Bioeconomy Opportunities for a Green Recovery and Enhanced System Resilience

Abstract

Industrial BiotechnologyVol. 17, No. 3 Industry ReportsFree AccessBioeconomy Opportunities for a Green Recovery and Enhanced System ResilienceUwe Fritsche, Gianluca Brunori, David Chiaramonti, Charis M. Galanakis, Robert Matthews, and Calliope PanoutsouUwe FritscheUwe R. Fritsche is Task Leader of IEA Bioenergy Task 40 (Deployment of biobased value chains), Co-Leader of IEA Bioenergy Task 45 (Climate and Sustainability Effects of Bioenergy within the broader Bioeconomy), and contributes to the Global Bioenergy Partnership by leading its Task Force of Sustainability's Environment Subgroup.International Institute for Sustainability Analysis and Strategy, Darmstadt, Germany.Search for more papers by this author, Gianluca BrunoriUniversity of Pisa, Pisa, Italy.Search for more papers by this author, David ChiaramontiPolytechnic Turin, Turin, Italy.Search for more papers by this author, Charis M. GalanakisGalanakis Laboratories, Greece & Food Waste Recovery Group, Vienna, Austria.Search for more papers by this author, Robert MatthewsUK Forest Research, Farnham, United Kingdom.Search for more papers by this author, and Calliope PanoutsouImperial College, London, United Kingdom.Search for more papers by this authorPublished Online:11 Jun 2021https://doi.org/10.1089/ind.2021.29248.ufrAboutSectionsPDF/EPUB Permissions & CitationsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail Executive SummaryThe COVID-19 pandemic is causing an unprecedented global health crisis and socio-economic upheaval and led to severe consequences well beyond previous crises of the last decades, which mostly were related to financial issues. COVID-19 caused sudden economic, psychological, and partly physical shocks to markets, societal sub-systems (e.g., education, food, health), and people.As a direct consequence, today, food security and resilience are at stake. The effects on biobased products and bioenergy (in particular, biofuels) vary and their role in the recovery (with possible changes in customer's behavior) could differ as well.The linkages of the bioeconomy to post-pandemic recovery with regard to impacts and possible responses are currently being discussed by many institutions and initiatives, even though there is currently limited data on the impact of the pandemic on the bioeconomy.This report presents preliminary results based on initial analysis from the authors on knowledge synthesis on the EU bioeconomy system, trends, and perspectives of the future development towards 2030 and 2050.The main impacts reported so far from COVID-19 in the bioeconomy relevant sectors are:Food sectorThe COVID-19 pandemic hit the food system hard, putting food security at risk and causing reduced capacity of input provision to food chains. Further direct impacts concern production losses due to shortage of inputs and labor, reduced demand due to lockdown of canteens and restaurants and wastage of perishable product that could not be stored.Biobased products and materialsCOVID-19 so far had mixed impacts on forestry, non-food biobased products and chemicals. These impacts have both direct and indirect variable effects across Europe. However, in some areas, there has been significant disruption in forest management and forestry sector activities.BioenergyIEA analyzed the impacts of COVID-19 on the energy sector, in particular to renewables, including biofuels. Electricity demand in the EU dropped significantly, and according to IEA, projected reductions in 2020 compared to 2019 will be highest for oil, followed by coal, gas, and nuclear, while renewables should slightly increase.The COVID-19 pandemic occurred in a time when the EU policy agenda was taking a powerfully transformative shape: the European Green Deal, committed to foster sustainable development and achieving the targets of the Paris climate agreement, has specified respective goals, tools, and timelines. Rather than deviating from this pathway, the COVID-19 crisis shows that a system change is needed. However, it has also shown that this transformation may encounter several obstacles which require combining regulatory efforts, multi-level coordination, and massive finance to be overcome.As the EU and its Member States begin to emerge from lockdowns and plan recovery, respective strategies, and contingency plans to manage further waves of the pandemic, attention must return to addressing the climate crisis and building resilience—and in that, the bioeconomy has a role to play.Climate action will be mainstreamed in all EU programs funded under the Multiannual Financial Framework and Next Generation EU programs, with buffers for distributive effects (Just Transition Fund). The role of bioenergy and bioeconomy investments are also part of the EU Taxonomy which aims to clarify what “green” investments are.The enormous funds (both public and private) mobilized and significant economic stimulus packages