Evaluating the macroeconomic impacts of bio-based applications in the EU

20-10-2014 | Publication

In 2012, the European Commission launched the Bioeconomy Strategy and Action Plan with the objective of establishing a resource-efficient and competitive society that reconciles food security with the sustainable use of renewable resources. This report contributes to the plan by evaluating the macroeconomic impacts of bio-based applications in the EU. These impacts have been evaluated with the computable general equilibrium model MAGNET, considering four bio-based applications, namely biofuel (second generation), bio-chemicals, bio-electricity, and biogas (synthetic natural gas).

The results show that – given the assumed efficiency of conversion technologies, conversion costs, and biomass and oil prices – the second-generation biofuel and biochemical sectors, for the EU, will be the only sectors competing with their conventional counterparts by the year 2030. A substantial part of this impact can be explained by an expected increase in wages, since the production of biomass is relatively labour-intensive. The increase in wages is transferred to other economic sectors and increases consumption and production. Another important contributing factor is the lower oil and fuel price, as a result of oil-based fuel being substituted by bio-based fuel, which in turn benefits the entire economy.