DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

106 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS
procurement, increased research funding or other economic support. 139 The construction
of a second-generation bioethanol plant in Maabjerg (The ‘Maabjerg Energy Concept’ or
MEC plant), projected to come online in January 2016, further illustrates that there is a
willingness to invest from both private and public stakeholders. 140
While the increased valorisation of existing waste and by-products is the focus of this
analysis, there are several other ways to derive additional value in the bioeconomy. As
highlighted during an interview by Mads Helleberg Dorff Christiansen from the Danish
Agriculture & Food Council, there is large potential to continue the optimisation of input
factors, such as crops with higher resilience and yield, improved livestock breeding,
elimination of fertiliser leakage, and better feed. Another option is to deliberately modify
plants to produce more auxiliary biomass to be used in bio-refineries. According to a
study from the University of Copenhagen, it would be possible to produce an additional
10 million tonnes of biomass without significantly altering regular land use or output
from agriculture and forestry sectors. 141 The report claims that products worth between
EUR 1.9 and 3.5 billion could be generated from processing this biomass (mainly for
fuel), while generating 12,000 to 21,000 new jobs.
BARRIERS AND POTENTIAL POLICY OPTIONS
The following paragraphs provide an initial perspective on the barriers limiting the
‘value capture in cascading bio-refineries’ opportunity (see Section 2.2.4 for the barriers
framework). Although there were some variations in emphasis from the sector experts
interviewed in the course of this study, the central message was clear: the largest
barriers preventing an acceleration of next-generation bio-refineries are technology
and capital. The full value of organic waste and by-products cannot be extracted unless
emerging technologies are supported to reach beyond R&D stage to commercial
deployment. This study did not encounter any bio-refineries that use microbial or
enzymatic processes to produce bio-based materials such as plastics at industrial scale,
indicating that such technology is still at the development stage. Building an efficient
bio-refinery operation is also capital intensive. The financing of the MEC plant at EUR
300 million would – if they were to take it on alone – represent 9–12% of the balance
sheet of leading companies in the sector. Payback depends partially on the ability to
use current technologies (such as bioethanol and biogas) as platforms, and then add to
the biochemical cascade more advanced technologies when they become commercially
viable. While the revenue streams from the high-value, low-volume products such as
nutraceuticals combined with bulk biofuels or other chemicals could ensure profitability,
the competitiveness of the products would be increased if the prices of alternatives
derived from petro-based resources reflected their true costs (externalities).
Unintended consequences of existing regulations also stand in the way of the biorefinery
opportunity. It is important to keep in mind the complex and internationalised
regulatory landscape for the food & beverage sector. Denmark, like other European
member states, has only limited control over legislation governing raw material and
product handling, as well as waste treatment, which is set at EU level. The most
prominent example is the more extensive restrictions on animal by-products being
rendered into animal feed, following the breakout of bovine spongiform encephalopathy
(BSE) in the 1990s. This animal by-product legislation restricts some animal parts from
being used in bio-refining. Several sector experts indicate that sometimes Denmark has
chosen to implement this legislation more strictly than its peers.
While parts of the legislation governing food safety and waste treatment may have the
unintended consequence of preventing advancement of new bio-refining operations,
interviews indicate that in many cases it is more the complexity of the regulatory
139 The National Bioeconomy Panel, Anbefalinger: Det gule guld – halmressourcens uudnyttede potentiale (2015).
140 Adding to the existing 800,000–900,000 tonnes capacity to convert biomass into biogas, the new plant is
expected to convert 300,000 tonnes of yellow biomass to 80 million litres of bioethanol. The total investment
of ~EUR 300 million comes from key industrial stakeholders such as DONG and Novozymes, but also
from the EU (EUR 39 million) and Innovation Fund Denmark (EUR 40 million).
141 Gylling, M. et al., Department of Food and Resource Economics, University of Copenhagen, The + 10 million
tonnes study: increasing the sustainable production of biomass for biorefineries (2013). The potential also
includes better collection of biomass from farmland, road verges, waterweed and cover crops.