No. 4/2016
Policy Brief:
Learning from country comparisons in renewing
manufacturing towards a circular bioeconomy
Abstract
What can be learned
from a country
comparison of
bioeconomy transitions?
What is the specific role
of innovation and other
policies in fostering
transitions?
TEKES and Vinnova have
provided support for the
analysis
Project: Renewal of
manufacturing towards a
sustainable circular
bioeconomy and
implications for
innovation policy
(RECIBI)
Authors: Mikael Hildén,
Rick Bosman, Philip Peck
with contributions from
the whole RECIBI-team
A sustainable bioeconomy must be compatible with the principles and practices of a
circular economy. It should apply innovative systems for the maintenance, material and
energy recovery, reuse, refurbishing and remanufacturing of bio-based products – with
‘end of life’ valorisation providing useful bioenergy. The number of solutions that
successfully apply these principles is increasing. They can be seen as niche activities that
can be aligned to achieve a major transition of the whole economy, increasing resource
efficiency and reducing fossil energy dependence drastically in line with the 2015 Paris
climate agreement. However, challenges to such a transition are significant and niche
applications become experiments that identify ways forward. By comparing transition
processes in different countries we can learn from one another - identifying best practices
and potential pitfalls. This analysis is based on a review of examples of bioeconomy
solutions and governance in Finland, Sweden and the Netherlands. A key finding of the
country comparison is the fundamental difference in the focus of innovation efforts within
product lifecycles. Dutch bioeconomy developments tend to be product oriented whereas
Finland and Sweden have placed key emphasis on production and extraction of domestic
raw materials. The alignment of innovative biobased circular economy elements into a
large-scale transition of value chains and business ecosystems is a challenge shared by all
three countries.
Major challenges identified include:
 how to achieve an effective combined approach that encourages sustainability
innovations throughout the value chains, including high-end products and services;
 the development of innovation policies to overcome cultural transition barriers
maintained by past successful innovations and strong incumbent market actors;
 the need to focus on radical innovation in business ecosystems, rather than
optimisation of existing processes of incumbent actors.
Actions that can address these challenges include the following



active challenges to current industry mindsets that hamper the emergence of a circular
biobased economy – firstly by making R&D support conditional on the creation of
innovative new business ecosystems and secondly by preclusion of support for
incremental improvements to current production systems;
focus R&D effort on the improvement of circular economy loops through the
introduction of incentives or regulations to encourage the creation of currently missing
links and business ecosystems;
develop policies that can carefully disentangle the dependency of the economy from
fossil carbon resources.
Tekesin Ohjelmatoiminnan strateginen tuki -yksikkö tuottaa innovaatioympäristöä palvelevaa tutkimusta
teemakohtaisilla hauilla.
Introduction
Countries can learn from
one another in efforts to
achieve a sustainable
circular economy
There are significant
differences between the
Dutch and the Finnish
(and Swedish) efforts to
achieve a bioeconomy
transition
The bioeconomy has been identified as a way to address global climate change, to
ameliorate increasing competition for natural resources, and to meet the need for new
economic opportunities in technologies and services. Different countries in the European
Union have thus formulated strategies on how to achieve a transition to an economy built
upon renewable natural resources.
A sustainable bioeconomy should be compatible with the principles and practices of a
circular economy (EC 2015). It needs to embrace innovative systems for the maintenance,
material and energy recovery, reuse, refurbishing and remanufacturing of bio-based
products – and ‘end of life’ valorisation should yield useful bioenergy. The attractiveness of
this vision is that it can include manufacturing of local bio-materials, thereby co-creating
business opportunities in the production of raw materials, a wide range of production
activities, and the maintenance, conversion and refurbishing of products and materials.
Although visions of a circular economy often depict closing loops on a local scale, locality is
not a necessary pre-condition as circular bioeconomy value-chains can also be regional,
and even global.
