The potential of the chemicals bioeconomy
Posted: September 08, 2025
Is a bio-based economy on the horizon? Back in 2020, a McKinsey report claimed that up to 60% of the physical inputs to the global economy could, in principle, be produced biologically. Biotechnology involves using biological reactions to transform compounds, using waste to produce valuable chemicals.
The McKinsey report said that about 20% of inputs are already biological materials, and an additional 40%—for example plastics or fuels—“could potentially be produced or substituted using biology.”[1] In 2022, the World Bioeconomy Forum concluded that the bioeconomy would be “a third of the global economic value” by 2050.[2]
Our Industrial Life
Get your bi-weekly newsletter sharing fresh perspectives on complicated issues, new technology, and open questions shaping our industrial world.
BioChem Europe, part of the European Chemicals Industry Council that advocates for the European biomass-derived chemical industries, sees the bioeconomy as an opportunity to recreate an industrial base in Europe and potentially lead global markets in the sector. But both political reforms and investment in infrastructure are required to fully capitalize on the opportunities available, according to the World Economic Forum.
In the meantime, businesses that can make the most of existing value chains have the potential to create huge sustainability wins by taking advantage of the bio-based boom.
The rapid expansion of bio-based products in Europe
Both the biofuels and the biochemicals markets are rapidly expanding. Last year, the global biofuels market was worth more than $132 billion and Precedence Research predicts it will almost double to $257 billion by 2034. The EU is prioritizing its bioeconomy, with an updated Bioeconomy Strategy, billions of euros of funding through Horizon Europe, and knowledge sharing through the European Bioeconomy Policy Forum.
One such project funded by Horizon Europe is LUCRA, a venture aiming to demonstrate the technical and economic feasibility of transforming organic waste into bio-succinic acid. Succinic acid has applications across industry, including in the automotive, pharmaceutical and agricultural sectors. Using thermal, enzymatic and fermentation technologies, LUCRA hopes to turn urban organic food waste and sawdust into succinic acid, reducing greenhouse gas emissions by 37% compared to conventional production processes.
In France, biotech company Afyren received a €20 million grant from Horizon Europe to fund its bio-based chemical building blocks project. The business turns agricultural processing co-products into new products, including compounds for industrial chemicals, pharma and personal care. Afyren’s fermentation process transforms organic waste, including sugar beet co-products, into bio-based organic acids that can directly replace petro-sourced compounds in products such as food preservatives, cosmetics, and weed control.
Meanwhile, a €30 million investment in metathesis catalysts aims to help decarbonize the chemical industry in Hungary.[3] Verbio, a biomass business, is opening a new large-scale production plant generating catalysts that will be used to manufacture bio-based chemicals at its new plant in Bitterfeld, Germany. The catalysts will also be used by industrial customers in sectors such as renewable chemicals, polymer production, fragrances, and agrochemicals.
“This technological breakthrough lays the groundwork for converting renewable vegetable oils into high-value organic compounds, which can be used in the production of cleaning agents, high-performance lubricants, and plastics. This not only enhances sustainability but also reduces the chemical industry’s reliance on fossil-based raw materials such as petroleum," said Dr. Levente Ondi, Director of XiMo Hungary Kft, a subsidiary of Verbio.
Bio-based drop-in chemicals vs. dedicated bio-based chemicals
The bio-based chemical industry produces two distinct categories of products, each with different market advantages and challenges.
Bio-based drop-in chemicals are the more straightforward path to market adoption. These chemicals are produced from biological sources like plants or waste materials, but their molecular structure is chemically identical to their petroleum-based counterparts. This identical composition allows them to integrate into existing industrial processes, supply chains, and manufacturing systems without any modifications to equipment or procedures.
Companies can essentially directly substitute fossil-fuel-derived chemicals with these bio-based alternatives in their current operations. However, this convenience typically comes at a premium price, as bio-based production methods are often more expensive than established petrochemical processes.
Dedicated bio-based chemicals, by contrast, often have entirely new molecular structures that have no direct fossil-fuel equivalent. While these chemicals may offer superior performance characteristics or novel functionalities, they face significant market barriers.
Since they don't match existing petrochemicals, manufacturers who want to use dedicated bio-based chemicals often need to redesign their processes, retool their equipment, or reformulate their products. This requirement for value chain modifications creates resistance to adoption, as companies must invest time and money to accommodate these new chemicals, even though they might offer better performance or sustainability benefits.
The key trade-off is between immediate compatibility and innovation: drop-in chemicals offer an easy transition but may limit the potential advantages of bio-based production, while dedicated chemicals can unlock new possibilities but require more substantial changes throughout the supply chain.
Simulating biofuel conversions with digital tools
For businesses switching from traditional fuels to biofuels, digital tools can help reduce the expenses and uncertainties involved. By simulating how waste can be turned into a useful fuel, businesses can test the steps that need to happen, for example, working out how much energy is stored in the potential fuels or simulating how to turn that fuel into hydrocarbons that can then be used in industry.
One business that has done just that is Neste, the world’s biggest producer of renewable fuels. Neste produces diesel made from renewable raw materials including used cooking oil and animal fat waste. Its renewable diesel is a drop-in chemical that can be used in existing diesel vehicles without modifications. But adapting its own production processes to create this biofuel was not so simple.
To transform its oil refinery in Porvoo, Finland into a renewable and circular solutions refining hub, Neste needed to convert traditional oil processing units to enable them to process renewable and circular feedstocks such as liquefied waste plastics. It modeled multiple changes including integrating the new feedstocks, retrofitting existing units, adding completely new units, and continuing its current operations.
The modeling enabled the business to understand and differentiate the impacts of each individual decision, for example to trial the impacts of feedstocks in different units before committing to the changes. Modeling changes enabled the business to ensure its existing operations could continue to run uninterrupted, and means it is already set up to reconfigure its operations in the future to adapt to new business needs or regulation.
As the world starts to pivot away from fossil fuels, the bioeconomy offers huge opportunities, both for the planet and for businesses that can take early advantage. As businesses reduce their dependence on petrochemicals, bio-based alternatives provide an opportunity to not only create value from waste and improve sustainability, but also optimize processes and improve performance.