developed to address the crisis offer opportunities to invest in the future, including in a sustainable circular bioeconomy which can put nature and restoration of natural capital at the center of the entire process. Member States will have to develop and implement adequate governance to handle such large resources and projects.The initial set of opportunities identified for a circular sustainable bioeconomy to contribute to a post-pandemic recovery include:Food sectorImproving food systems to become more sustainable and resilient will allow adapting fast to extreme events, as well as ensuring that future crises will only minimally affect food chains and vulnerable people. Key to that plan is the strengthened position of farmers in the value chains. Priority is in reorganizing agricultural supply systems based on the principles of agroecology, circularity, and One Health. Attention must be given to the blue bioeconomy and sustainable aquaculture as well as on urban agriculture that can improve quality of urban life. There is also significant interest from businesses and various start-ups in animal protein alternatives, biobased fibres, and respective marketing. Viewed in the context of a global food syndemic, the interplay of food insecurity, malnutrition, and obesity based on dietary behaviors amid the COVID-19 pandemic indicate opportunities for addressing social and structural determinants of healthy eating as a strategy to improve the health of people and the planet.Biobased materials and bioenergyCurrently, the industrial system is too linear, resource-intense, has limited provisions for biodiversity and ecosystem services and is mostly based on non-renewable resources. There are scalable innovations and viable technologies to produce sustainably sourced biobased alternatives, though, including public goods such as bioplastics, nanocellulose, and wood-based textiles as well as services such as bioenergy, which could significantly reduce both amounts of non-renewable materials used and GHG emissions while creating durable carbon pools. Both in biobased products and in bioenergy, possibilities to integrate biochemical and thermochemical processes gain attention, as well as the ability to valorize residues and co-products of upstream routes to improve on circularity. Also, the extraction of critical raw materials, as identified and listed by the EC, and their valorization beyond traditional routes and products should be developed in combination with biorefining processes.At present, it remains unclear how the COVID-19 pandemic will evolve and how it will impact daily life patterns in the long run: This applies to the first and second waves of the pandemic and even more to possible subsequent wave(s).However, a circular, sustainable and transformative bioeconomy, building on innovation and people's inclusion, represents great opportunities with at least partly solutions for the post-COVID-19 era and during the EU economic recovery. These cover all sectors of the bioeconomy and beyond – from agriculture, fishery and forestry to food, energy, materials, transport, and tourism as well as financing and cross-cutting options such as decentralized biorefineries, innovative bioprocessing, and stimulation of an inclusive “BioWEconomy”.Concerning the recommended actions, considering the need to ensure a transition leaving no one out, both short- and long-term strategies should be immediately elaborated with dedicated measures. In that, supporting economic operators, communities, and stakeholders to overcome the crisis and preserve jobs and economic activities need to be combined with decarbonization and sustainable production and use models.In order to support the EU industry in its transformation towards a sustainable and circular bioeconomy, sufficient EU funds need to be leveraged to de-risk innovative projects and stimulate private investments, far beyond the €250 million which is the current target size of the European Circular Bioeconomy Fund. Furthermore, closely monitoring the effectiveness of these financial programs is essential.Given that the global pandemic is ongoing also in the EU and its Member States, and relatively little evidence exists yet on COVID-19 impacts and bioeconomy responses, the analysis presented here is preliminary and needs substantiation from further work, considering future results from monitoring, and scientific knowledge expected to arise in the 2021–2022 timeframe.It should also be investigated more deeply how the circular bioeconomy can counter sustainability implications of COVID-19 in urban and rural areas, and what impacts this will have on ecosystem services and on achieving the SDGs.IntroductionThis report presents results from initial analysis of the ad-hoc Network of Experts on the question: What are the most promising solutions and opportunities that the European bioeconomy can offer to support a green recovery from the coronavirus pandemic and enhance system resilience