Bioeconomy – driver for rural development

Jukka Teräs, Nordregio

Rohevik, Tartu

September 25, 2014

Nordregio ( established in

1997) is a leading international Nordic research institute in the broad field of regional studies.

Nordregio is acting as the secretariat for Working Groups of the Nordic Council of Ministers in 2013-2016:

Demography and welfare

Sustainable regional development in the Arctic

Green growth – innovation and entrepreneurship

Green growth - sustainableurban regions

Population density 2011 (Nordregio)

Rural regions, OECD and EU

“Rural regions in OECD countries are important economically and demographically. They account for about 75% of the land and almost a quarter of the population in OECD countries. Gains in agricultural productivity have led to a dramatic reduction in farm employment, rural regions across the OECD now depend on a wide range of economic activities for growth…traditional policies to subsidize farming have not been able to harness the potential of these economic engines” (www.oecd.org)

With over 56 % of the population in the 27 Member States of the European Union (EU) living in rural areas, which cover 91 % of the territory, rural development is a vitally important policy area. Farming and forestry remain crucial for land use and the management of natural resources in the EU's rural areas, and as a platform for economic diversification in rural communities. http://ec.europa.eu/agriculture/rurdev

Bioeconomy, blind men and the elephant

(adapted from Mintzberg & Jain stories)

“All of you are right. The reason every one of you is telling it differently is

because each one of you touched the different part of the elephant. So,

actually the elephant has all the features you mentioned” (Jain Stories)

Total Bioeconomy Nordic 2011-2012

Finnish National Bioeconomy Strategy (2014)The role of cities, municipalities, and regions

• “Cities, municipalities, regions and the central government play a key role in introducing new bioeconomy solutions.”

• “Local authorities and their large-scale investments as well as public procurement provide important development environments for the bioeconomy. They can be used for experimenting with, testing and developing sustainable bioeconomy solutions, for example, for construction, energy and water supply, transport and waste management.”

Glocal bio-based economy(Mc Cormick & Kautto 2013)

There is a need for the development of a glocal bio-based economyand distributed production models at the local level

Biomass cannot (usually) be easily or cheaply transported long distances. A distributed bioeconomy stresses the proximity bothof the sites where raw material is acquired, and where goods and energy are produced and consumed . It means establishing manyinterconnected local production plants that are integrated with other nearby industries

It is much about jobs: Case Denmark(BE Sustainable 2013)

• Maabjerg Energy Concept (MEC) – a project with the potential to become Denmark’s first full-scale integrated advanced biorefinery – will be able to produce around 70 million litres of 2nd generation biofuels from wheat and barley straw plus biogas, power and heat.

• The macroeconomic tool ADAM (Annual Danish Aggregate Model) calculations have shown that MEC… can generate 1 250 jobs per year in the construction period (2 years) , while it can keep around 1 200 people employed annually when in operation.

• S.H.Pedersen, Vestforsyning A/S (one of the partners in MEC): ”Many of these jobs will be so called blue-collar jobs. 350 of these 1200 jobs will be in the feedstock sector, 200 will be energy production jobs, and 450 jobs in industry, transport and construction – due to the fact that the biorefinery will need construction maintenance. Finally, 200 jobs will be in the service sector… MEC will be situated in one of these rural areas. So several unemployed people with a blue-collar background will be able to get a job again close to their home”

Regional impacts of Green actions(Alatossava 2014)

Regionally integrated bioeconomy: vision(VTT 2014)

Main innovation barriers

(Tödtling & Trippl, Research Policy 2005)

Regional cases on Nordic bioeconomy(Nordregio 2014)

The main objectives:

to identify the role of the regions in driving a bioeconomydevelopment in selected Nordic regions

to analyse the regional key factors: enabling conditions & impeding factors influencing the development of bioeconomy from a regional perspective and having an impact on the environment, economy, society and territories

to identify good practices of regional transition to bioeconomy as well as to identify examples of potential Nordic future “rising stars”.

