industry depends on carbon-based materials in the production of organic compounds, and biomass is the only renewable source of carbon.

EU: Low Investment in Biorefineries and Industrial Biotechnology

Compared to America and Asia, Europe invests little in biorefineries and industrial biotechnology. For investment, companies need both secure sustainable renewable raw material supply for reasonable prices; and binding political framework for supporting the bio-based economy.

Bio-based materials are in competition for feedstock with energy. In contrast to bioenergy and biofuels, there is currently no similar European policy framework to support bio-based materials. Bioenergy and biofuels not only receive high support in R&D, pilot and demonstration plants, but also receive strong ongoing support during commercial production (quotas, tax incentives, green electricity regulations and more).

Without comparable support, bio-based materials will suffer from underinvestment from the private sectors. The recent policy leads to a market distortion regarding feedstock availability and costs.

Even biorefineries that are producing energy and materials will not be able to truly overcome this problem. If the energy market is more attractive because of related incentives and support, biorefinery development will be disproportionately on energy as the main output - without realizing the huge potential of bio-based materials.

Market Distortion

In several EU member states, there is considerable support for bioenergy, but almost no support for the industrial material use. With the existing political framework, it is much more attractive to use biomass for energy - a misallocation of biomass in terms of resource efficiency?
Already today we see competition between both sectors in Europe.

High subsidies for energy crops lead to high biomass and land prices that make industrial material use unattractive. In Germany for example, the financial support of bioenergy is between 20% (biodiesel) to 80% (bioethanol, small biogas) of the turnover.

Establishing a high-volume bio-based economy, including bio-based chemistry, bio-based plastics and composites, lubricants and others, feedstock shortages can be foreseen. A new political-economic framework is needed to rebalance the financial support for energy and industrial material use of biomass.

New policy - Principle of Equal Treatment

In principle, the applied policy on bioenergy and especially biofuels was appropriate and a success story. But the global framework changed, biomass is now more limited than several years ago, and new technologies have been developed. For the future, we need a new policy to be able to use the potential of biomass most efficiently and most productively.

The EU needs a new agricultural raw material policy to rebalance the support of bioenergy and biofuels versus industrial material use. This means to search, screen, develop and evaluate (new) political instruments, which could secure access to sustainable renewable feedstock, well-balanced between bioenergy and bio-based products.

This new framework should cover all industrial applications and should be based on climate protection, resource efficiency, employment ("green jobs") and innovation.

A higher focus should be put on resource efficiency and climate protection regarding the use of land and the biomass flow. Cascading utilization could be one option for future support. Priority should be given to using biomass for bio-based materials, followed by recycling and later its use for biofuel and bioenergy.

Instruments That Could Provide A Level Playing Field For Bio-Based Products

Currently, mainly necessary-but-weak instruments like R&D support, standardization and information tools are discussed for bio-based chemistry and materials - whereas bioenergy receives a strong ongoing support during commercial production via quotas, tax incentives, green electricity regulations and more.

Bio-based chemicals and materials will only thrive if strong instruments are implemented in a new political framework to rebalance the support of energy and material use. Bio-based products need at least a level playing field in order to get started. During the last 10 years, no political instruments have been developed to support bio-based chemistry and materials during commercial production. This is strongly needed.

Outlook

The new policy framework for the EU has to be coordinated by European Commission, European Parliament, member states and regions - including all involved sectors like agricultural, enterprise, energy, environment and R&D - to find the most efficient instruments to support the industrial material use until a level playing field with bioenergy, particularly biofuels, is reached.

The region in the world that optimizes and balances the support of the use of biomass for energy and material first will profit from a considerable growth, investments, green jobs, innovation, increased resource efficiency and additional climate protection.

Let Europe be the region to profit! 

www.bio-based.eu/policy/en