Large investment into sustainable future
The European Commission and European Investment Bank are launching a new multi-million euro effort to drive private investments into bio-based markets.
The European Commission and European Investment Bank are advancing plans this winter for a new fund to stimulate private investment across the bioeconomy, in order to help European bio-based companies gain ground in the race for capital. Launching next year, the fund, the first of its kind from Brussels, will generate new money for what officials call the circular sustainable bioeconomy: all economic activity that uses land and aquatic biomass to generate new bio-based materials, chemicals or processes. The fund could also benefit other bioeconomy sectors, such as agriculture and food, and contribute to the EU’s broader agenda to promote the circular economy.
Supporting a green industrial revolution
“The bioeconomy for me really is green alchemy,” said John Bell, director of bioeconomy at the European Commission’s Directorate-General for Research and Innovation. “And we want to help it go from niche to norm.” The goal is to support an industrial revolution that, due to climate change, low commodity prices and new consumer tastes, could support millions of jobs and replace petroleum and harsher industrial processes. The Commission will provide cornerstone investment of up to €100 million for the fund, with money drawn from its current research programme, Horizon 2020, in particular its Societal Challenge 2 and Access to Finance sub-sections. Additional funds will be sought from other funding sources, public and private.
Public funds attract private investments
The point is to instigate a new wave of private investment for the sector. Usually, when a public body puts money into something, this is seen as a good sign for the private sector, which is then more likely to follow suit. The push for the new fund follows an analysis by the European Investment Bank, published in June, which found that, while there is money available in Europe for the research and development phase of bioeconomy projects, it is much more difficult to attract funding for the later demo and commercialisation phases. “On the heels of these findings, it’s time for entrepreneurs and investors to come together and focus on doing everything we can to save our planet, spur growth in hugely promising projects, and create new high-quality jobs,” said Shiva Dustdar, head of innovation finance advisory at the EIB. The EIB’s Advisory Services, working with the Commission, will launch a formal call for investment managers early in 2018, and aims to have the fund on the road by the end of the year.
Taking natural resources and maximising its value
The most well-known product of the bioeconomy is bio-fuel – such as corn-based ethanol – that has expanded rapidly in the past decade. But there’s a lot more to it than that. “At its root, I would say it is about taking any natural resource and maximising its value,” said Kevin O’Connor, associate professor at the School of Biomolecular and Biomedical Science in University College Dublin. Since the first EU bioeconomy policy strategy in 2012, there has been a variety of measures and strategies by Brussels to spur research and development of crops, biofuels and biological manufacturing processes.
Financial incentives for bio-based industries
By EIB estimates, if you add up all of the bioeconomy-related sectors from food onward, it amounts to an annual turnover of around €2 trillion in Europe and already offers employment to more than 17 million people (or 8 per cent of the total EU workforce).
National governments, driven by EU renewable targets, are luring biological producers with financial incentives. Finland and Germany, for instance, focus on grants and loans to support biological and aquaculture projects, whereas France, Spain and the UK use a much wider set of public financial instruments, including equity and venture capital.