Two trillion euros in annual turnover, 22 million jobs employing 9% of the European workforce and growing — the European Commission envisions a bright future for the European bioeconomy. However, critics paint some dark clouds into the picture. Although Europe is strong in research and development, finding large bio-based industrial plants remains a difficult task. Experts recognize a “valley of death” between scientific excellence and commercial success.

A growing number of large investments is made outside Europe, BioAmber’s succinic acid plant being only one example. Although the acid had been produced in large scale in France since 2010, a new facility for 30,000 t of the acid was built in Sarnia, Ontario, Canada. “Lack of finance” is one reason frequently cited when decision-makers are asked about the sluggish growth of the European bioeconomy. Financing experts counter that there is enough money available and that the challenge lies in finding the funding. Venture capital is still an important source of funding, although the global financial market crisis left its mark on the business. Before 2009, a lot of venture capital went into businesses less than 3 years old. After the crisis, more mature companies — 4 years and older — are preferred by venture capitalists.

Financing Bioeconomy: Finding the Funding

At the interface between private and public funding there is the Bio-Based Industries Joint Undertaking between the European Union and the Bio-based Industries Consortium. This public-private partnership with €2.7 billion from private investors and €975 million of EU funds operates under Horizon 2020. Horizon 2020 is the EU’s strategic framework for research and innovation for the years leading up to 2020 with a budget of €80 billion.

Complementary to Horizon 2020, the EU launched five structural and investment funds (ESIF), which are intended to push less-developed regions to economic flourishing. Between the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime & Fisheries Fund (EMFF), in total there is €80 billion to €100 billion available. The bio-based economy is eligible for parts of all of them, as it is such a diverse topic. It is the explicit goal of the EU to develop close synergies between Horizon 2020 and ESIF. For applicants, this means they can tap into both sources at the same time, albeit with the constraint that no cost item can be funded twice.

Accompanying Horizon 2020 the European Investment Bank launched the InnovFin program to facilitate and accelerate access to finance for innovative businesses in Europe. The financing tool offers loans and guarantees from €25,000 for small and medium-sized enterprises (SMEs) to €300 million for large caps.

European Policy Needs to Enable Long-Term Planning

The other important factor that is considered a roadblock for bioeconomy is European policy. There is a general agreement among all players that Europe urgently needs a change in policy to keep up with worldwide competition. Long-term planning reliability is what investors seek most and what they are currently lacking in Europe.

The renewable energy directive is effective until 2020 with no decision in sight on what will be beyond this date. Until then biomass is channeled preferably into fuel production, leaving behind those companies that compete for biomass to manufacture bio-based chemicals and materials. A level playing field for all industries is therefore topmost on the wish list of all those involved, both in industry and organizations like the German Bioeconomy Council.

Creating Market Pull by Public Procurement and Labeling

Other than for biofuels, market pull is missing in Europe. The US has successfully created considerable market pull with its BioPreferred program, which is managed by the US Department of Agriculture (USDA). This program requires federal agencies to prefer items with the highest percentage of bio-based content when the purchase exceeds $10,000 per year.

Critics accuse the USDA of distorting the market, but European manufacturers would love to see a similar program hereabouts, where public authorities spend about €2 trillion on goods and services annually. The German agency for renewable resources (Fachagentur Nachwachsende Rohstoffe) provides a database that caters to the needs of public procurement staff, and Europe’s Green Public Procurement initiative works in this direction, too. However, both are wholly voluntary and rely on the awareness of the individual buyer.

In addition to the preferred procurement program, there is also the USDA Certified Biobased Product label. This indicates that the product has been tested to determine its bio-based content and has met the established minimum content. It is not restricted to products from US companies — European companies can apply for it, too. A label should provide consumers with clear information on the environmental performance of the product and guide their purchasing behavior toward sustainable choices.

The European bioeconomy would profit from such a label, too, as the Organization for Economic Cooperation and Development (OECD) stated in 2011, but the standards required for developing such a label are still in discussion. This starts with the very basic question of how to determine the bio-based share. Content of bio-based carbon? Or is oxygen counted as well? Are we looking at atoms or at weight percent? It’s a complicated discussion. With the ecolabel index growing toward 500 different labels worldwide, establishing an assertive one would be no small feat.

Mandates And Bans

Mandates and bans are another means for influencing markets. Brazil was the first country to establish ethanol mandates for fuel 40 years ago, which certainly contributed to becoming a major player in the world bioethanol market. The idea caught on, and ethanol mandates are the norm today in many countries.

Italy set a positive example of how to get maximum positive effect out of the ban of a product. Thin, single-use, nonbiodegradable plastic carrier bags such as those from the supermarket’s produce section were forbidden in 2011. A biodegradable model replaced them and was used as a vehicle of education: Slogans were printed on the bags that prompted customers to reuse the bags to collect their organic kitchen waste. This awareness campaign was a huge success. As a result the use of single-use bags dropped by 50% and many consumers started to collect biowaste in their kitchens for the first time. The quality of the biowaste also increased. The resulting compost was contaminated with fewer nonbiodegradable bags as the consumer received only compostable ones. And there were more advantages: As fewer single-use bags went into circulation, the risk of littering was lowered. If biodegradable bags ended up in the sea, they decomposed quickly and posed no risk for fish and marine mammals.

Infobox:

The article is based on a trend report commissioned by Dechema and written by international trade journalists. Dechema brings together experts from a wide range of disciplines, institutions and generations to stimulate scientific exchange in chemical engineering, process engineering and biotechnology. Dechema is globally known as the organizer of Achema. The world forum and leading trade show for the process industry will again take place June 11-15, 2018, in Frankfurt, Germany.