A future scenario for 2050 in which nine billion people enjoy improved ecosystem services and life’s essentials is not as elusive as often portrayed. For this reality to unfold, the ways we consume and deal with food, materials, and energy has been the latest catch cry warranting a deep reevaluation. Continuing the business-as-usual path will only exacerbate our ecological footprint, biocapacity deficit, and planetary boundaries, posing an unnecessary gamble with our (non)living systems. This is why dialogues highlighting the need to substitute linear fossil-based products with circular bio-based alternatives are increasingly brought to the forefront of environmental action.

Within the EU, the annual cost of bio-waste management is €143 billion (Zero Waste Europe 2019). Each year, the average European throws away 200kg of organic matter, 75% of which is landfilled or incinerated, causing significant levels of emissions and pollutants. The business opportunities in enhancing management and processing solutions for bio-residual streams are therefore substantial. European bio-based industries have witnessed a 23% growth in the past decade, generating 750 million Euros in turnover. The sector has additionally reached a valuation of 2.4 trillion Euros, a 25% increase over the last 10 years. Forecasts assess that by 2030, the industry holds the potential to generate up to one million new jobs (BBI JU 2022).

With the implementation of the EU Bioeconomy Strategy, the Circular Economy Action Plan, and the Waste Framework Directives, the EU has placed a high priority on the expansion of the bioeconomy. The policies aim to standardise frameworks, instruments, and measures for biomass use, to stimulate local, regional, and national growth of the industry.

There is no denying that nature is the best designer and, through evolution, has delivered exquisite structures and functions. Nonetheless, today’s massive resource pressures are urging scientists to seek new material sources from local, renewable matter or by mining “urban” waste streams for high-quality reuse. The linear direct disposal mentality only leads to missed opportunities to (re)valorise nature’s building blocks.

Currently, less than 60% of organic waste and sludge is being reused within cities. Inputs and outputs need to be characterised to introduce as many loops as possible that recover energy, water, and nutrients. More effort in the management of our biowaste streams is warranted.

Biobased sciences answer this call by unlocking the potential of biological systems using mimesis and technology to foster more regenerative and resilient societies. Essentially, researchers lean into what biology has evolved to produce and coax it through traditional chemistry and biotechnology to create new materials with improved functional properties.

In dealing with biomass crops, it is important to work around the fact that these are living organisms with metabolic processes like respiration and senescence. To prevent the loss of quality and profit in the distribution chain, we need to slow down the metabolism to prevent decomposition. Advanced planning is, therefore, needed to coordinate the logistics of harvesting, storage, and transport to the processor.

Beyond biomass crops, feedstock sources also stem from aquaculture, municipal waste, the food industry, agricultural residues and more. Here, the quantities, quality and consistency of the supplied feedstock tend to fluctuate, which makes sourcing and biorefinery processing a vulnerable activity. Coordination of supply chain actors on strategic and tactical decisions throughout the planning becomes key to operational success.

Risk factors like seasonality (among many others) in biomass production lead to uncertainties related to their price and productivity. Bearing this in mind, companies that want to pierce into this industry must be prepared for the unique challenges and opportunities ahead. Material handling is an important challenge for companies dealing with return flows and waste streams, together with matching the ever-changing quantity and quality of biomass with the right valorisation options. Dynamic decision support systems should be embedded in circular business models to maximize the valorization potential of biomass. This uncertainty, feedstock diversity and supply security have become a significant challenge for the development of viable new business models. This, in turn, leads to perceived risks and high initial investment costs.

The chemical composition of biobased feedstock is different to that of fossil-based feedstocks presently used. Oil and fossil resources mainly consist of carbon and hydrogen atoms, whereas biobased resources have a high water and oxygen content, which has consequences on the distribution and conversion of biomass. Tailored separation technologies and processing steps are needed to produce a multitude of bioproducts (materials, food, feed, fuels, chemicals, pharmaceuticals etc.) and bioenergy (biofuels, power, and/or heat) from biomass. The complexity of feedstock diversity is further compounded by the fact that biomass composition may fluctuate even within a single crop variety. As an example, the main component of potatoes is starch. Components change by the year depending on the cultivar and cultivation conditions, and the variations in the amount of sunlight, rain and fertilizer, so trying to obtain a feedstock that is homogenous for conversion is not an easy task.