in the future?The authors addressed resilience in a knowledge synthesis on the EU bioeconomy system, trends, and perspectives of the future development towards 2030 and 2050.1 With the present report, this brief analysis is deepened to the extent possible, and open questions are summarized.Given that the global pandemic is ongoing in the EU and its Member States, relatively little evidence exists yet on COVID-19 impacts and bioeconomy responses. Thus, the analysis presented here is preliminary.It needs substantiation from further analysis, considering future results from monitoring, and scientific knowledge expected to arise in the 2021–2022 timeframe.Setting the Scene: COVID-19 and the EU bioeconomyThe COVID-19 pandemic is causing an unprecedented global health crisis and socio-economic upheaval since first reported in Wuhan, China, on 31 Dec. 2019.2 On 9 January 2020, the European Centre for Disease Prevention and Control published a Threat Assessment Brief on the cluster of pneumonia possibly associated with the novel coronavirus in Wuhan.3On 24 Jan. 2020, the first European case was reported in France.2 In Fall 2020, the so-called second wave reached many European countries, causing further lockdown.The pandemic led to severe consequences well beyond previous crises which mostly were related to financial (banking, stock market) issues. It represents a sudden economic, psychological, and partly physical shock to markets, societal sub-systems (e.g., food, health), and people.This “Black Swan” socio-economic event was impossible to predict due to its extreme rarity.4 Authorities and companies were neither prepared for it, nor have they planned to transition beyond it.5Today, food security and resilience are at stake. The effects on biobased products and bioenergy (in particular, transport fuels) are different, and their role in the recovery could differ as well due to possible changes in customer's behavior.The linkages of the bioeconomy and post-pandemic recovery is currently being discussed by many,6–9 both with regard to impacts, but also possible responses.10Before addressing the latter in more detail below, the following sections present a wrap-up of current understanding of COVID-19 impacts on the EU bioeconomy.Impacts on the Food SystemThe COVID-19 pandemic hit the food system hard, putting food security at risk. The impact is systemic, affecting not only components of food value chains but also generating indirect and delayed effects and feedback.11Table 112,13 illustrates the significant impacts of COVID-19 on the food system and respective food security implications.Table 1. Impact of COVID-19 on the Food SystemSECTIONDIRECT IMPACTIMPACT ON FOOD SECURITYSupply• Reduced capacity of input provision to food chainsReduced food availabilityProduction• Production losses due to shortage of inputs and labor• Demand collapse due to lockdown of canteens and restaurants• Wastage of perishable product that could not be storedReduced food availabilityPrices increase and incomes reductionProcessing• Production losses due to shortage of inputs and labor• Demand collapse due to lockdown of restaurants• Wastage of perishable product that could not be stored• Unemployment of workers• Lack of investmentsPrices increaseIncome reductionTechnologies are not renovatedTrade• Disruption of (international) trade flowsReduced local availabilityLogistics• Disruption of transportation routes• Reduced operativity of wholesale marketsReduced local availabilityRetailing• Panic buying, queuing due to distancing, congestion of home deliveries• Closure of small retailers, boost of e-commerce• Direct links farmers-consumers• Pressure on food assistance organizationsPhysical access to foodCatering• Forced inactivity• The collapse of demand related to tourism• Food home de0livery• UnemploymentWorkers' income reductionConsumption• Change of eating patterns• Change of dietary patterns• The collapse of demand related to tourism for restaurant and hospitalityWidening inequalitiesFood insecurity for the most vulnerable groupsSource: own compilation based on HLPE (2020) and CCRI (2020).The systemic nature of the COVID-19 shock implies indirect effects (i.e., an activity B affected by the impact of COVID-19 on an activity A, as in the case of cascading effect of restaurants' lockdown), delayed effects (business bankruptcy for lack of liquidity), and feedback effects (scarcity generated by panic buying caused by the fear of absence).The drastic rise of remote working, closure of cultural sites (concert halls, clubs, movie theatres, museums), education facilities (kindergartens, schools, universities) as well as cancellation of congresses, exhibitions, and fairgrounds reduced food provision through canteens, caterers, restaurants, and street food suppliers. Home cooking increased, shifting logistics and consumption patterns (e.g., for pre-processed food), and potentially rising food waste, though evidence in some countries points to reducing