No modern society has yet developed a complete biobased circular economy but the
examples that include parts of this concept are multiplying. They can be seen as niche
activities that can eventually align to achieve a major transition of the whole economy
thereby increasing resource efficiency and drastically reducing the dependence on fossil
energy carriers and raw materials. Some path dependence is unavoidable, as transitions
will build upon specific features of existing economies (Table 1). Through comparisons of
the transition processes in different countries, bioeconomy proponents can learn from one
another so to build on strengths, identify shortcuts, and avoid pitfalls. Further, as countries
hold markedly different resource bases, economic morphologies and comparative
advantages, many different circular bioeconomies can be expected to emerge.
Table 1. A comparison of ideas and drivers in the Dutch and the Finnish (largely also applicable to
Sweden) approaches to bioeconomy transitions in 2014 (from Bosman and Rotmans 2014)
Transition
Drivers
Urgency
Phase
Regime
Niches
Vision
Governance
Scale
Approach
Focus
Government
Dutch Biobased Economy
from fossil to biobased
chemistry sector / government
rather high
pre-development
economic top sectors
systematic experimentation
co-created vision for 2050
transition governance
regional
conceptual, network based
radical innovation
facilitator
Finnish Bioeconomy
from bulk to speciality
bioeconomy/innovation in genes
average
just before take-off
powerful silo structure
many unconnected pilots
government-led vision for 2025
traditional top-down
national
practical, sector based
incremental innovation
director
Tekesin Ohjelmatoiminnan strateginen tuki -yksikkö tuottaa innovaatioympäristöä palvelevaa tutkimusta
teemakohtaisilla hauilla.
Material
The material for the study is based upon findings from the RECIBI project, carried out in
Finland and Sweden within three sectors that can be expected to make progress in a
biobased economy, i.e. textiles (fibers), building and biorefineries. The results have been
combined with the comparison of approaches to a bioeconomy in Finland and the
Netherlands by Bosman and Rotmans (2014). Primary RECIBI material has been collected
in thematic interviews, through consultation of policy documents and an analysis of news
articles on circular economy (Lavikainen 2015).
Results
Finland and Sweden
have been heavily ’raw
material oriented’ in
bioeconomy whereas
products have been in
the focus in the
Netherlands
Forest derived biomass has been very important for the Finnish economy and it has
also played a significant role in the Swedish economy. Importance has been built upon
access to and efficient management of large forest resources. The forest sectors are
typified by large volumes and bulk products, with innovation efforts focusing on the
increase of raw material yields per unit of productive land and on optimising bulk
production. From an economic point of view such strategies have been successful. Both
Finland and Sweden have achieved recognized competitive and comparative
advantages in many forest related areas. However, this has also meant that the main
value chains of the bioeconomy have remained in the lower part of the biomass value
pyramid (Fig. 1).
While the Dutch bioeconomy has emerged from the agro- and food industry there is
also a strong chemical industry sector seeking new non-fossil raw materials. The lack of
abundant endogenous raw material resources has contributed to a focus on products.
Hence many important biobased value chains are less bulk and volume oriented and
are higher in the biomass value pyramid than those in Finland and Sweden. This active
search for novel products and use of biomass can, for example, be seen in the topics
1
and foci of numerous business conferences organized in the Netherlands.
Figure 1 Biomass value pyramid for a circular bioeconmy (modified based on
WTC BBE, 2011 and Bosman and Rotmans 2014)
Tekesin Ohjelmatoiminnan strateginen tuki -yksikkö tuottaa innovaatioympäristöä palvelevaa tutkimusta
teemakohtaisilla hauilla.
The obstacles to a
circular bioeconomy
differ between the
potential sectors and
countries, but the need
to find bridges and links
that can close loops is a
common generic
challenge
In Finland and Sweden
there are signs of
emerging industrial
ecosystems that can
provide new
opportunities for
products and services
consistent with a
circular bioeconomy
An advantage of a raw material oriented focus is that demands on full life cycle
sustainability arise naturally because impacts of extraction are easy to identify.
Large volumes of bulk-material also offer numerous opportunities for different value
chains based on circular economy concepts. A product-oriented focus on the other
hand, requires finding value chains with maximum added value. A focus on products
high in the value pyramid may, however, neglect full life cycle sustainability aspects;
particularly, if the raw material is obtained from a global market with poor
traceability. It may also be difficult to identify processes with potential for circularity
for some high end items such as health care products or fine chemicals. The
sustainability perspective arising from the governance of the production of raw
material and bulk products combined with innovative product developments are
thus key to the renewal of manufacturing towards a sustainable circular
bioeconomy. This is clearly the case in textiles (fibers), buildings and biorefineries.
