While there is no specific bioeconomy legislation, funding for bioeconomy research and innovation is a key policy tool for promoting the bioeconomy. EU funding mechanisms include notably the HORIZON 2020 framework programme, the European Structural and Investment Funds (ESIF) and the European Fund for Strategic Investment (EFSI). Some 5.6% (EUR 4208 million) of the HORIZON 2020 budget is dedicated to the bioeconomy. HORIZON 2020 also provides approximately EUR 1 billion for the public-private partnership Bio-Based Industries Joint Undertaking (BBI JU), which are topped-up by private funds to an overall budget of EUR 3.7 billion.
The European Investment Bank (EIB) and the European Commission (EC) have now pledged their stronger commitment to the circular economy and bioeconomy sectors in Europe through a set of actions aimed at facilitating access to finance.
An assessment of the first years of Horizon 2020, published by the European Commission at the end of May, finds that Horizon 2020 demonstrates clear European added value in terms of economies of speed, scale and scope, producing demonstrable benefits compared to national and regional-level support. 83% of projects funded would not have gone ahead without EU support. This leap in demand for European funding has, however, led to oversubscription and a drop in success rates, with some parts of the programme strongly underfunded. An additional EUR 60 billion would have been needed to support all the proposals that were scored “excellent” by independent evaluations.
A new study by InnovFin Advisory (IFA) on access-to-finance conditions for investments in bio-based industries finds that projects and companies active in the Bioeconomy face issues accessing private capital, with the main funding gaps appearing in projects scaling up from pilot to demonstration plants and particularly in moving from demonstration to flagship/first-of-a-kind and industrial-scale projects.
The study puts forth a number of recommendations to address these funding gaps, among which is the development of a new dedicated risk-sharing instrument addressing the specific needs of project promoters in this sector. The set-up of such an investment platform is currently being considered for approval by the European Investment Bank and the European Commission as part of the new InnovFin programme. The EIB and the EC are expected to announce further steps towards offering fully integrated access-to-finance solutions for innovators in the Bioeconomy and Circular Economy sectors in the weeks to come.
The study finds that the bioeconomy is a key contributor to Europe’s growth, offering substantial opportunities for innovation and jobs, and at the same time supporting the EU’s transition to a Circular Economy and helping to address major societal challenges, such as greening the economy and addressing climate change.