food wastes.14COVID-19 has impacted unequally on individuals, social groups, enterprises, and territories and widened existing inequalities. Most vulnerable groups have suffered the most substantial losses, e.g., mini-jobbers, single-parent families, and homeless people. The food system was also subject to COVID-19 hotspots, e.g., the centralized slaughterhouses employing temporary workers living in crowded places in Germany closed temporarily as a result of workers experiencing high illness rates and to halt transmission of COVID-19 in their communities.12,15Impact on Biobased Products and MaterialsCOVID-19 so far had mixed impacts on forestry, non-food biobased products and chemicals. These impacts have been both direct and indirect and there have also been variable effects across Europe. The demand for single-use plastics for wrappings and packaging materials increased and this is expected to continue, implying the growth of future potential for biobased plastic substitutes.16 The increased interest in the use of biobased materials for the improvement of living conditions could be further mobilized. Linking “nature-based solutions” to the production of biobased products (as described in more detail below) may be important for effective recovery, also ensuring the maintenance and improved resilience of forests.In some areas, there has been significant disruption in forest management and forestry sector activities. Table 2 provides an overview of COVID-19 impacts on the forest and woody biomass processing sectors.Table 2. Overview of Impacts of COVID-19 on the Forest and Wood Processing SectorsACTIVITYIMPACTTotal wood supplyIn some areas it has almost been “business as usual,” in others there have been some restrictions to “essential” activities including limitations to supply wood only to those industries categorized as “essential”.Construction wood supplyVariable impacts but generally, a reduction in construction wood supply, in some cases a complete collapse, related to suspension or decline in construction activities. The situation recovered quickly after lifting of lockdowns.Increased consumption of certain “niche” products, e.g., garden decking and furniture, as people sought to renovate gardens and homes during lockdowns.Small roundwood supplySome regions have noticed significant increases in small roundwood production for paper, card, and pallet wood, related to an upsurge in online shopping.Waste and recyclingDuring lockdowns, home renovation and “stock cleaning” led to rising demand for new clothing and furniture which increased household waste, and the recycling of used textiles.Forest managementLockdown measures restricted workforce activities (e.g., reduced mobility of migrant workers, social distancing during tree planting) or slowed processing of e.g., harvesting permits. In some areas, activities are limited to “essentials”, e.g., responding to forest fires or pest/disease outbreaks. Generally, it is taking longer to deliver outputs at pre-COVID levels. Some activities have been reduced or completely stopped, e.g., forest surveys, consultancy.Recreation and tourismCommercial activities in forest areas providing holiday and recreation facilities and services have been reduced or completely stopped.Own compilation.Activities enabling social engagement with nature and rural areas (recreation, tourism) have been hit hard, suggesting recovery may be difficult; this could be particularly damaging for rural revitalization and may have wider implications for health and wellbeing in the period after the pandemic.Impacts on BioenergyIEA analyzed the impacts of COVID-19 on the energy sector, in particular to renewables, including biofuels.17 Electricity demand in the EU dropped significantly,18 and according to IEA,17 projected changes in 2020 compared to 2019 are highest for oil, followed by coal, gas, and nuclear, while renewables slightly increase (Fig. 1).17Fig. 1. Projected changes in primary energy demand by fuel in 2020 relative to 2019.The drop in oil demand is predominantly caused by COVID-19 impacts on the transport sector, especially aviation, and scenarios indicate possible lasting reductions.19Bioenergy, the largest renewable energy source globally and in the EU, was also partly impacted by COVID-19 and the spring lockdowns put in place by many EU countries,20 and lockdowns following in the fall 2020. Notably, investments in the (bio)energy sectors are expected to decline in 2020 due to the unfavorable and challenging economics (lower profits and cash flows, higher debts, reduced demand).21IEA forecasts carried out during the first pandemic wave estimated a significant recovery of oil demand by December 2020 in the different regions of the world. However, the second wave of COVID-19 affecting many EU countries changed this expectation.Concerning biofuels, production is expected to fall by 13% in 2020 due to transport fuels' reduction demand, while in 2021, the 2019 level may be reached