The renewal of manufacturing encounters different obstacles across sectors and
countries. For example, in Finland and Sweden the production of high quality wood
based textiles is partly hampered by the broken tradition of thread, weaving and
cloth production. In the Netherlands dealing with waste has been an important
driver due to the import of raw materials and the accumulation of rest products in
the relatively small country. In the Netherlands the bioeconomy also needs to
overcome the large presence of an industry with a focus on fossil carbon.
As it is heterogeneous the bioeconomy is affected by many policy areas. These
include, among others: regulation of chemicals, waste and products, consumer
safety issues, building codes and energy policy. In a circular economy practices and
behavior are also important, for example in the choice of material and in attitudes to
repair and maintenance. A circular bioeconomy demands integrated approaches
that cut across many sectors, disciplines and government departments. It must also
bridge parallel and currently separate developments in new bio-based materials and
products, material recycling, and new products and services in refurbishing and
repair. Bringing together these independent developments into a functioning system
is one of the main challenges in stimulating a circular bioeconomy.
Examples of innovations that that facilitate the bridging of the bioeconomy with the
circular economy are emerging. These include modular solutions for houses and
2
refurbishment , wood and fiber preservatives that reduce problems of toxic
3
substances and lease systems for major textile users such as hospitals. There are
also examples of attempts to create business ecosystems where large incumbents
facilitate access of small niche innovators to the material flows of large biobased
enterprises such as pulp mills. This approach is used at Domsjö fabriker in Sweden
and is the strategy planned for the Äänekoski bioproduct mill in central Finland.
Key challenge 1: How to
achieve an effective
combined approach
that encourages circular
sustainability
innovations throughout
the value chain
Challenges for innovation policies
A sustainable circular bioeconomy requires the building of concrete links between different
and hitherto often distinct areas of R&D. Examples can be found within areas such as ICT,
industrial design and material science to produce innovative products and services. The
alignment of the innovative biobased elements of a circular economy into a large-scale
transition of value chains (and networks) is a challenge shared by Finland, the Netherlands
Tekesin Ohjelmatoiminnan strateginen tuki -yksikkö tuottaa innovaatioympäristöä palvelevaa tutkimusta
teemakohtaisilla hauilla.
Key challenge 2: To
develop innovation
policies that overcome
the cultural transition
barriers that are
maintained by past
successful innovations
and strong incumbent
actors
The focus of public R&D
support should be on
the emergence of new
businesses ecosystems
compatible with a
circular bioeconomy
and Sweden. To succeed, this transition must deliver products and services that have
high export value. This is a generic challenge for all industrial ecosystems based on
textiles and textile fibers, wood building and novel products of emergent biorefineries.
For example, the circular economy of textiles is still poorly developed with large leaks
to the waste sector (Dahlbo et al. 2015), but there are examples of emerging
innovations also for textiles such as those of the Dutch co-operative circle economy
(http://www.circle-economy.com/);
Cultural aspects that maintain path dependency and hamper transition constitute a
major challenge for innovation policies. The creation and nurturing of more niches for
circular bioeconomy products and services will help to break down cultural barriers to
transition. In particular, greater attention to industrial ecosystems that produce low
volume high value-added products may facilitate transitions from those existing
systems that focus on high volume and low added value that do not encourage circular
solutions. Innovation policies in Finland and Sweden need to pay greater attention to
the emergence of product-oriented business and innovation ecosystems. Thus, in the
case of biorefineries, support should be made conditional on the emergence of
innovative new ecosystems and in order to support that only contributes to
incremental improvements in the bulk production of incumbents.
The great emphasis on bulk production in the forest sectors in Finland and Sweden has
contributed to limited investment in R&D targeting new break through high-end
products. Almost paradoxically, the new policies cannot just focus on the high end
products themselves. Policies should also support fundamental studies of the
materials, but with a new twist. The supported R&D should recognize and search for
desired material characteristics that make it possible to create new high-end products.
