Hungary aims to develop the bioeconomy of Central and Eastern Europe (CEE) for its upcoming stint in the EU presidency.
We take a look at what Hungary is planning, the CEE bioeconomies to date, and how much potential this region has in terms of biobased value chains.
What does Hungary and its neighbours want from the EU?
The bioeconomy includes any economic activity where the main raw materials come from biological organisms. The concept covers anything from aquaculture and land agriculture to the production of plastics from algae or the manipulation of bacterial strains for industrial uses.
Hungary reportedly intends to use its EU presidency between July and December this year to develop new, higher-value bioeconomies in CEE, covering countries like Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia.
To do this, Hungary will either kickstart a new Horizon Europe programme or ask the EU to enter a partnership with the CEE. The partnership would be modelled on an existing EU regional economic development programme, the Partnership for Research and Innovation in the Mediterranean Area (PRIMA), which targets similar areas like agriculture.
The estimated budget will be around €400 million to begin with, coming from certain member states and the Commission. Like many other EU projects, this initial bump from the government aims to ultimately attract organic private investment.
Any CEE bioeconomy project will have one primary goal: to attract investment into processing facilities in the region. These countries already produce large amounts of biomass for value-added food and beverage industries but lack scaled facilities to turn organic matter into industrial chemicals and advanced materials.
For agriculturally productive countries like those in the CEE that want backing for its higher-value chemical industries, focusing on the bioeconomy rather than traditional pathways using carbon-intensive or fossil feedstocks is an ideal pitch for the EU.
The EU is more likely to be receptive to demands for regional bioeconomy projects as it aligns with the bloc’s wider efforts to implement climate policies such as the Green Deal, which leans heavily on rolling out a bigger bioeconomy, and its agricultural policy flagship, the Farm to Fork Deal.
What is the state of the CEE bioeconomy?
The biobased value chain around the region today remains almost wholly limited to the food and feed sector, producing few higher value industrial products from biomass. By value, for example, half of Hungary’s bioeconomy is agricultural products or value-added products within the food, beverage and tobacco sector.
The higher value bioeconomy may still be underdeveloped in Hungary and the CEE. Yet what they do have are large agricultural sectors, a necessary if not sufficient foundation for industries in biotech and materials.
Productive agriculture means a potential pool of raw materials: a fundamental prerequisite for mounting a more industrial technology-based bioeconomy. Even advanced, highly processed biobased materials ultimately rely on biological feedstock, whether this comes in the form of purpose-grown crops, farming waste, or forestry.
CEE yields 36.1% of the EU-26 production in cereals, around 108 million tonnes a year. It also represents around 28% of EU bioeconomy supply in biomass generally: more biomass than the EU average. Most of the countries are already net biomass exporters, meaning that biological resources are already a bedrock of their economies. In 2019, the CEE countries had a net export of 70 million tonnes of biomass, led by Romania, Poland, Hungary, and the Czech Republic.
Biomass produced in the CEE is also growing, with levels at 7.1% higher in 2019 than in 2008. Between 2008 and 2019, Hungary in particular saw a 35% increase in the value of its bioeconomy overall. Although mostly this consisted of agriculture for the food industry, the biggest rate of increase was seen in its liquid biofuels sector, although it remains a tiny portion of its bioeconomy overall.
CEE steps towards a higher value bioeconomy
Lack of advanced biomass processing facilities is why Hungary is not able to convert their agricultural biomass into higher-value goods such as chemicals or materials. However, This isn’t to say there is a lack of appetite in Central and Eastern European countries for a higher-value regional bioeconomy.
The biggest example of regionwide CEE cooperation in the bioeconomy has been the Bioeast initiative. Members are the Czech Republic, Hungary, Poland, Slovakia, Bulgaria, Croatia, Latvia, Lithuania, Republic of Estonia, Romania, Slovenia.
Bioeast conducts cross-border research on biobased topics while providing a forum to express shared bioeconomy policy ambitions. Clearly, there is demand for collaborative bioeconomy initiatives in the region and Bioeast is likely to become a key stakeholder and mediator in any bioeconomy partnership that Hungary manages to negotiate with the EU.
Hungary’s intention of mobilising a bioeconomy partnership between the EU and the region did not come out of the blue either. Already back in 2021, the country’s Ministry of Agriculture discussed the need for supportive EU legislation for Bioeast countries to make good on their bioeconomy potential.
Can science strengths feed into industry?
Bioeast’s existence demonstrates that there is another thing standing in the CEE bioeconomy’s favour: a strong interest in the sciences relevant to industrial biomass utilisation.
The Czech Republic, for example, has a strong track record in biology and chemistry. Agronomy is a well-funded science here too, upheld by the size of its agriculture and forestry industries. The Czech government strongly supports research into plant breeding and genome editing. This makes it more likely that a more advanced bioeconomy in the country would be able to draw a skilled labour force as well as institutional hubs for innovating in biobased goods.
However, public spending on scientific research varies across the CEE, with big agricultural producers like Romania spending just 0.5% of their GDP on this area compared to Czechia’s 1.95% or Slovenia’s 1.95%.
Further, academic interest in the life sciences does not necessarily translate into industrial capacity without a strong entrepreneurial culture and institutions that actively encourages the lab-to-startup pipeline.
The CEE countries generally have a weaker startup culture than in Western Europe. However, there is already recognition of this barrier among bioeconomy stakeholders in the region. Academic to business cooperation was singled out as the most important intervention for building bioeconomy knowledge in a survey that canvassed biobased businesses, the public sector, and academia among BIOEAST member countries. Improving research, development and innovation have been the bioeconomy implementation topics discussed by most BIOEAST countries in their concept paper reports.
Why regional?
Why is Hungary proposing a regional bioeconomy programme rather than tapping the existing EU-wide network of financing instruments and industry groups?
Since CEE countries will be at similar stages in their higher value bioeconomy development, they will face similar challenges in building capacity. The key benefit of a regionally targeted programme is that it creates a geographically dense network of stakeholders with a similar problem set. Close communication will allow for the sharing of knowledge, technologies, and policy experiences in implementation.
One problem the region has to confront more so than the Western or Northern European bioeconomy is the lack of skilled labour.
Cooperation between economically similar and geographically close bioeconomy aspirants is also critical for another reason. Bioeconomies tend to grow up around regional value chains – a ‘Biocluster’ that concentrates each step of the biobased supply chain cuts the distance between raw material pools, the biorefineries that process them, and their end markets, reducing logistics costs and making economies of scale much likelier.
Testing times for the EU-Hungary relationship
EU-Hungary cooperation around the bioeconomy would have to overcome longrunning political tensions between the bloc and the country’s government.
The EU has often hit out at some of the policies implemented by the national right-wing government of Viktor Orbán, prime minister of Hungary since 2010. In turn, Orbán has been a vocal critic of the EU, using ths rhetoric to demonstrate his ideological credentials as a leader loyal to the Hungarian nation.
Yet this anti-EU rhetoric does not necessarily represent the real sentiments of Hungarians. Recent surveys indicate well above half of citizens support membership with some suggesting the figure could be 70 or 80%.
The outward rift between the political establishments of Hungary and the EU also obscures deep political and economic dependencies between these two entities.
EU subsidies end up empowering Hungary’s landowning elite and Hungary’s support for the EU is essential as the bloc faces fractures from within, including right wing backlash against political integration and uneven economic development.
In this situation, it seems likely that a relationship of pragmatism will prevail in the bioeconomy as it has in the field of agriculture, where the EU and Hungary put aside political conflict to gain mutual benefits.