again (Fig. 2).19 However, the effects of the second pandemic wave, and a possible third one, could further delay the return to consumption patterns comparable to pre-pandemic (Table 3).Fig. 2. IEA biofuel production forecast.Table 3. Summary of Main Impacts of COVID-19 on the (Bio)energy SystemACTIVITYIMPACTElectricity and CHP generationReduced demand for electricity, with limited impact on bioenergy, because heating is the main market and feed-in priority given to renewables.The biomass-based cogeneration sector showed good resistance to COVID-19 impacts, given the role of bioenergy in the renewable energy system, delivering heat and electricity to end-users, and the type of contracts in place. Feedstock supply was however partly affected by the pandemic, and this in turn impacted on bioenergy generation. Delay (or even halting) of energy investments was also a critical element for the sector.Heat generationThe heating sector was rather resilient to the pandemic, in particular the pellet sector, which benefits from long-term contracts. Moreover, heating is viewed as an “essential” service.Transport fuelsTransport was the most impacted area by COVID-19: fuel demand in some sectors almost collapsed, in particular in aviation. Reduction in diesel and gasoline demands directly translate into reductions of biofuels, as quota are expressed in percentages. Oil price fell, lack of storage capacity emerged, and thus opportunities for renewable fuels also diminished, given the very low oil prices. Investments and financing of new initiatives on transport fuel halted: this heavily impacted also on investments in the renewable fuel area. Some companies redirected their business to sanitisation and disinfectants (in particular, the ethanol sector).Source: Own compilation.Recovery: Build Back Better with the BioeconomyThe COVID-19 pandemic occurred in a time when the EU policy agenda was taking a powerfully transformative shape: the European Green Deal, committed to achieving the SDGs and the targets of the Paris climate agreement, has specified respective goals, tools, and timelines.22 Rather than deviating from this pathway, the COVID-19 crisis has shown that a system change is needed. However, it has shown also that this transformation may encounter several obstacles, and that their removal requires a combination of regulatory effort, multi-level coordination, and massive financial resources.1As the EU and the Member States begin to emerge from the lockdowns and plan their recovery, respective strategies, and contingency plans to manage further waves of the pandemic, attention must return to addressing the climate crisis and building resilience23–and in that, the bioeconomy has a role to play.24–28In parallel to the pandemic, the ambition to meet the Paris climate agreement increased in the EU and elsewhere (e.g., China, Japan, Korea), in parallel to the need of financing new initiatives aligned with the European Green Deal goals. Climate action will be mainstreamed in all EU programs funded under the Multiannual Financial Framework29 and Next Generation EU programs, with buffers for distributive effects (Just Transition Fund).30 The enormous funds (both public and private) mobilized and significant economic stimulus packages developed to address the crisis offer opportunities to invest in the future, including in a sustainable circular bioeconomy which can put nature and restoration of natural capital at the center of the entire process.31Burger et al. (2020) evaluated 130 studies and programs on design and effectiveness of 'green' economic recovery.32 They found a broad consensus on criteria to be applied and suitable areas of support: climate adaptation measures and nature-based solutions (e.g., reforestation)33 are frequently recommended. However, only a fraction of the stimulus measures adopted worldwide have so far been “green”, and explicit notion of sustainable bioeconomy options in the recovery is scarce. Green stimulus includes a long list of possible COVID-19 recovery interventions that support low-carbon development and build climate and disaster resilience:34–39Improvements in climate-smart agricultural value chains enhancing biodiversity and sustainable food supply systemsDeploying industry green transition, incorporating more sustainable production modes and ICT/AI in the value chainUpgrade of health facilities to disaster and climate resilience standardsHealth projects promoting disaster preparedness (e.g., long-term disease surveillance)Energy efficiency schemes, including support for retrofits (e.g., low-interest loans), construction of low-energy buildings, and skill developmentRural green infrastructure projects, such as grid expansion and off-grid rural electrification, and rural low-carbon household programs, such as clean cooking programs (biogas, efficient wood-burning stoves) and solar lightingLabor market programs to protect natural assets and green infrastructuresInvestment in education and