One of the major challenges of transitioning to a sustainable bioeconomy, is the establishment of a viable and profitable bio-based market. Whether at the EU or national level, much work remains to be done in this direction. Yet before we start focusing on “how” to get the bioeconomy market going, we first need to understand “what” to focus on. With other words, what should the bioeconomy market comprise? What value chains should we focus on? And what are the main challenges and opportunities for establishing a European bioeconomy market? These interesting questions are posed by a group of researchers from the Chair of Environmental Governance, at the University of Freiburg. Marzena Wilczynski and Julia Federer work within the BioMANik project (short for “Market Actor Networks and Market Dynamics within Bioeconomic Value Chains” ) under the supervision of Prof. Heiner Schanz. Their objective: to understand the market configurations and market dynamics in existing and emerging value chains of the German Bioeconomy. In this blog post, Marzena and Julia share some interesting insights from their project.

Defining cross-sectorial bioeconomic value chains

There are different interpretations and definitions of the bioeconomy concept. In order to define bioeconomic value chains, one first hast to delineate the bioeconomy concept. The BioMANik team understands bioeconomy as the transformation from a fossil-based economy to a bio-based one. This includes on the one hand traditional sectors such as forestry, agriculture and paper production and on the other hand emerging sectors such as bio-based polymers, biotechnology and fuels from biomass.

Usually, a value-chain encompasses all production steps from raw material until the finished good. Bioeconomic value chains transform renewable resources into consumer products and each step in the value creation includes a market of its own, e.g. transforming straw into synthesis gas (such as in the case of a synthesis gas biorefinery) involves the agricultural market (for straw) as well as the chemical market (for synthesis gas).

 “Classical” vs “New” bio-based products

Many so called “classical” bio-based products are already widely used (e.g., timber, biomass residues etc.). Yet the success and growth of the bioeconomy market would have to rely on newer, more innovative value chains that can enhance the already existing chains, as well as create new value chains all together. The BioMANik team look at different technologies that allow for the combination of material usage with energetic usage. For example, an interesting innovation case study are biorefineries. It is particularly interesting how waste materials can be used within the bio-based value chains and how this transforms existing markets.

The project focuses specifically on how such innovations are able to enter the market. For this reason, the team looks at the driving and hindering factors for bio-based market formation, in order to determine the success factors for the Bioeconomy transition.

The challenge of jumpstarting a bio-based market in Germany

The market for bio-based products is still underdeveloped in comparison to the many fossil-based products currently dominating the market. What are some of the main challenges with jumpstarting a viable bio-based market in Germany?

According to the BioMANik team, there are several factors involved when comparing fossil-based value chains with bio-based ones. Currently, fossil-based value chains are well-developed and very efficient. Bio-based value chains involve more value creation steps and are therefore more costly. They involve more actor groups that exchange ideas and knowledge, which can be difficult to manage. The more complex a value chain, the more actors from different sectors work together. This can be beneficial for product creation and innovations, but also challenging when establishing new cooperation and new markets.

Other challenging factors involve the market size and volume, since they compete with large-scale fossil-based markets. In order to go into mass production, a sufficient amount of biomass must be available to produce the volumes of output products needed that saturate the market. Furthermore, fossil resources, such as mineral oil or coal, are often centrally located at one point, while the logistic costs for bio-based raw materials may be higher, since the areas where biomass is grown are much more distributed. Here too, the price should be competitive.

New market practices throughout the whole bio-based value chain need to be established, like handling the biomass streams, knowing and operating the new process steps for the production of the intermediary and output products and building up the necessary infrastructure. These are quite some challenges that need to be considered when creating new markets.

The way forward

Through their Network of Markets Approach, the BioMANik team hopes to identify leverage points for the transformation of complex economic systems by combining value chain analysis and a relational perspective on markets. They already developed a framework for depicting the configurations of economic systems through the identification of leverage points in a systematic manner. Next, they will focus on the existing market of Biogas and the emerging market of Biomass-to-Liquid (BtL). Here, they analyze the factors involved in the development of bio-based markets. The team is interested in showing how those factors are connected in order to explain the underlying market dynamics within the Bioeconomy.

As a final step, the team is planning to use the method of system dynamics to model the flows within bio-based markets in order to determine governance intervention points to steer a transition towards a Bioeconomy.

The BioMANik project deals indeed with very timely and relevant topics.  There is still more work to be done, and only time will tell how and if a bioeconomy transition will unfold. For the time being, the researchers can say with certainty that a bioeconomy transformation will require cross-sectorial cooperation. Not only for innovation and knowledge exchange, but also for establishing a market for bio-base products. In the German Bioeconomy context for example, the BioMANik team found that the chemical markets are especially important for the transformation. The chemical industry links existing and emerging value chains within the Bioeconomy and is therefore central in determining its future.

For more information, check out their latest publication here: https://www.sciencedirect.com/science/article/pii/S2210422418301539

Marzena Wilczynski

Her research focuses on leverage points in the transformation of markets towards more sustainable forms and the implementation of sustainability strategies. In her PhD-Project, she investigates the dynamics of emerging bio-based markets by using the example of the Biomass-to-Liquid Innovation in Germany.

Julia Federer

In her PhD project, she builds on several approaches in the sociology of markets and on social science methodologies in order to understand how actor’s perceptions of markets shape the development of existing markets in the bio-economy.

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