Explanatory Memorandum to COM(2013)496 - Bio-Based Industries Joint Undertaking - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)496 - Bio-Based Industries Joint Undertaking. |
|---|---|
| source | COM(2013)496  |
| date | 10-07-2013 |
One of the main aims of Horizon 2020, the Framework Programme for Research and Innovation covering the period 2014-2020, is to strengthen European industry through actions supporting research and innovation across a range of industrial sectors. In particular, it provides for the creation of public-private partnerships that will contribute to tackling some of the key challenges Europe is facing.
Bio-based industries in the EU could make a significant contribution to the objectives of the Europe 2020 Strategy, and its flagship initiatives 'Innovation Union', 'A Resource Efficient Europe' and 'An Industrial Policy for the Globalisation Era'. This has been recognised in several recent EU policy initiatives, such as the European Innovation Partnership for Agricultural Productivity and Sustainability, the Smart Specialisation Strategy for Member States and Regions and the proposal for the 7th Environmental Action Programme. The Communication outlining the European Bioeconomy Strategy, adopted on 13 February 2012 i proposes the creation of a Public-Private Partnership (PPP) for bio-based industries (Bio-based PPP) as part of its Action Plan. The Commission Communication promoting a stronger European industry for growth and economic recovery i reiterates the importance of setting up a Bio-based PPP in the form of a Joint Technology Initiative (JTI) in the context of the EU's industrial policy, which is also in line with the Commission Communication 'Public-private partnerships, in Horizon 2020: a powerful tool to deliver on innovation and growth in Europe' i.
The Committee of the Regions has also underlined the important role of bio-based products and a bio-based society in Europe in its opinion on the European Bioeconomy Strategy end of November 2012[6]. In view of broader economic and social sustainability issues and of implications for consumers, the Commission is currently studying biofuels from a consumer perspective as a part of a broader study on the functioning of the fuels market[7].
Bio-based industries are industries, which use renewable biological resources for the production of bio-based products and biofuels. Production usually takes place in biorefineries and often relies on bio-based processes. They give rise to new value chains, linking previously unrelated primary producers (and e.g. managers of organic waste) and industries, thus opening new opportunities for a wide range of established players. An increasing number of processing industries, such as the chemical, biofuels, pulp and paper, sugar and starch, and technology providers (in particular on industrial biotechnology and engineering) are interested in moving partially or entirely towards sustainable renewable bio-based resources and/or products.
The main focus of this JTI will be on the transformation of non-edible parts of plants (e.g. wood, agricultural and forestry residues) and biodegradable wastes into bio-based products and biofuels. The non-edible part of plants, also referred to as ligno-cellulosic material, is usually heterogeneous and contains a mix of different types of complex biomolecules (i.e. cellulose, hemi-cellulose and lignin). The technology required for transforming ligno-cellulosic material is considered 'more advanced' compared to current technologies converting edible parts of plants, and is still being developed. The resulting products and processes are therefore called 'advanced'.
Bio-based industries are a cornerstone of the EU bioeconomy in generating growth and jobs. Although bio-based products and biofuels currently only represent about 3% of the EUR 2 trillion in annual turnover and 1% of the 22 million jobs generated by the European bioeconomy today[8], bio-based industries are expected to grow more rapidly and substantially than more traditional bioeconomy sectors[9],[10]. Estimates from different sources consider that:
· The global revenue potential of the entire biomass value chain for biorefineries could exceed EUR 200 billion by 2020[11];
· The share of bio-based processes in all chemical production taken on its own is likely to increase from less than 2% in 2005 to 25% in 2025[12];
· The volume growth of EU bio-based chemical products (including bio-plastics, bio-lubricants, bio-solvents, bio-surfactants and chemical feedstock) will be at 5.3% per year up to 2020, resulting in a market worth EUR 40 billion and 90,000 jobs within the bio-chemical industry alone[13];
· Up to 75 billion litres of bioethanol could be sustainably produced at a competitive cost by 2020, which would represent about EUR 15 billion in additional revenue for the agricultural sector[14].
To realise this potential and ensure the competitiveness of Europe's bio-based industries and their value chains in global markets, a number of hurdles need to be overcome:
· Biomass feedstock will need to be sourced in Europe in a sustainable way and without unintended negative consequences, such as loss of biodiversity, indirect land use change (ILUC) or negative effects for food security.
· Different players, including agriculture and forestry, industries and waste managers need to set-up cooperations along full value chains, with the aim of increasing resource-use efficiency by reducing the current fragmentation and isolation of these sectors.
· New processes need to be developed to separate, pre-treat and convert this feedstock into bio-based products and biofuels. A wide range of radically different technological options (e.g. enzyme based versus thermochemical processes) will need to be taken forward simultaneously in a strong and multi-facetted research effort to enhance process efficiency and optimise yield.
