Investments totalling more than 5 billion with a future bio-based quota for plastics in Europe

Success story biofuels in the EU

The EU introduced its first union-wide biofuel quota in the form of Directive 2003/30/EC. This directive set an indicative target of 2% biofuels in transport fuels by 2005, rising to 5.75% by the end of 2010. This resulted in a surge of investment in first-generation biodiesel and bioethanol plants during the early to mid-2000s, with the majority of EU biofuel production capacity being established during that decade. Later, with the 2009 Renewable Energy Directive (RED I, 2009/28/EC), the EU tightened this into a binding 10% renewable energy target in transport for 2020. From the outset, the quotas were introduced against the oil companies – that is, explicitly as a means of imposing burdens on them and driving transformation – even though they were designed at the same time as a ‘market-based’ instrument.

Depending on different sources about 50-100 bioethanol and 50-100 biodiesel plants were built in the European Union, the cumulative investment is estimated between 6.5 and 10 billions of euros for EU first-generation biodiesel and bioethanol infrastructure.¹

The Commission’s impact assessment for RED II estimated that around 900 million euro per year of investment in advanced bio-refineries from 2021 to 2030 would be required to meet the advanced renewable fuels targets (Annex IX feedstocks).²

The EU Sustainable Transport Investment Plan (STIP) estimates that meeting ReFuelEU Aviation and FuelEU Maritime fuel targets will require about €100 billions of investment by 2035 for sustainable alternative fuels (SAF and maritime e-fuels).³

These are impressive investment figures which demonstrate the significant impact of fuel quotas. But what can we expect from quotas in the field of bio-based plastics?

The impact of bio-based plastic quotas on investment

The scenario presented here assumes that the entire plastic production in Europe (across all application sectors) will have a 5% bio-based quota in the future, representing an increase from the current 1% share. In 2024 the plastic production in Europe was 54.6 Mt/y with a share of 1.1% for bio-based and bio-attributed (see figure ⁴), equal to 0.6 Mt/y production volume.

A 5% share would equate to 2.7 Mt/y, so an additional 2.1 Mt/y of bio-production capacity would be required. As a draft scenario, we assume that (1) 30% will come from bio-attributed sources, (2) 25% from dedicated bio-based polymers, and (3) 45% from drop-in bio-based polymers. What would this require in terms of investment?

(1) 30% = 0.63 Mt/y additional “bio-attributed” capacities – no relevant investment

No relevant additional investment is needed, because existing plants can be used. This is the strength (and weakness) of bio-attributed: Fast production of big bio-attributed volumes possible without additional investment, better utilisation of existing facilities.

(2) 25% = 0.53 Mt/y additional “dedicated bio-based” capacities – about €2.1 billion investment

Example PLA: Additional production facilities for monomer lactid acid (LA) and the polymer polylactic acid (PLA) are required. The capital intensity of a combined LA and PLA plant is approximately €4,000 per tonne per year of PLA (inc. LA) produced. This means that an investment of €2.1 billion is necessary for the production of 0.53 Mt/y of PLA.

(3) 45% = 1.0 Mt/y additional “drop-in bio-based” capacities – about €1.5 + €1.7 = €3.2 billion investment

Consider the following two example pathways: (3a) Bioethanol to bio-based polyethylene (PE), and (3b) Biomethanol to bio-based polypropylene (PP) and PE. Each pathway should contribute 0.5 Mt/yr.

(3a) Bioethanol to bio-based PE: To produce bio-based PE existing fossil plants can be utilised – if bio-based ethylene is available. To produced 0.5 Mt PE, almost the same amount of ethylene is needed. The capital intensity of producing bio-based ethylene from bioethanol is approximately €3,000 per tonne per year. For an annual production capacity of 0.5 Mt, an investment of around €1.5 billion is required. The investment is solely for the production of bio-ethylene. If there are no existing polyethylene (PE) production capacities available, additional investment is necessary to produce bio-based polyethylene (PE) from bio-ethylene.

(3b) Biomethanol to bio-based PP and PE (ratio 3:2): To produce bio-based PP and PE existing fossil plants can be utilised – if bio-based olefins (propylene and ethylene) are available. To produced 0.5 Mt PP/PE, almost the same amount of propylene/ethylene is needed. The capital intensity of producing bio-based olefins from methanol is approximately €3,400 per tonne per year for small plants in the size of 0.2 Mt/y. Around €1.7 billion would be required to produce 0.5 Mt/y of olefins in those plants. However, for larger plants with a capacity of 1 Mt/y, such as those in China, the capital intensity could be reduced to €1,800 per tonne per year.

The investment is solely for the production of bio-based olefins. If there are no existing PP/PE production capacities available, additional investment is necessary to produce bio-based PP and PE from the bio-based olefins.

Based on these assumptions, a 5% bio-based (including bio-attributed) polymer quota would generate €5.3 billion in investment, similar to the level of investment in first-generation biofuels. A subsequent 30% bio-based (including bio-attributed) polymer quota would generate €32 billion, similar to the level of investment in sustainable aviation fuels (SAF) in the next decades.

_{¹ Transport & Environment. (2017). Crop-based biofuels – facts and figures about investments and jobs. Brussels: T&E. (based on Ecofys analysis)
² European Commission. (2016). Impact assessment accompanying the document Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (recast) (REFIT) (SWD(2016) 418 final, Parts 1–4). Brussels: European Commission.
³ https://transport.ec.europa.eu/news-events/news/commission-unveils-sustainable-transport-investment-plan-strategic-approach-boost-renewable-and-low-2025-11-05_en
⁴ PlasticsEurope 2025: Plastics the Fast Facts 2025}

Source

nova-Institute, original text, 2026-05-29.

Supplier

European Commission
European Union
nova-Institut GmbH
Plastics Europe

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