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NORDREGIO POLICY BRIEF 2015:5 • PUBLISHED JUNE 2015

BIOECONOMY– the Growth Engine of Nordic Regions?

Why this buzz about bioeconomy, you might wonder? Perhaps because it can be seen as a “silver bullet”, able to avert several staggering threats to our societies: eco-nomic and demographic decline in rural areas; jobless-ness and the climate crises. Clearly, there are several good reasons for the Nordic countries to dig deeper into their bountiful biological assets. First, it is about replacing

the nordic region contains a multi-tude of biotic natural resources; from the marine environments off the Icelandic and Norwegian coasts to the vast forests of Finland and Sweden and the fertile ag-ricultural soils in Denmark.

Since 2014 bioeconomy has been high on the Nordic policy agenda. The total turnover of the key bioeconomy sectors in the Nordic countries was approximately €184,000M in 2014 according to Nordic Innovation (2014). This constitutes 10% of

fossil fuels with biofuels and replacing non-degradable products with bio-degradable ones. Second, the bioeco-nomy could boost the productivity and product develop-ment within agriculture, fisheries, forestry and the che-mical industry. Finally, the bioeconomy creates new jobs in sparsely populated areas, by utilizing existing natural resources in new ways.

Cases from Nordic countries »Policy recommendations »

the total Nordic economy. The share of the economy represented

by the bioeconomy is highest in Iceland and lowest in Norway. In the Nordic region, growth potential is found in a wide range of bio-based products such as chemicals, bio- »

PHOTO: YADID LEVY / NORDEN.ORG

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ICELAND – South Iceland region

NORDIC CASE STUDIES

Enabling conditionsnThe region is a major producer of agri-cultural products and fisheries. Tourismcreates new markets.n Considerable potential: competencesand knowledge of primary food produc-tionn National level: Matís Ltd, an Icelandicfood and biotech R&D organisation, pro-moting region´s food innovationsn A specialized national funding instru-ment was created to increase the value offood and non-food marine products.

Impeding factorsn Scarce population, lack of educatedworkforce, vulnerable for out-migrationn Small companies, small innovations.Companies require external encourage-ment.n The regional structure makes it diffi-cult to create joint strategies but the policy framework in Iceland is being reformedn Ecoinnovation is included in the na-tional strategy Iceland 2020, but imple-mentation has been slow due to govern-ment changes

Box 1. Defining bioconomyInternational actors and governments have different ways of defining bioec-onomy. The aim is clear though: to develop an economy that is based on the sustainable utilization of renewable resources. In its “Communication on In-novation for Sustainable Growth: A Bioeconomy in Europe”, the EU considers the bioeconomy to consist of food, agriculture, paper and pulp, forestry and wood industry, fisheries and aquaculture, bio-based industries, biochemicals and plastics, enzymes and biofuel sectors. In policy-making, a bioeconomy is in many cases also seen as requiring a cross-sectoral approach that calls for a broad range of system-level changes and innovation.

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Indicative maps of the case studies on this spread: Nordregio / Julien Grunfelder

“Bioeconomy in a sparsely populated region – without always calling it bioeconomy”

DENMARK - Lolland region

Enabling conditionsn Long tradition of renewable energyproduction and active local communityn Vestas Wind Systems, a world leadingmanufacturer in the wind energy sectorn Green Center was created in 1988 inLolland to help farmers innovaten A regional development strategy thatplaces renewable energy as a core priorityand catalyst for other developmentsn Denmark aims to become completelyenergy independent by specializing inclean technologies. One objective is toutilize 50% of the manure for biogas.n A European Strategy for Sustainable,Competitive and Secure Energy 2020 (EUpolicy 2006) has been accompanied by fi-nancial support to regions like Lolland.

Impeding factorsn Structural challenges of industrial de-velopment, out-migration, dependenceon local labour marketsn Location disadvantages: weak urbannetworks and infrastructure; difficultyin connecting with neighbouring regionsn Low density: difficult and expensiveimplementation of strategies that wouldimprove the efficient use of resources(water, energy)n Renewable energy sectors’ continueddependence on public subsidies. Farm-ers don’t find it profitable to harvest bio-mass for biogas.

“Green economy focus & bioeconomy initiatives in a region undergoing restructuring“

fuels and gas, nutrients and medicine. There are differences in the extent

to which the bioeconomy is prioritized on the national political agenda. So far, Denmark, Finland and Iceland are the forerunners in this regard. Finland and Denmark recently launched new national policies and strategies to promote bioeco-nomy.

In the following pages we present five Nordic cases of bioeconomy at work – and the impeding and enabling factors.