For example, wood based textile fibers that can compete successfully with cotton
fibers in high-end product markets are only now receiving the attention that is
required to tailor their properties for the market. Focused fundamental material
science is also necessary for the development of new biorefinery processes and for
innovations in structural applications for wood.
Suggested measures
The results of the comparison of Finland, Sweden and the Netherlands suggest that the
following measures are required:



innovation policies in Finland and Sweden should strive actively to encourage the
emergence of business ecosystems that can deliver mixes of biobased product
and service innovations in supporting transitions towards a circular bioeconomy;
focus R&D to develop better understanding of the appropriate scale of circular
economy loops (local, national, international), across different biobased value
chains, and explore how incentives or regulations can encourage their full linking
or improvement;
use R&D policies to challenge current industry mindsets and structures (i.e. focus
on resources, bulk, optimization, or particular existing end products) that hamper
the emergence of a circular biobased economy as a crucial pre-cursor for progress
– in practice this can be achieved by introducing conditions for public R&D support
that create clear incentives for the establishment of new business ecosystems;
Tekesin Ohjelmatoiminnan strateginen tuki -yksikkö tuottaa innovaatioympäristöä palvelevaa tutkimusta
teemakohtaisilla hauilla.


analyse the true potential for upscaling beyond the domestic market across
national bioeconomies in order to better focus R&D support for a circular
economy on activities that have upscaling and export potential. Joint action by, for
example, the Nordic countries can be highly beneficial in this regard;
manage the decline of the fossil carbon based economy with the help of
denovation policies (Bosman & Diercks, forthcoming) or destabilization
approaches (Kivimaa and Kern 2016) to carefully disentangle industries and the
economy from fossil resources.
References
Bosman, R., J. Rotmans. 2014. Benchmarking Finnish and Dutch bioeconomy transition
governance. Dutch Research Institute for Transitions – DRIFT. Report December 2014.
Bosman, R., Diercks, G. (forthcoming). Addressing Grand Challenges: denovation policy as
the next step in the normative turn in innovation policy.
Dahlbo, H., K. Aalto, H. Salmenperä, H. Eskelinen, J. Pennanen, K. Sippola, M.
Huopalainen 2015. More efficient re-use of textiles and recycling of textile waste in Finland
(in Finnish) The Finnish Environment 4/2015.
EC 2015. Closing the loop - An EU action plan for the Circular Economy. Communication
from the Commission to the European Parliament, the Council, the European Economic
and Social Committee and the Committee of the Regions. COM(2015) 614/2
Kivimaa, P., F. Kern 2016. Creative destruction or mere niche support? Innovation policy
mixes for sustainability transitions. Research Policy 45: 205–217.
Lavikainen, K. 2015 Media Analysis of Sustainable Circular Bioeconomy in Finland. RECIBI
project report.
Werkgroep Businessplan Biobased Economy 2011. Een punt op de horizon: aanzet voor
een intersectoraal Businessplan Biobased Economy. Available online:
http://www.rijksoverheid.nl/documenten-en-publicaties/rapporten/2011/06/17/eenpunt-op-de-horizon.html
Notes
1) For example, the eco-bio conference (http://www.bebasic.org/calendar/calendar/eco-bio-conference-march-6-9-2016-inrotterdam.html) is clearly product oriented. Dutch biobased companies also
actively aim at the innovation top, for example with the Europe’s ‘top 20 growth
companies’ selection of the 2014 Cleantech Summit Rotterdam, where no Finnish
or Swedish companies were listed under bioeconomy.
2) For example, http://www.storaenso.com/rethink/modular-construction---allinclusive
3) For example, the Norwegian Kebony ASA develops, manufactures and sells the
environmentally friendly hardwood product Kebony based on smart use of liquids
from biowaste material http://kebony.com/en.
Tekesin Ohjelmatoiminnan strateginen tuki -yksikkö tuottaa innovaatioympäristöä palvelevaa tutkimusta
teemakohtaisilla hauilla.