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The Joint Research Centre (JRC) is the European Commission's science and knowledge service which employs scientists to carry out research in order to provide independent scientific advice and support to EU policy.
The need to reduce fossil fuel dependence in the chemical industry has led to the emergence of bio-based alternative products. A new JRC study details the potential of bio-based chemicals in EU markets, and estimates their annual growth rate at about 3.6% per year from 2018 to 2025.
The 2018 update of the Bioeconomy Strategy aims to accelerate the deployment of a sustainable European bioeconomy so as to maximise its contribution to the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs), as well as the Paris Agreement. It aims to achieve a more innovative and low-emissions economy, reconciling demands for sustainable agriculture and fisheries, food security, and the sustainable use of renewable biological resources for industrial purposes, while ensuring biodiversity and environmental protection.
An important role can be played by bio-based chemicals, which are defined as chemical products that are wholly or partly derived from materials of biological origin (for example biomasses, feedstock, but also plants, algae, crops, trees, marine organisms and biological waste).
Given their expected limited environmental footprint in comparison to their traditional counterparts, bio-based chemicals have recently emerged on EU markets as valid, environmentally friendly alternatives to standard chemicals.
Bio-polymers, for example, are already in use in the soft drink industry to produce bio-based beverage bottles.
Despite their successful application in several industries - cosmetics, solvents, inks, and other standard products – bio-based chemicals still have a limited market share and investor interest.
Since most of the products derived from chemicals are fundamental to our daily lives, gaining an overview on the future evolution of their market is of paramount importance.
A greener segment of the EU economy
Because of their potential to stimulate new segments of the economy and new uses of natural resources, the European Commission has put bio-chemicals under the spotlight. Supported by DG Research & Innovation and in collaboration with the Biomass Technology Group, the JRC has produced the first ever study to quantify the untapped market potential of bio-based chemicals from 2018 to 2025. It also contributes to the European Commission's Knowledge Centre for Bioeconomy.
Estimating the market potential for bio-based chemicals
In their report, the scientists describe 10 key bio-based chemical product categories, their market production and consumption levels for the EU, their level of maturity on the market and the main drivers of and constraints to their future production.
As bio-based chemicals have yet to be precisely defined, official European statistics provide limited insights on their environmental impacts and production trends.
"Having a comprehensive database with all this information at our disposal is a great opportunity for us" says Claudia Parisi, one of the JRC researchers involved in the report, "because now we are able to conduct a comprehensive analysis on these 10 product categories. This step is essential for the identification of market gaps and development opportunities".
Based on detailed methodology, market data and expert opinions, the authors estimate that overall EU bio-based production accounts for about 4.7 Mt of bio-based chemicals per year, equivalent to about 3% of the total market for the 10 key products.
Their findings also show that each product category will evolve differently in terms of market maturity, market potential and the percentage of bio-based chemical involved.
For instance, bio-based polymers for plastic are already very popular, especially for the production of disposable items and packaging, but their production still involves few bio-based chemicals. Conversely, surfactants – commonly used in the personal care industry – contain a high percentage of bio-based chemicals, mainly vegetable oil, but their production is already mature so their market will not evolve significantly in the future.
Under a business-as-usual scenario, the overall average annual growth rate of these 10 products is estimated at about 3.6%. In other words, their demand is not expected to grow rapidly.
Overcoming barriers to market uptake
Scientists identify production costs as the main barrier to growth of the bio-based chemicals’ market, as these are still higher than for their traditional counterparts.
Also, some bio-based chemicals are still considered to be risky in terms of upfront investments in infrastructure or future sales.
Policy interventions aimed at stimulating these markets could be oriented towards investment incentives (grants, loans, guarantees, etc.), or making the production of their fossil-fuel counterparts more expensive – e.g. through carbon taxes – or making the use of bio-based chemicals mandatory in some industries, thus boosting their demand.
This study provides initial evidence to inform policymakers about the untapped potential of the bio-based chemical market and offers fresh insights on major market drivers and constraints that can stimulate the interest of stakeholders and customers in bio-based chemical products.