Nordic regional case studies on bioeconomy(Nordregio 2014)

Basic Facts

Area: 30 966 km2

26 000 inhabitants (2012)

15 municipalities

Ministry for Industries and Innovation,

Icelandic Regional Development

Institute, Innovation Centre Iceland

University Centre of South Iceland

Regional Association of Local

Authorities (SASS)

Matís Ltd

Key Sectors

Key Actors

40% of the Icelandic agricultural

production stems from the region

Fisheries: key for the regional economy

Inland: focus on agriculture and tourism

Iceland

Case Study: South Iceland

Bioeconomy in South Iceland

Enabling conditions:

Good accessibility to natural resources

Long tradition of agricultural activities and fisheries

Positive public-private cooperation

Already existing synergies between sectors (agriculture,

fisheries and tourism) & potential for future increase

Impeding factors:

Mostly small companies with low capacity to diversify and innovate

Political uncertainty: lack of consensus

Shortage of educated labour force and insufficient funding

Case South Iceland: Findings

Natural resources and strong tradition of agriculture and fisheries combined with the increasing opportunities of tourism can provide a good background for bioeconomy

Some areas strong in innovation related to agriculture and forestry but large variations within the region

Funding available in the start phases of innovation - but challenging when aiming to scale up (expensive machinery, marketing etc.) The role of state level support ( Matís Food Innovation Centres, Innovation Centre Iceland) considered essential as they provide facilities for developing food innovation products and offer business support in the region

Low average education level can be a challenge. The situation has improved due to the establishment of the University Centre of South Iceland with several facilities along the coast (distance learning, owned by the municipalities)

Some interviewees identify challenges in innovation culture; interest in innovation may not always be sufficient and a high level of encouragement and support are needed

Bioeconomy in South Iceland: conclusions

Potential to increase the added value for biomass

Innovation in food industries can have a role in increasing profits

especially in sparsely populated areas. State-level actors are central

in promoting food innovation in the region

When promoting bioeconomy in rural regions, one should not

necessarily require very high innovation level. Enable possibilities

to develop ideas that are innovative in their regional context !

Basic Facts

• 550 km to Stockholm

• 55,000 inhabitants in Örnsköldsvik

Municipality

• Mainly rural communities

Companies: Aditya Birla, Domsjö

Fabriker, Akzo Nobel, Holmen, SEKAB

R&D/Education: Umeå University, Mid

Sweden University

Municipality of Örnsköldsvik & regional

institutions

Clustering initiatives: Processum

Key Sectors

Key Actors

Trade and heavy industry e.g. pulp & paper, logging

By-products of forest supply: Chemicals, chlorine and ethanol

SwedenCase Study: Örnsköldsvik

Bioeconomy in Örnsköldsvik

Biorefinery activities emerged

after a serious regional

economic downturn in the 1990s

Bioeconomy cluster built around

the pulp mill in Domsjö.

Processum established in 2003.

Vinnväxt funding from 2005 for

the “Biorefinery of the Future”.

SP bought 60 % of Processum

in 2013

Currently, bioeconomy has a

strong position in the regional

development program

Source: Processum

Conclusions: Örnsköldsvik

Örnsköldsvik biorefinery is an essential part of the regional change

story. Good accessibility to natural resources clearly an asset

Processum provides a regional development tool and systematic,

long-term approach - definitively needed in bioeconomy initiatives.

Processum cluster as a liaison between state actors, private

companies, academics and local communities (Triple Helix)

The municipality has limited financial possibilities to support the

development of the local bioeconomy

A major challenge: how to scale up the biorefinery development in

the Örnsködsvik region? The following concrete steps?

Nordic bioeconomy case study and rural regions

The cases illustrate the broad variety of Nordic regional bioeconomy

initiatives, ranging from small-scale efforts to large-scale ecosystems

Some Nordic regions have fully adopted the term ”bioeconomy” -

some other regions only starting to get familiar with ”bioeconomy”

Public-private partnerships: often favourable in developing Nordic

bioeconomy, especially in rural regions

One major challenge: how to scale up the emerging bioeconomy

development

Thank you!

www.nordregio.se

Photo: Kjell Nilsson