· Significant investment in up-scaling of technology and infrastructure is needed to assess the relative merits of radically different technology options and to identify winning option(s). This will mean upgrading existing bio-based industries (e.g. pulp and paper mills, biofuels, starch, chemical, etc.) and developing new and scalable integrated biorefinery models.
· The successful uptake of new bio-based products and bioenergy/fuels would require developing standards, labelling and certification systems and achieving customer acceptance. Product prices should appropriately reflect externalities and consumers should be able to make informed product choices, e.g. based on data on the benefits of these products over the full product lifecycle from cradle to grave.
The bio-based industry value chains (ranging from primary production, biorefineries, industrial users to consumer brands) are complex and so are the technological and innovation challenges that need to be overcome to unlock its socio-economic and environmental potential. Only a strong strategic vision, a well-structured and defined research and innovation agenda and a long-term stable financial commitment can bring together in one programme the different competences from across Europe to achieve the necessary breakthroughs and provide sufficient certainty and critical mass to leverage significant private investments.
The objectives of the proposed JTI on bio-based industries are to:
· Contribute to a more resource efficient and sustainable low-carbon economy and to increasing economic growth and employment, in particular in rural areas, by developing sustainable and competitive bio-based industries in Europe, based on advanced biorefineries that source their biomass sustainably; and in particular to:
· Demonstrate technologies that enable new chemical building blocks, new materials, and new consumer products from European biomass, which replace the need for fossil-based inputs;
· Develop business models that integrate economic actors along the value chain from supply of biomass to biorefinery plants to consumers of bio-based materials, chemicals and fuels, including through creating new cross-sector interconnections and supporting cross-industry clusters; and
· Set-up flagship biorefinery plants that deploy the technologies and business models for bio-based materials, chemicals and fuels and demonstrate cost and performance improvements to levels that are competitive with fossil-based alternatives.
The EU has funded a wide range of projects that contribute to the advancement of bio-based industries over the past decades. The EU Framework Programmes for Research and Technological Development (FPs) cover almost 6% of total R&D investment of the EU and 15% of European publicly funded R&D financed in a cross-border collaborative manner. Under the FP7 Specific Programme on 'Cooperation', Theme 2 'Food, Agriculture and Fisheries, Biotechnology' is currently financing 100 projects in the area of biotechnology with an EU contribution of about EUR 400 million.
In view of the multidisciplinary nature of biorefineries, DG RTD organised a Joint Call in 2008 on biorefineries involving four Themes of the 'Cooperation' Programme (Theme 2, Theme 5, Theme 4 'Nanosciences, Nanotechnologies, Materials and New Production Technologies, and Theme 6 'Environment"). Three flagship collaborative projects (BIOCORE, EUROBIOREF and SUPRABIO) were selected for funding in 2009 with a combined EU contribution of about EUR 50 million.
The experience of the past years confirms that Europe has a strong research base in the area of bio-based industries with some successful biorefinery plant projects, both at EU level and at regional and national level.
Funding mechanisms applied at EU and regional level, in particular large and integrated biorefinery projects and regional bioeconomy clusters, are a step in the right direction by applying a value chain approach that covers research, demonstration and deployment activities and encourages cross-border collaboration. Yet, they have not succeeded in reaching a critical mass sufficient to overcome fragmentation and create integrated bio-based industry value chains in Europe. The impact of either funding mechanism could have been even better if they had been part of an integrated long-term vision for bio-based industries and if more support was given to demonstration and deployment activities.
Contents
- RESULTS OF CONSULTATIONS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- General context
- Reasons and objectives for a JTI in the area of bio-based industries
- Building on past experience
- WITH INTERESTED PARTIES AND IMPACT ASSESSMENTS
- Impact Assessment
- Summary of the proposed action
- Legal basis
- Subsidiarity and proportionality
- Choice of instrument
- 5. OPTIONAL ELEMENTS
A wide range of sources were consulted in preparation of this JTI:
· A public consultation on the proposed Bio-based PPP took place from 21 September to 14 December 2012 and received 638 valid responses. 64.6% of responses came from the private sector, 24.6% from academia, 8.8% from the public sector and 2% from NGOs. Responses were received from 19 out of 27 Member States, with most replies coming from Poland, followed by the Netherlands, Germany, Spain, France, Belgium, Sweden, Finland, Italy, Austria, the UK, Romania, the Czech Republic, Portugal, Denmark, Ireland, Hungary, Greece and Slovakia. Almost all respondents (94.3%) called for EU intervention and 86.9% viewed a PPP as the most appropriate mechanism to implement the R&I programme for bio-based industries under Horizon 2020, and considered that it would have positive socio-economic impacts. Other key messages were the need to strengthen EU innovation, to improve competitiveness and to formulate clear intervention objectives for bio-based industries. The results from the consultation were presented and discussed at a stakeholder event on 9 January 2013 in Brussels, which was attended by 162 people. The full report of the online public consultation forms part of the Impact Assessment; it is planned to publish a printed version in June 2013.
