Biofuels & bioplastics: Opportunities for Europe by 2050

Achieving net zero emissions by 2050 will require countries, industries and citizens to reduce, recycle and replace fossil-based products across all economic sectors and modes of use. This transformation must be anticipated to lead to opportunities in the energy transition and sovereignty in Europe. Within this context, the study examines the markets of biofuels and bioplastics as they represent the most promising bio-based products for the foreseeable future. This is due to their high potential for growth in terms of incorporation rates, as well as their increasing global demand. 

Over the last decade, the bioeconomy has thrived in Europe with the overall bio-based market growing by over 40%. The three main drivers of the bioeconomy in Europe are: 

• Feedstock availability: Europe has a large diversity of agricultural resources that ensure a certain level of self-sufficiency to produce bioplastics and biofuels, which represent a minimal share in the use of agricultural resources (3%). 

• Price stability: Europe can count on a reliable supply of feedstocks at a stable price point that is twice as consistent as oil. This will help meet the growing demand for bio-based products. 

• Environmental benefits: Most bio-based products have lower GHG emissions than fossil-based products, and they can be reduced even more depending on the processes and feedstocks used. 

The drivers of the bioeconomy in Europe must be challenged by the growth of bio-based demand in the coming decades and by the need for advanced technologies with greater environmental benefits. In this context, the competitiveness of Europe is affected by 3 trends: 

• Technological advances: The industrial development of bioresources from the first generation of biomass has reached its maximum level and is now locked at 7% by EU regulations. It is necessary for actors in the biorefining sector to refocus on the exploitation of second-generation biomass (waste, agricultural residues…) to reach an industrial level of production over the next decades. For instance, Neste plans to transition a refinery to a renewable and circular site.  
• Regulations: The growth of the biorefining sector is supported by the introduction of environmental performance standards. By 2030 the minimum target for renewable energy consumption in road and rail transportation is set at 32%. The target for advanced biofuels and biogas in final energy consumption is set to reach 2.2% by the year 2030 (compared to 0.2% in 2022). Lastly, a target of 20% minimum of sustainable, non-fossil fuel sources will be utilized in the production of chemical and plastic products. 
• Societal breakthroughs: Total EU biofuel consumption is projected to decline by 0.7% per year by 2029 due to the development of alternative mobility. At the same time, the high greenhouse gas emissions of increasing plastic production (1124 Mt expected in 2050) are driving the transition to a circular plastic economy which promotes the development of bioplastics. 

Sia Partners has developed a top-down modelling tool to quantify the evolution of European biorefining by 2050 and investigate key parameters: 

Based on the ambitious assumptions of absolute sovereignty (no importation of biofuel and bioplastics) three scenarios were drawn with different rates of deployment of advanced generation (2G+) technologies encouraged by incentives from European governments: conservative scenario, supportive scenario and advanced scenario. To qualify the benefits of biorefining and advanced technologies of production in the fuel and plastic sectors, 5 key parameters were measured for each of these scenarios: 

• Environmental impact: how much GHG savings from this transition?  
• Energy sovereignty: how is it impacting European import dependence? 
• Agriculture stress: what are the feedstocks needed? Are they cultivated in Europe? 
• Resources impacts: Is it possible to produce 100% of the bioproduct locally? 
• Refinery sector transformation: how will the refining industry need to adapt? 

The Supportive scenario would allow significant changes in the European economy and strongly contribute to environmental objectives but would require major agricultural and technological developments to use other resources of feedstocks. Sia Partners proposes three main levers to achieve the challenges of the European demand of biofuel and bioplastics in 2050.

As the pioneer of Consulting 4.0, Sia Partners is supporting the oil industry in its energy transition, such as developing green alternatives and supporting digital transformations, a vital shift to secure their margins in a complex market with high price volatility.