!ICELAND

South Iceland region

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DENMARKLolland region

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FINLANDForssa sub-region

SWEDENÖrnsköldsvik

NORWAYØstfold region

NORWAY – Østfold region

Impeding factorsn Old mindset: “smokestack industry”n Shortage of qualified labournWeakened regional and local financingof bioeconomy initiativesn Need for additional high-growth com-panies to form a critical mass for theForssa regional bioeconomy cluster, andto provide inspirational examples

Enabling conditionsn Örnsköldsvik region has a long tradi-tion in forestry, trade and heavy industryn Access to natural resources, primarilywoodn Public-private co-operation and long-term financial commitmentn The Örnsköldsvik Biorefinery of theFuture Cluster: >20 member companies,using biotech to create new productsn National level: Swedish Research andInnovation Strategy for a Bio-basedEconomy: because of good natural geo-graphic conditions, industry and infra-structure, Sweden has good conditionsfor conversion to a bio-based economyn Steadily increasing share of biofuels intransportation and heating

Impeding factorsn Political will for change is partly lack-ing. Action is requested to correct marketfailures by e.g. inserting tax incentivesand biofuel quotas.n The national bioeconomy policy hasnot been updated recentlyn Hesitant regional mindset due to somefailed bioeconomy investments in the pastnThe technologies are ready to scale-up,but the demand for green solutions is in-sufficient

SWEDEN – Örnsköldsvik

“Region with a locomotive bioeconomy company”

“Long-term commitment towards regional bioeconomy cluster”

Enabling conditionsn Tradition of agriculture, industry andapplied education in the regionn Cluster of several research institutions,cleantech companies and educational insti-tutions related to bioeconomynThe Finnish National Strategy on Bioec-onomy (2014). “Pioneer of the global bio-economy”n Regional large-scale biorefinery initia-tive: Brightgreen Forssa program (2014)n The Envi Grow Park eco-industrial parkas a flagship for Forssa bioeconomy (closedcirculation of energy and materials )n Active public-private cooperationn National & international networking

FINLAND - Forssa sub-region“Bioeconomy with regional branding and public-private initiatives“

Enabling conditionsn The knowledge base & reputation cre-ated by the world class biorefinery Bor-regaardn National Strategy for Biotechnology2011-2020: investment in research, de-velopment and the commercialization ofbiotechnologyn Public support system as an additionalasset: Industrial Biotech Network Nor-wayn The Research Council of Norway fo-cuses on the bioeconomy through the Re-search Programme BIONÆR on Sustain-able Innovation in Food andBio-based Industries 2012-2021nWhite Paper No. 7 (2008–2009)“An innovative andSustainable Norway”

Impeding factorsnThe competitive situation inNorway between fossil fuels andbiomass - low profitabilityn Decline in the number of jobs inthe region, especially related to management and academic professionsnHigh costs in Norway make it difficultto compete in the global marketn Limited access to raw materials

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ContactJukka Teräs, Senior Research Fellowjukka.teras@nordregio.se

Nordregio is a Nordic research institute within the fields of urban planning and regional development. We provide policy relevant knowledge with a Nordic and European comparative perspective.www.nordregio.se

POLICY RECOMMENDATIONS - national and regional level

The five Nordic case studies can be summa-rized as a common call for action and true implementation of national and regional bioeconomy strategies. The following mes-sages were put forward to decision-makers:

n Create a common understanding ofthe concept bioeconomy. This has animpact on ambitions, visions, tools, andlearning between countries and regions.Interesting initiatives are also found inplaces where the bioeconomy concept isnot emphasized, e.g. South Iceland case.

n Design and implement financial incen-tives, stimulating demand for bio-basedproducts and services. What is called for (inall case studies) is the facilitation of markets,increased profitability in biomass, effectiveinfrastructure and action by consumers.

n Focus on export promotion and theglocal nature of bioeconomy: Open-up anew export markets for bio-based prod-ucts and services – through Nordic coop-eration, elimination of border obstaclesand other EU-initiatives.

n Promote regional co-operation andpooling of resources between regionaland local sectors and actors, throughregional clusters or quadruple helixmodels. The case studies underline thatpublic–private partnerships are very fa-vourable for developing the bioeconomyand enabling entrepreneurship, financ-ing, up-scaling, education and vocationaltraining. Such examples of active private-public cooperation are found in Forssa,Finland and bioeconomy cluster in Örn-sköldsvik, Sweden.

n Ensure long-term national and re-gional, political and financial support indeveloping regional bioeconomy sectorsor industries, including up-scaling ofdemonstration plants to larger facilities.See e.g. VINNOVA’s support to the biore-finery in Örnsköldsvik, Sweden.

n Supply statistics: Make it easier tomonitor the actual impact of bioeconomyon regional development (in jobs, CO2reduction and economic growth).

n Encourage further Nordic bioeconomy cooperation and knowledge exchange,co-financing of demonstration plants andother development projects.

Box 2. THIS POLICY BRIEFis based on a report by Nordregio (Bioeconomy in the Nordic region: Regional case studies, www.nordregio.se), commissioned by the Nordic Working Group on Green Growth—Innovation and Entrepreneurship of the Nordic Council of Minis-ters (NCM), investigating different regional bioeconomies in five Nordic countries. The Nordic regions that have been analysed are Forssa in Finland, South Iceland, Østfold in Norway, Örnsköldsvik in Sweden, and Lolland in Denmark.

Further reading / Additional references:

Future Opportunities for Bioeconomy in the West Nordic Countries commis-sioned by Matis, Icelandic Food and Biotech R&D.2014.Available on: www.matis.is

Innovating for sustainable growth – A bioeconomy for Europe (EC 2012). Available on: http://ec.europa.eu/research/bioeconomy

Nordic Innovation (2014): Creating value from bioresources. Innovation in Nordic bioeconomy. Nordic Innovation report 2014:01. Available on: www.nordicinnovation.org

Forthcoming publication:

The potential of industrial symbiosis as a key driver in Nordic regions (Nordregio, fall 2015)