Biobased economy benefits the whole economy

Published on
March 24, 2016

As well as making our economy less dependent on fossil fuels, the transition to a biobased economy is also crucial for realising the goals of the Paris Agreement. Moreover, the large-scale use of biomass strengthens the economy as a whole. These are the findings of the Macro Economic Outlook, drawn up under the direction of LEI Wageningen UR.

The Macro Economic Outlook (abbreviated as MEV in Dutch) was commissioned by the Dutch Ministry of Economic Affairs and TKI Biobased Economy, as part of the BE-BASIC R&D programme. In this document LEI Wageningen UR and Utrecht University determine the macro-economic impact of the large-scale use of biomass in the Netherlands on energy production and the production of materials and chemicals, with the year 2030 taken as the horizon. Project partners Essent, DSM and Corbion contributed to the economic and technological aspects of the outlook.

“One of the conclusions of the MEV is that the large-scale use of biomass has a positive effect on the Dutch economy,” says Hans van Meijl from Wageningen UR. “Major investments in technological development and open international markets could help the biobased economy contribute some one billion euros a year to the overall economy in the medium term.”

Essential for achieving climate goals

The scientists also looked into the importance of biomass use within the framework of the Paris Agreement. Van Meijl: “A further development of the biobased economy is essential if the Dutch government is going to takes the climate agreement seriously. In our scenarios, biomass represented 50 to 60% of the total amount of renewable energy in 2030. A biobased economy reduces the costs required to achieve the emission goals. Investing in further technological development will reap rewards in any case, even when the prices for fossil fuels are low. In addition, there are still good arguments from an economic perspective for implementing an international CO2 tax. The negative effects of the use of fossil fuels are currently not levied on anyone. With a CO2 tax, the costs would be for the polluters.”

Stimulating government

Stimulating government policy continues to be crucial, especially with the current oil prices, adds Van Meijl. “While the technologies in the fossil economy are fully developed there is still plenty to learn in the biobased economy. This requires support from the government. Moreover, the biobased economy can boost sectors that are currently experiencing difficulties, such as agriculture and the chemical industry. These sectors are seeing a considerable decline in employment and the biobased economy can reduce this negative effect.”

Four scenarios

In the macro-economic outlook, the scientists drew up four possible scenarios for the development of the biobased economy until 2030. In addition to the oil price and the role of the government, they also took two uncertainties into account: the speed of technological development and the availability of biomass from outside of the EU.

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