– EU public funding towards de-risking bioeconomy investment

EU public funding required to leverage additional private funding from bio-based industry

A fully functioning, widely deployed bioeconomy and bio-based industry sector can make a major contribution to the EU Green Deal agenda towards meeting our climate and sustainability targets over the next decade and up to 2050. Following publication of the EU Bioeconomy Strategy in 2012 updated in 2018, there was a notable surge in EU public funding for bioeconomy-related R&D activity in innovative technologies across Horizon 2020 and other EU programmes such as LIFE, ESIF, etc.

However, despite this collaborative, impact-driven cross-sectoral activity linking the best academic researchers with industry, the capacity to progress and transform such development to commercial reality has often remained stubbornly elusive. As such, the bioeconomy has struggled to make inroads against the continuing dominance of the fossil-based industry benefiting from economies of scale and a range of government supports. 

In order to seek to address this lack of first-movers on the industry side, public co-funding continues to be a required approach to resolve this market hurdle. Such funding can be pivotal for de-risking investment while leveraging additional funding and mobilising resources from the private sector, as already exemplified by the BBI JU  which has operated over the Horizon 2020 period.

The BBI JU public-private partnership

The BBI JU, a public-private partnership between the European Union and the Bio-based Industries Consortium (BIC), was set up in 2014 with the ambition to invest €3.7 billion by the end of 2024 – €975 M from the Horizon 2020 budget, and the rest leveraged from industry. Over Horizon 2020, BBI JU has funded over 140 projects and achieved a targeted leveraging effect of 2.8. The larger budget, higher TRL demo and flagship projects focus on scalability and replicability. Such FLAGSHIP projects, 13 of which were funded over Horizon 2020, have led to new types of biorefineries operating at pre-commercial scale for the first time in Europe, all being well distributed across the EU while addressing very different business models and different feedstocks, projected to reduce over 600 000 tons of CO2 emissions per year while creating thousands of jobs, mostly in rural and coastal areas.

Horizon Europe

We are now moving on with Horizon Europe and its increased emphasis on systemic innovation leading to economic, social and environmental impacts. Included within the second pillar commanding 56% of the overall agreed €95.5B budget is the part of the programme that will finance the industrial partnerships and closer-to-market research. The main goal of Horizon Europe Pillar 2 is to address global challenges including climate change and the Sustainable Development Goals. There are a number of Clusters corresponding to these global challenges including Cluster 6: “Food, Bioeconomy, Natural Resources, Agriculture and Environment”, which includes the contribution of the bioeconomy towards the provision of sustainable biomass, grown in a way which respects climate and biodiversity goals and sustains ecosystems integrity, and its conversion into bio-based products and nutrients as a substitute for fossil and mineral-based ones. Cluster 6 also looks to promote small-scale, bio-based solutions and innovations in farming at the interface between agriculture, aquaculture and forestry, as a means to unlock the potential of the circular bioeconomy and create attractive jobs in the rural community. This aligns with an emerging reappraisal of the biorefinery model within the bioeconomy sector, with a recognition that the centralised large biorefinery model for the production of bioenergy/biofuels will often struggle to compete with the mega-scale fossil refineries, and that the better approach is to look to deploy smaller scale regional biorefineries using local biomass feedstocks for the production of higher value bio-materials and bio-actives.

The European Partnerships dimension within Horizon Europe is also very much to the fore, encouraging wide participation of partners from public and private sectors, while seeking to address common priorities jointly with Member States. Partnerships will seek to develop close synergies with national and regional programmes, bringing together a broad range of actors to work towards a common goal, and turning research and innovation into socio-economic results. Under Horizon Europe, the European Partnership for Circular Bio-based Europe (CBE) – the successor to BBI JU – will continue to facilitate the development of new sustainable biorefineries, generating over 3,500 direct and 10,000 indirect jobs in both urban and rural areas.

EU bioeconomy and bio-based industry sector

Funding synergies

A new approach encourages projects to combine Horizon Europe funding with complementary programmes available at national level including Structural Funds and Rural Development, ESIF, and the Recovery and Resilience Facility under the Covid Recovery Next Generation EU mechanism. Aligning with regional smart specialisation strategies will further contribute to de-risking investments and facilitating the development of local, regional, and rural bioeconomies.

While public funding and the industry investment it leverages can continue to drive the development of a functioning bioeconomy, it is also vital to bring external investors closer to the bio-based sector. The EIC Accelerator programme within Horizon Europe Pillar 3 Innovative Europe has a role to play here, supporting the most innovative SMEs including start-ups to scale up their ideas across all sectors, including the bioeconomy. This gives visibility and validation and, as the Pilot in Horizon 2020 has already shown, often encourages other investors to get involved and support the journey towards the marketplace. Also, the European Investment Bank (EIB) and the European Commission has initiated the European Circular Bioeconomy Fund, the first venture capital fund exclusively dedicated to the (circular) bioeconomy (€300m), taking up the challenge to unlock the economic potential of the sector. The expectation is that this will again give added visibility to the investment returns achievable, thereby encouraging other external investors to come on board with the bioeconomy movement.

From a series of articles guest-written for Bioeconomy News, a newsletter produced by Bioeconomy For Change.