The ShapingBio project’s recent report, Bioeconomy Financing Analysis (Deliverable D2.4), provides a comprehensive analysis of the financing landscape for the European Union’s bioeconomy. It examines public and private funding mechanisms, identifies critical gaps, and offers recommendations to enhance support for innovation in sectors like agriculture, forestry, and bio-based industries. The bioeconomy plays a vital role in Europe’s transition to sustainability, yet its development faces financial and structural challenges.

Public Financing for the Bioeconomy

EU-level funding, primarily through Horizon Europe and its Cluster 6 program, has been instrumental in driving early-stage innovation in bioeconomy sectors. Programs like the Circular Bio-based Europe Joint Undertaking (CBE JU) and the European Circular Bioeconomy Fund (ECBF) have facilitated cross-border collaborations and strengthened value chains. National and regional programmes are also in place, providing support relevant to local priorities and addressing challenges of local bioeconomy ecosystems. However, barriers remain, including insufficient support for scaling innovations and transitioning from research to commercial markets.

Private Sector Financing and Challenges

Private investors are increasingly drawn to bioeconomy sectors like synthetic biology and agri-tech. Yet, they face significant barriers, such as fragmented regulations across EU countries, high perceived risks, and the absence of standard definitions for bioeconomy technologies.

ShapingBio Bioeconomy Financing Analysis identified gaps and proposes solutions that may improve the accessibility, adequacy and alignment of policies and financing instruments for bioeconomy at EU and national and regional level.

Gap 1: Time Lag in EU Programme Implementation

Solution:

• Introduce adaptive work programmes for periodic reviews and adjustments.
• Implement fast-track procedures for urgent call revisions to address emerging global challenges.

Gap 2: Regulatory and Administrative Complexity

Solution:

• Simplify regulations and harmonize frameworks across governance levels.
• Standardize bioeconomy taxonomy and technology nomenclature.
• Introduce AI/machine learning tools to streamline proposal matching.

Gap 3: Public-Private Collaboration

Solution:

• Establish structured public-private schemes to de-risk investments.
• Expand equity investment schemes to support high-risk projects and attract private capital.

Gap 4: Access to Market

Solution:

• Implement stricter CO₂ taxes and direct subsidies for bio-based products.
• Align scaling funds with private sector needs through public equity schemes.
• Introduce scaling and entrepreneurs support programmes to develop their investment readiness and strategic business connections

Gap 5: Early-Stage Financing

Solution:

• Develop streamlined financial instruments for early-stage innovators.
• Offer pre-seed and seed funding combined with mentorship and business development.
• Strengthen university Technology Transfer Offices (TTOs) and teach entrepreneurial skills.

Gap 6: Scaling and Commercialisation

Solution:

• Adopt milestone-based funding disbursements to align with specific achievements.
• Provide scaling programs with targeted support for business development and market entry.
• Engage industrial experts in funding decisions to evaluate scaling potential effectively.

Gap 7: Capacity Building in Bioeconomy Companies

Solution:

• Create regional bioeconomy hubs with integrated financing and skills training.
• Enhance EU and national funding authorities' outreach and informational platforms.
• Establish proactive portfolio management by funding bodies for stronger company support.

Gap 8: Long-Term Innovation Project Funding

Solution:

• Introduce multi-stage funding programs to support projects throughout their lifecycle.
• Evaluate project progress with mechanisms for follow-on funding based on milestones.
• Coordinate funding pipelines across governance levels to avoid financing gaps.

Key Insights and Future Directions

The report identifies a pressing need for a more coordinated financing approach that bridges public funding with private investments. By addressing regulatory inconsistencies, fostering innovation-friendly policies, and ensuring equitable resource distribution, Europe can unlock the full potential of its bioeconomy.

Conclusion

The ShapingBio D2.4 report underscores the urgency of aligning financing strategies with the unique demands of bioeconomy innovations. Its findings serve as a roadmap for policymakers and stakeholders to create a robust, competitive, and sustainable bio-based economy in Europe. Immediate action is essential to overcome financial barriers and position the EU as a global leader in the bioeconomy sector.