Pioneers engaging in the bioeconomy can develop provided they receive the right financial and regulatory backing. For example, project developers often lack contact with feedstock providers which leads to high procurement risks in the eyes of investors. Solution providers in this emerging field, therefore, often face prejudices and must invest considerable efforts in communicating and lobbying their cases. Tools accordingly need to be developed that help streamline institutional alignment with the growing research and experience-based evidence from industry.

Ultimately, what’s lacking for entrepreneurs are guidelines outlining indicators, criteria, measures, and requirements (considering all the technical, economic, legislative, and social factors) to increase the probability of project success. A number of initiatives are underway to characterise the dynamics in biobased business investments and the factors that influence them, along with defining risk reduction mechanisms for investors. Equipped with these directives, entrepreneurs could work towards coming closer to certain specifications versus advocating the industries promising potential to clients and stakeholders.

Solutions to make this material stream circular stem from several disciplines, with the implementation being driven by different stakeholders.

Renewable bioresources from plants, but also from municipal waste streams, contain all kinds of valuable components such as proteins, phenols, lipids, (ligno)cellulose, starches, and more. For this reason, it is important to develop and implement biorefinery processes that capture the maximum value of biomass components. The aim is to use these compounds in as high-value applications as possible: food, feed, chemicals, materials, pharmaceuticals. As a last resort, for low-quality biomass, a good option is the production of biofuels.

In trying to channel and scale up investments in bioeconomy activities, we need to assess whether the current regulatory approaches of financial institutions act as catalysts or barriers in implementing transition processes. If barriers exist, how might we reassess and adjust public financing instruments, metrics, and policy considerations to attenuate the risks (credit, regulatory, market, operational, performance…) commonly perceived by investors? Entrepreneurs in this sphere need a baseline understanding of potential financial frictions and sector-specific market failures that are dampening progress. That is why it is important to build our portfolio of financial tools to evaluate whether projects align with set requirements and to create standardization systems for risk management.

Policies addressing waste management, resource efficiency, and circularity in our economy have become increasingly important in recent years, with targets and provisions that have been set to drive the sustainable management of biowaste. New resource recovery models have been imposed (e.g. the 2018 EU Bioeconomy Strategy) to encourage companies and governments alike to optimise and practice good (urban) biowaste management. This is significant as policies influence market structures that may incentivise or deter participation in value chains. For the biobased sector to grow, an effective European regulatory framework is needed that guides specific activities such as the collection and treatment of biowaste, promoting innovative solutions for its valorisation, and market development pathways for useful biobased products.

Circular business models aim to design waste out of the system while at the same time building capital – financial, human, social, natural. Creating and managing feedback loops between value chain actors, as they play a role in reverse logistics, material flows, and information exchange, are key to developing businesses that operate within planetary boundaries. New ways of value creation that are rooted in multi-stakeholder business models require a lot of trust and understanding. Perceived and actual risks have to be separated.

A biomass supply chain has its own unique characteristics and challenges, including specific growing cycles of biomass sources, unstable natural conditions, but also the willingness and coordination of supply chain actors. At the same time, for the system to be viable, financial benefits must be achieved, which requires the joint collaboration of all the actors. Advanced planning of supply chain management activities is key to designing efficient and competitive systems, where decision support tools and quantitative methods are applied to evaluate the performance of logistical designs.

Bax & Company is actively involved in elaborating and implementing transition pathways that bring our systems closer to circular principles. In doing so, we develop and participate in European collaborative projects, facilitate matchmaking between investors and solution providers, scout applied and emerging technologies, model decision support tools, and develop actionable plans curated to CE frameworks. These activities allow us to evaluate the impact of proposed circular alternatives, while calculating the unique particularities of each material and ecosystem to optimally close the loop(s). Our approach focuses on promoting multi-stakeholder dialogues to leverage the thought leadership and technical expertise required for building innovative solutions. Past and current cases extend from projects that boost investments in urban biowaste valorisation to co-developing circularity blueprints for composite materials with industry leaders.

Today, as a partner of the collaborative H2020 HOOP project, we are developing a methodology for providing project development assistance to cities and regions that want to invest in the development of an urban bioeconomy. Bax & Company provides tailored multi-stakeholder business models and innovative financial engineering for leveraging public & private investments, an instrument for assessing circularity at city level, and supports partners in the commercialisation of their results.

To find out more about our services, visit our Circular economy focus area or get in touch with us.

Reach out to a member of our team today!