training, natural capital investment, and clean R&D.In the following, opportunities for a circular sustainable bioeconomy to contribute to a post-pandemic recovery are presented, focusing on the EU.Options in the Food SystemThe pandemic has revealed that our food systems are not resilient enough to adapt to severe stress, such as economic crises and climate change.40 Although being different in nature, the pandemic crisis and climate risks have common characteristics as both of them represent physical shocks, systemic, non-stationary, and regressive changes.The current pandemic could be a preview of future shocks from climate change to supply and demand, disruption of food supply chains, and global pathogen transmission. Moreover, measures taken against each could result to improve the other, e.g., steps taken in climate-resilient infrastructure could increase economic and environmental resiliency.Improving food systems to become more sustainable and resilient should be more than ever an urgent priority, including contingency plans and mitigation strategies that allow adapting fast to extreme events, as well as ensuring that inevitable crises will minimally affect food chains and vulnerable people.41Key to these plans is the strengthened position of farmers in the value chains.42 Both the Green Deal and the CAP emphasize cooperation of producers within producer organizations and respective associations, which will allow producers to strengthen their position in supply chains as well as their resilience to economic and environmental challenges and contribute to climate action.The EU Farm to Fork Strategy43 and the Biodiversity Strategy44 indicate the need for transforming in the food system: carbon neutrality, radical reduction of pesticides and fertilizers, a significant increase of organic farming and protected areas. As some of the root causes of the pandemic crisis are in the food system, the commitment to change is even stronger.12 A key priority will be related to the reorganization of agricultural supply systems, based on the principles of agroecology,45 circularity,46 and One Health47,48 to radically reduce GHG emissions, pollution and the risks related to human/animal interfaces.As known, the most relevant critical point of the supply system is livestock, using about 40% of agricultural land.50 Animals can play an important role in circular agricultural systems, as they can use biomass (e.g., grasses) that cannot be used in other ways, and can contribute to soil fertility through their excreta. Incentives and compensation should be addressed to the conversion of intensive livestock systems into integrated crop-livestock systems, bringing to a Livestock Unit/ha rate of 1 by 2030.In parallel, tighter regulation of antibiotic use and support to antibiotic-free labelling as well as significant incentives to organic farming are required to achieve the goal of 25% of the area under organic farming by 2030. All of that will be subject to the next medium-term CAP reform.51,52 A further point of attention will be blue bioeconomy resources.53 As fish capture cannot be expanded,54 investments should be made in sustainable aquaculture–especially in multitrophic systems – and in cultivating algae.1Urban agriculture in all its forms, from community gardening to rooftop agriculture to vertical farming, will contribute to the green transition, making urban areas less dependent on long-distance trade for fresh vegetables, improving quality of urban life and contributing to consumers' education.1 For that, increased policy intervention is needed on dietary choices,56 with investments in food retail, initiatives to make fresh and nutritious food more affordable, and regulation of junk food.Food industries should innovate fast enough within the imminent economic crisis caused by the COVID-19 pandemic, offering affordable and competitive products, e.g., by developing functional foods fortified with bioactive compounds and antioxidants that promote health and support consumers' immune system.56 These products may emerge from food processing by-products, grasses, fungi, microalgae, seaweeds, and yeast that reduce inflammatory responses typically associated with cytokine storm in severe COVID-19 patients.4 There is also significant interest from existing businesses and various start-ups in animal protein alternatives, biobased fibers, and respective marketing.57Viewed in the context of a global food syndemic, the interplay of food insecurity, malnutrition, and obesity based on dietary behaviors amid the COVID-19 pandemic indicate opportunities for addressing social and structural determinants of healthy eating as a strategy to improve the health of people and the planet.58,59As part of the farm to fork chains, more safety measures are needed since more people (and subsequently more potential infection) are involved in the process. Thus, there is a need to develop respective bioanalytical protocols for food and environmental