The policies the EU bioeconomy needs now

Building a biomanufacturing base is fundamental to the EU’s long-term climate and security agenda. 

Yet its bio-industries still face limits to scaling, including high raw material costs and investor caution.

Meanwhile, fossil chemicals have enjoyed decades of subsidies and regulations. To compete, biobased supply chains need urgent policy support.

Here, we explain the role of policy in building markets, plus three areas the EU must intervene in for biobased growth: demand stimulus, regulatory harmonisation, and vision. 

Why a scaled EU bioeconomy matters

The importance of the bioeconomy to EU policy priorities cannot be understated. 

Biomanufacturing is essential for decarbonising certain industries as well as meeting biodiversity goals. Creating goods from renewable feedstock involves fewer eco-toxic compounds, decoupling manufacturing from poisonous solvents and byproducts. 

Biomanufacturing can also allow the EU to make essential goods domestically with local materials, lowering reliance on fragile fossil supply chains and strengthening its room for manoeuvre on the international stage. 

Despite these benefits, EU biomanufacturing capacity and biobased market share remains limited. The reason comes down to cost: biobased products remain two to three times the price of their petrochemical counterparts. 

Yet as we will learn, there is nothing inevitable about this. With the right policies, EU biomanufacturing could be a far larger and more competitive sector than it is today.

How policy supports fossil fuels

The reason that biobased goods are costlier than fossil products usually comes down to the price of biobased feedstock. Plants, algae, and other biological raw materials are more expensive than cheap petroleum and its derivatives. 

However, the cheapness of fossil feedstock has never been inevitable. Rather, fossil dominance has been the result of concrete policy choices reaching across decades.  

In 2024, the world gave fossil fuels around $725 billion in direct subsidies. This comes on top of subsidies and favourable policies stretching back over a century. 

Fossil fuels also enjoy indirect perks: downstream damage like air pollution and climate breakdown are not priced into their cost. Oil plastics and chemicals would be far more expensive if the market accounted for these consequences. 

This shows how every industry is built first and foremost on policies: deliberate and consistent choices on what resources to allocate where. 

If policy choices have driven down the cost of exploiting fossil fuels over decades, they can also make biobased supply chains more competitive. 

So, what policies does the EU bioeconomy need right now to grow? 

Demand-stimulus: biobased procurement, quotas

If a larger, more competitive bioeconomy is the goal, the EU policy priority should be demand stimulus. 

Without actively increasing demand for biobased goods, Europe’s sustainable innovations will remain niche products without a wider impact on climate or economic outcomes. 

Policy can stimulate demand in several ways. One is by bringing in new rules for public procurement that favour sustainable purchases. 

Getting government departments and public agencies to prioritise green products in their buying can be a powerful shot in the arm for emerging biomanufacturing sectors that cannot compete on price but can offer superior sustainability. Public departments are steady, high-volume buyers, offering a reliable source of long-term demand – the kind that encourages cautious investors to part with their cash. 

Public procurement should only be the start of a biobased demand stimulus. The EU also needs policies that will expand demand within B2B markets. 

Whether EU biomanufacturing will eventually develop into a self-sustaining, profit-generating segment of the economy will depend on whether it can win demand from the private sector. This is because the private sector is bigger than the public sector. 

To drive biobased purchases in private industry, the EU would need to implement quotas. This could be a legal minimum of biobased content in certain products, like packaging ingredients. The EU has already used quotas to expand its sustainable aviation fuel industry. 

Biobased quotas are perhaps one of the most powerful ways to reshape the market in favour of biobased goods and sustainable re-industrialisation and match the sort of policy support for fossil fuels have profited from for decades. 

Without regulations like quotas that enforces sustainable industry purchasing, companies will inevitably revert to the cheapest (and dirtiest) goods. 

Demand reduction: fossil bans

The flipside of stimulating biobased demand is a clampdown on demand for fossil products where scaled green alternatives already exist. 

There are already some EU regulations that try to do this. The most famous is the Single Use Plastics Directive, which outright restricts the sale and use of certain single use plastics – sachets for condiments and sauces, for example. 

As well as clear-cut bans at the supply end, the law encourages behavioural changes in consumers. For example, the law requires takeaway business options for diners to bring their own containers at no extra cost.

Another EU policy that favours biomanufacturing is the Packaging and Packaging Waste Regulation 2025/40, which entered into force in 2025. It aims to decrease the use of virgin materials in packaging and make all EU packaging recyclable in an economically viable way by 2030.

Finally, the Ecodesign for Sustainable Products Regulation (ESPR) regulation, which became operational in February 2026, should bolster biobased and circular demand by forcing companies to build products with sustainability in mind from the start. 

In certain industries, the regulation will enforce sustainable product features like durability, repairability, recyclability, and reusability, energy use requirements, and ‘substances of concern”, like forever chemicals. 

The idea is to encourage companies to cut the use of unnecessary resources and eco-toxic materials. It aims to foster products that are useful for longer, limiting the need for virgin resource extraction. 

The regulation should drive up demand for biobased supply chains as biobased or circular ingredients can drastically improve product sustainability across the ESPR’s metrics. 

Regulatory harmonisation: simplify approvals

The EU is home to thousands of innovative biobased products with the potential to scale. 

Many meet the ESPR’s sustainability criteria and could offer a one-to-one substitute for fossil products.

Nonetheless, new biobased products still struggle to find investors and or reach customers. This is because the EU market is so fragmented. 

In theory, the EU is home to 33.5 million enterprises and 452 million people – an immense commercial opportunity for biobased business. In practice, however, the EU pool of demand is divided across different national jurisdictions and approval systems. 

 European and national regulations for bio-based products do not just vary – they can outright contradict each other. 

This regulatory fragmentation is a problem for a sector bursting with new materials, foodstuffs, and chemical formulas. Companies consistently report on how costly it is to obtain regulatory approvals for new products in the EU compared to the US, where goods can get greenlighted four times quicker. 

Regulatory harmonisation has been a keyword in biobased policy recommendations for years. The advice still holds: the bloc still needs work on speeding up approvals and unifying the market for biobased goods. 

Harmonisation highlights the need for different policy interventions to be implemented at the right time. Even with demand stimulus, fossil bans, and green manufacturing rules all in place, businesses and consumers cannot access the sustainable alternatives being produced right on their doorstep without efficient product approval pathways. 

Green vision

The EU is not short on new green industrial policies. Yet overall, these regulations can appear fragmented, lacking a clear goal that investors can fix their sights upon. 

The final piece of the biobased policy puzzle is therefore not confined to a particular legislative area. Rather, it relates to overall vision.

Vision is the cherry on the cake of industrial policy. It is how policymakers draw the threads of individual regulations together into a coherent set of goals.  

Without clarity on ultimate purpose, the various acts, frameworks, and directives issued by the EU will not necessarily articulate together, even if they are effective in their limited domains. 

Without a consistently ambitious narrative from the top, biobased companies will also struggle to convince investors their sector will enjoy supportive regulation over the next 10 to 15 years.

The exact content of the EU’s green industrial vision is up for debate. At minimum, however, it must involve bold and active intervention to create demand for green manufacturing. The success of demand stimulus should be measured against binding targets on emissions, capacity buildout, and economic security for citizens. 

A clear green industrial vision could also allow the EU to carve out a distinct identity on a global stage, one that offers an alternative to economic models promoted by rivals  China and the US.

The EU has made progress on policies that favour bioeconomy growth. Equally important is to articulate an idea of what success will look like: a vision that industry, government, and citizens can commit to over the long-term. 

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