· Several events organised in the framework of the Bioeconomy Strategy implementation allowed for regular and broad-based contacts with stakeholders during the preparation of the Impact Assessment . This included the conference 'Partnering for the Bioeconomy in European Regions' of 12 October 2012, co-organised by DG RTD and the Committee of the Regions. During the conference, information on the potential of a Bio-based PPP was provided and examples of regional activities highlighted possible benefits of bioeconomy partnerships. DG REGIO specifically informed conference participants about the Smart Specialisation Strategy, being part of the rural development policy of the EU. It proposed focusing investments on the bioeconomy where appropriate.
· Several studies conducted in connection with the bioeconomy, bio-based products and biofuels were consulted.
· A group of ten external reviewers with expertise relevant to the different parts of the bio-based industries value chain was brought in to assist DG RTD with collecting and analysing the above data and preparing the Impact Assessment.
The proposed Regulation is supported by a Commission Impact Assessment, which is accompanying the proposal.
This proposal concerns setting-up the Bio-based Industries Joint Undertaking (BBI JU) under Article 187 of the Treaty on the Functioning of the European Union (TFEU) for the implementation of the Joint Technology Initiative on Bio-based Industries (BBI JTI).
The BBI JU should be established for a period ending on 31 December 2024. It will have its seat in Brussels, Belgium.
It will be founded by the EU, represented by the European Commission, and the Biobased Industries Consortium (BIC). The activities of the BBI JU will be jointly funded by its founders. The Commission and BIC will contribute in equal parts to the running costs of the BBI JU. The research and demonstration activities will be funded through contributions by the BIC member companies with monetary and non-monetary resources (staff, equipment, consumables, etc.), and monetary resources from the EU. The level of EU resources will vary, in line with Horizon 2020 rules, depending on the type of activity considered.
The BBI JU will be open to new members, provided that they contribute with resources to the achievements of the objectives.
The Commission will be represented in the Governing Board in rights and votes as the industrial BIC members.
The legal basis of the proposal is Article 187 of the TFEU.
The Rules for Participation and Dissemination of Horizon 2020 will apply. However, given a specific operational need of this initiative, a derogation from these Rules is necessary. Nevertheless, this specific derogation is not included in the present proposal at this stage, in order not to prejudice the inter-institutional discussions concerning the appropriate legal basis/procedural modalities for their adoption, which are still pending in the context of the legislative works concerning the Commission proposal for a Regulation of the European Parliament and of the Council laying down the Rules for Participation and dissemination in Horizon 2020 (COM(2011) 0810 - 2011/0399 (COD). The specific derogation will be introduced at a later stage in view of the outcome of the abovementioned discussions.
The derogation will allow to limit, for actions other than innovation actions, the eligibility for funding to entities such as SMEs or secondary and higher education establishments whilst achieving at the same time the optimal level of leverage effect on private investment.
The proposal concerns an area in which the EU does not have exclusive competence, which is why the principle of subsidiarity applies.
The policy objectives underlying the proposal can only be achieved through EU action for the following main reasons:
The transnational and complex nature of this large research and innovation challenge identified, which requires pooling complementary knowledge and financial resources across sectors and borders. No single Member State, company or stakeholder can resolve the problem by itself.
The coordination effort and the resources required are of such a large scale that they can only be credibly implemented at European level.
Given similar and competing initiatives underway or being launched in other leading economies (US, Brazil, China, Canada), only large-scale action implemented at European level is sufficiently attractive for industries to invest in Europe.
In accordance with the principle of proportionality, the provisions of this Regulation do not go beyond what is necessary to achieve the objectives.
The proposed Regulation will significantly boost public and private investment in research and innovation activities that aim to improve the competitiveness of European bio-based industries and create employment, in particular in rural areas. The BBI JU can leverage private resources with EU funds at a level that cannot be achieved with traditional instruments, which lack the strategic long-term approach regarding programming and financing. Every EUR 1 of EU funds will leverage EUR 2.8 of private funds during the operation of the Joint Undertaking.
The total budget of the BBI JU will be EUR 2 000 million (including in cash and in kind contributions). In addition, the industry has committed to invest EUR 1 800 million in the establishment of large demonstration and flagship plants contributing to the objectives of this JTI.
The maximum contribution from the European Union (including EFTA) will be EUR 1 000 million[15], paid from the Horizon 2020 budget.
The running costs of the BBI JU will be covered in equal parts by the EU and the BIC from the outset. The administrative costs shall not exceed EUR 60 million for the duration of the JU.
The research and demonstration activities implemented by the BBI JU and eligible for co-funding under Horizon 2020 will be jointly funded by the EU and BIC.
Review
The EU will present an annual report on the progress made by the BBI JU and will perform a mid-term review by 31 December 2017. Discharge for the implementation of the EU contribution shall be part of the discharge given by the European Parliament, upon recommendation of the Council, to the Commission in accordance with the procedure provided for in Article 319 of the TFEU.