Exploring economy-wide sustainable conditions for EU bio-chemical activities

Abstract

The EU's Green Deal sets out a vision for a clean, competitive, climate neutral circular economy. As a part-solution for decarbonising its industrial base and improving its strategic autonomy, the role of bio-based substitutes is envisaged. Focusing on EU chemicals, the MAGNET simulation model is employed to quantify the impacts from EU bio-based chemical, pharmaceutical and plastic output increases over a thirty-year time horizon to 2050. To support this transformation, a fiscally-neutral tax funded investment scheme is modelled. Results show EU bioeconomy (rural) employment and growth improvements, although bio-feedstock market tensions impact negatively on EU food security, whilst ‘leakage’ effects cause net global increases in greenhouse gases and land use. Further experiments explore (i) sustainable tax schemes on food-based feedstock to mitigate said tensions and (ii) green-investment driven input-saving productivity gains in EU bio-based chemicals. Employing metrics for the five bioeconomy strategy objectives, the former generates environmental, food and (bio-)energy security improvements, relieves land market tensions, but falls short of a win-win/win-neutral outcome. Similarly, for four EU bioeconomy objectives, the latter produces outcomes that are largely on a par, or even better than the baseline. Finally, a stylised combination of both is found to generate the most optimal outcomes.