Tons of progress has been made in biobased materials innovation in recent years yet the biobased share of the real economy is still around 1% for many of those high volume plastics, detergents, solvents and lubricants materials that are so important for fossil oil displacement. Optimistic forecasts envisage a doubling of bioplastics volumes every three or four years bringing it to as much as 10% of the market by 2030. While great for those firms enjoying the growth, the world needs over 40% carbon emissions reductions by then. 10% market share is not going to make a sufficiently disruptive contribution to fossil displacement and climate change abatement. Nor will it contribute as much as it could to Europe’s goals of jobs creation, rural development, reindustrialisation, circular economies and the proliferation of innovative life enhancing new products. Remember, materials and fuels go hand-in-hand in the current economy. Our addiction to petroleum – and keeping it in the ground – is just as much about materials as it is about fuels. As we displace fossil fuels we need to be displacing co-produced fossil materials at the same pace.
A genuinely disruptive and impactful market share target would be 30%-40% by 2030 in those all important fossil displacing materials sectors. Reaching 30% for bioplastics means getting to the point where we are able to make 20 million tons per year of the stuff and that will require investments of 20-30 billion euros in sustainable biomass, materials and products manufacturing. That’s about 200 advanced manufacturing facilities spread over dozens of regions and many hundreds of thousands of jobs in rural economies. Add in detergents, solvents and lubricants and the investment figures add up to considerably more. Current investment levels are, by comparison, only a tiny tiny fraction of that. We should be seeing 20 or more major new investment announcements per year. Instead we see just a handful of modest project announcements.
The main barriers to growth of the biobased sectors are to do with displacing incumbent fossil industries with their immense economies of scale, infrastructures and entrenched practices and interests. Put simply, fossil industries have massive market power over the economy and tower over the biobased sector. Free market forces and tons of wishful thinking alone will not bring about the seismic shifts required to tackle climate change, wean ourselves off fossils and transition the economy to a circular and sustainable basis.
If Europe is to make that disruptive progress then more ambitious leadership and decisive and disruptive actions are needed. The recently created European Bio-based Industries Joint Undertaking with its €3.7 billion investment goal over the seven years to 2020 is a tremendous sign of intent and commitment by the European Commission and its partners, and a credit to the people who made it happen. Its mission goes way beyond the technology innovation focus of previous grant programmes, encompassing development of biomass supply chains, biorefineries, markets, products and policies. But its operating model imposes limits to how much it can achieve. Its primary instrument is grant funding of a portfolio of collaborative innovation projects. With a couple of hundred million euro per year flowing through its offices it has a hundred or more projects in the system at any one time. This does represent massive fire power. But the way these projects are conceived, commissioned and administered – mostly through an arm’s length process involving coordination of collegial work groups, independent evaluators and annual project reviews – results in a somewhat non-agile organisation where a couple of years can pass from concept to action and in which projects are difficult to steer once approved. The €3.7 billion loses some of its oomph in the process. This is just the way joint undertakings are.
So yes, the biobased joint undertaking is great but there are a some extra things that any bioeconomy Ceo would want to do in order to aggressively steal market share from the fossil oil guys.
To be fully effective, sector development agencies – like good regional development or “invest in..” agencies – need well resourced, entrepreneurially minded professional teams that operate with agility, taking real-time executive decisions on when and how to apply their resources. The biobased sector has to compete out in the world with lots of other sectors. Photonics, for instance, is one of the other five chosen pillars of Europe’s innovation strategy and it is nearly twice as big as biobased. Don’t know about photonics? Most people don’t know about biobased either. That’s what we are facing. Development agencies communicate, educate, stimulate investment, lobby, fund raise, network and market the sector with the creativity and energy one sees in those wonderful emerging bioeconomy start-ups and gazelles. They can promote standards and labels and public procurement and education. A professionalised biobased promotion and development agency could easily slot into the current constellation of bioeconomy organisations complementing what they do already. The joint undertaking will always design and administer the grant funding but the new biobased development agency would add heavy weight advocacy and drive, stimulating quicker take-up. And there’s no reason necessarily to wait around for political leaders, the Commission or government bodies to set it up. The agency could be invented by any group of interested parties or derived from something that already exists (for instance BIC or EuropaBio). There is ten or twenty million euro being spent each year in advocacy by a couple of dozen interested organisations (you know who you are). Why not focus some of these resources on executive action on the ground and get more bang for your buck? It’s mission would be closely aligned with the joint undertaking, i.e. get 30 billion or more into the sector by 2030, but it would have more freedom to decide how to go about it. The first item on the order of business for the agency will be to create a series of regional bioeconomy investment forums to energetically market the sector in those locations where it can have most effect.
The other limitation for everyone, joint undertaking included, is that the European bioeconomy has few if any legislative or fiscal teeth. We have laws and taxes to help with everything from toys to noise to lead in fuels but we don’t have much to give us an edge on the competitive forces of big oil. Making law is hard and as Vice President Frans Timmermans reminds us, it is pointless to let EU institutions waste time and energy on proposals which have no chance of being adopted. But bioeconomists will not be put off so easily. Designing and advocating smart legal, fiscal, political and regulatory support mechanisms is definitely something the sector development agency can help with, including maybe a biobased materials directive. After all, it’s what’s needed if those €30 billion of investments are to have any chance of becoming reality, taking on big oil, in our working lifetimes.
With the joint undertaking bedded in now, with 2030 around the corner and with a massive upswell of positive momentum being generated by the climate change emergency this is the time when the European bioeconomy can raise its sights and go for the next set of victories.
*Technology, Industry and Policy Analyst.