12 Juni 2017

Special BIC FLASH: Study on Access-to-Finance -Conditions for Investments in Bio-Based Industries

EIB and the EC are expected to announce further steps towards access-to-finance solutions for innovators in the Bioeconomy and Circular Economy sectors

Dear members,

Yesterday, the European Investment Bank (EIB) and the European Commission (EC) have pledged their stronger commitment to the Circular Economy and Bioeconomy sectors in Europe through a set of actions aimed at facilitating access to finance.

First, the study, ordered by the EIB and performed by E&Y in close collaboration with BIC and its industry members, was finally published (see attachment). The study brings together information from investment projects in these sectors within the European Union and evaluates the need and potential for dedicated financial instruments as well as for other policy actions at the EU and Member State levels that can catalyse private sector investments.

The key findings are that:

  • BBI (Biobased Industries) projects face issues accessing private capital
  • Regulation and market and demand framework conditions are perceived as the most important drivers and incentives but also present the biggest risks and challenges for BBI project promoters as well as financial market participants to invest in the Bioeconomy
  • The main funding gaps exist in (i) Bio-based Industries projects scaling up from pilot to demonstration projects and (ii) particularly in Bio-based Industries, moving from demonstration to flagship/first-of-a-kind (FOAK) and industrial-scale projects
  • Financial market participants are attracted by the growth potential of the Bioeconomy, but due to its high perceived risks and information asymmetries, identify two unaddressed funding gaps
  • Existing public financial instruments are utilised but their catalytic impact could be further enhanced
  • Policy actions and/or new or modified public financial instruments could de-risk Bio-based Industry investments and catalyse (crowd-in) private capital

The key recommendations are:

  • Establish an effective, stable and supportive regulatory framework for BBI at the EU level, which is essential
  • Further reinforce awareness about InnovFin and the European Fund for Strategic Investments (EFSI), which can match the funding needs of certain BBI projects
  • Develop a new EU risk-sharing financial instrument dedicated to BBI, potentially taking the form of a thematic investment platform that can meet the funding needs of BBI and BE projects and mobilise private capital
  • Explore the creation of an EU-wide contact, information exchange and knowledge sharing platform or other channels to facilitate relationships between BBI project promoters, industry experts, public authorities and financial market participants active or seeking to become active in the Bioeconomy.

Second, the EC and the EIB signed an amendment to the InnovFin Advisory Technical Assistance agreement, setting up the conditions for improved access to finance for the Circular and Bioeconomy sectors. 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.

We will keep you informed.

Kind regards,

Dirk Carrez
Executive Director

Source: Biobased Industries Consortium, press release, 2017-06-01.

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