“The bioeconomy represents a strategic opportunity of the 21st century”. So opens the EU’s new bioeconomy strategy document, its first since 2022.
The new strategy document lays out how the EU will focus on scaling biobased technologies, targeting those with the greatest commercial potential.
We review how it promises to push the EU bioeconomy to its fullest potential.
Competitiveness wins out
The 2025 EU bioeconomy strategy distinguishes itself from its 2022 predecessor in its emphasis on competitiveness.
This reflects how the region is a very different place to where it was just three years ago. The region is struggling to compete with the US and China, which were able to invest in post-pandemic recovery in ways that the politically fragmented EU could not.
The 2022 Ukraine war led the EU to dramatically reduce dependence on Russian gas. However, the region is now more reliant on US liquefied natural gas as well as Chinese-made renewables.
The latest bioeconomy strategy speaks strongly to this context. At a time of economic uncertainty, the EU sees its biobased sector as the least environmentally damaging route to economic independence and supply stability.
Lead markets in focus
To maximise the economic benefits of the bioeconomy, the EU plans to funnel support towards a select group of biobased technologies. These will be products that a) offer the highest added-value and are b) ready to be sold or have achieved industrial maturity.
The strategy identifies the following biobased sectors as the most promising in terms of value-add and industrial maturity:
- Bioplastics, biopolymers, and biobased fibre packaging
- Biobased textiles
- Biobased chemicals
- Biobased construction products
- Biobased fertiliser and plant protection products
Barriers to scale-up
According to the strategy, the barriers to faster scaling of these sectors are exactly those preventing the region from competing more generally with China and the US.
These barriers are:
- regulatory burdens on business,
- insufficient funding for startups and scale-ups.
Here are the strategy’s proposed solutions.
Tackling regulatory complexity
Unlike its economic competitors, the EU is a bloc of sovereign countries with their own political systems and policy priorities. This fragmented policy landscape works against the kind of unified stimulus needed to get a region-wide bioeconomy off the ground.
The lack of coherent governance has been a recurring issue through the last several EU bioeconomy strategies. To unify bioeconomy policies across the bloc, the Commission says it is working with member states to align investment priorities. This is happening under the Important Projects of Common European Interest (IPCEI) framework, which aims to help states collaborate on large-scale projects that benefit the EU as a whole.
Fragmentation afflicts not just policy but also product regulations. As the strategy acknowledges, when national rules and interpretations of laws diverge from one another, it makes it more costly to do business – especially for small and medium-sized businesses.
The strategy’s main solution is the EU Biotech Acts. These acts seek to simplify regulatory requirements and accelerate product authorisations, for example, with fast-tracked authorisation for microbial solutions in industry and streamlined permitting for biomanufacturing. The Commission also promises to better coordinate national and EU product approvals so that companies are able to hear final decisions more quickly.
Robust regulations also help drive up demand. Consumers are more likely to opt for biobased goods if there is a trusted, scientifically-grounded system for labelling environmental performance. Yet there is still a lack of EU-wide regulation on how to systematically evaluate sustainability. The current strategy says that efforts to rectify this are happening through the ongoing review of Product Environment Footprint methods.
Tackling the funding gap
Funding is still insufficient to scale the EU bioeconomy, according to the strategy, particularly for scaling biomanufacturing, advanced biobased materials, and circular bioeconomy infrastructure.
Lack of funding is a major reason why so many biobased companies fail. Most often, startups fold at two critical points in their journey: between prototyping and commercial production or just after the product hits the market. These treacherous points of the startup lifecycle are known as ‘Valleys of Death’.
More funding for biomanufacturing infrastructure could reduce the failure rate. The strategy acknowledges the need for more pilot and demo plants where startups can test their manufacturing processes. Startups usually struggle to access these capital-intensive facilities, leading them to miss out on investment.
The EU has several measures planned to address this lack of funding and support. Most importantly, it proposes widening access to both early- and late-stage venture finance at both the EU and national level. It promises increased bioeconomy funding in the next Multiannual Financial Framework of 2028 to 2034 via the European Competitiveness Fund (ECF) and the Horizon Europe Framework Programme policy.
Until the next MFF, the plan is to develop a bioeconomy booster programme through the Circular Bio-Based Europe Joint Undertaking (CBE-JU) as well as improve access to finance and other services for startups via the Scale-up Europe Fund and other European Innovation Council instruments.
Securing demand
Biomanufacturing facilities are capital-intensive. Often, they are also geared towards selling into relatively new markets. These factors mark out the sector as high-risk for private investors, who want to know there is secure market demand before parting with cash.
To boost private sector demand for biobased goods, the EU Commission proposes a pilot project known as Bioeconomy under the Competitiveness Coordination Tool (CCT). Under this project, it plans to establish a voluntary alliance of EU corporations known as “bio-based Europe Alliance” (BEA). The alliance will be designed to “ensure a reliable and predictable demand for biobased materials and products.
It estimates that the group will collectively buy biobased products worth €10 billion by 2030. This should convince investors to finance demo facilities for startups.
The strategy also acknowledges the public sector can be a large source of early demand for the bioeconomy. The Commission says it will support public buyers wishing to purchase biobased solutions, something that will be supported by the forthcoming revision of the Public Procurement Directive.
Better markets for circular feedstock
Circularity remains a major theme in the 2025 strategy as it was in previous bioeconomy documents. Biobased production based on waste feedstock maximises resource efficiency, in keeping with the EU’s emphasis on resource self-sufficiency since the pandemic and Ukraine war.
According to the strategy, one of the major barriers to growing circular production is that there is no single EU market for secondary biomass. Circular producers are instead having to purchase feedstock from fragmented suppliers, raising the costs of sustainable production.
The strategy says that the Circular Economy Act, scheduled for adoption by 2026, will help build a more efficient single market for waste. The Act will provide an EU-wide end-of-waste criteria, a checklist that determines when a material has been transformed from waste into a high-quality potential manufacturing input. The act also provides new intra-EU waste shipment rules that will make transactions between exporters and importers of waste easier.
Sustainability
Biomass is finite and even making renewable products can have negative environmental impacts if not properly managed.
To ensure the sustainability of the bioeconomy, previous EU strategies heavily promoted the cascading principle, a method of keeping biomass carbon locked away from the atmosphere and within products for as long as possible.
According to the principle, biomass should be used for the most resource efficient, highest-value applications possible – usually sustainable materials and chemicals. These should be recycled as many times as possible. Only then should biomass be burned for bioenergy or biofuels.
The 2025 strategy has shifted on this. Although it states that where feasible, biomass should be used for materials and chemicals, the language is now more favourable to turning biomass straight into fuel, especially waste biomass.
The strategy justifies this by stating that “biofuels will continue to play a role in the decarbonisation of the transport sector” and other applications where it is not feasible to switch to renewable electricity.
Now more than ever, the EU frames biofuels and bioenergy as one route to greater energy self-sufficiency. This re-centering of biofuels is consistent with a bigger EU policy shift. With regional industries still hurting from elevated energy prices, the EU’s reasoning is that it simply cannot afford to overlook a domestic source of power like biofuels.
EU policy is now dominated by the desire for resource self-sufficiency, particularly in energy. The new agenda is also re-shaping the region’s approach to the bioeconomy. Yet one key message has remained consistent: that circular and biobased manufacturing can support long-term economic resilience.