Improving policy coherence: bioeconomy, circular economy and sustainable trade

The discussions with experts, held at two workshops held in June and October 2023, highlighted the global diversity in bioeconomy strategies, emphasizing the need for tailored approaches based on regional strengths and contexts. They also highlighted the need for improved efforts to integrate both circular and trade related considerations as part of the bioeconomy strategies and their successful implementation. The increasing relevance of trade in bioeconomy strategies and the intricate relationship between circularity, bioeconomy, and international trade underscore the need for comprehensive discussions and inter-ministerial coordination. While challenges exist, the potential for sustainable development, innovation, and economic growth through realising circular- bioeconomies is significant.

The global impacts of the growing biodiversity and climate crises combined with Russia’s ongoing invasion of Ukraine has sharpened the minds of governments in terms strengthening supply chain resilience for certain biomaterials and food stuffs. Over 60 countries and regions around the world have now adopted bioeconomy or bioscience-related strategies. Underpinning many of these strategies, keeping in mind the need for greater domestic resilience to growing environmental and geopolitical shocks, is the desire to transition to sustainable – including also circular – bioeconomies.

In parallel, over 54 national circular economy roadmaps have been developed or are under development – many of which have committed to actions related to a range of bioeconomy sectors.

A sustainable and circular bioeconomy involves “the use of biological science, technology and innovation for the sustainable production and use of biological resources, with the aim of achieving resource-use efficiency and circularity while promoting environmental and social benefits for the society".

Yet, no country can transition to a sustainable and circular bioeconomy in isolation. Rather they are, to varying degrees, integrated into a global system of value chains underpinned by trade. Global trade therefore has the potential to both facilitate and hinder the transition towards more sustainable and circular bioeconomies.

Trade can help to spread innovative circular goods, services and intellectual property across different regions, promoting the scale up of sustainable and efficient biomaterial production and consumption. It also enables the trade in secondary raw biomaterials, wastes, scraps and residue for recovery to other geographical regions with the economies of scale and production capacity to revalorize such materials. Additionally, it underpins the functioning of a global model for efficient production by enabling foods to be grown in geographical regions with conducive geographies and climates and then efficiently distributed to areas where production would have been more resource and energy intensive.

Conversely, global trade can serve to undermine sustainability and circular economy goals by promoting unsustainable and inefficient practices, such as unsustainable farming practices, long-distance transport of food, and excessive packaging and waste. Equally, over reliance on trade can increase a country or regions exposure to the cascading effects of environmental crises and geopolitical events.

Despite the deep coupling between achieving sustainable and circular bioeconomies and trade, bioeconomy, circular economy and trade strategies tend to be developed in isolation to each other with each being owned by a different branch of government and holding its own set of objectives.

It is therefore crucial to gain better understanding on the relationship between these strategies. Firstly, it is important to gain explicit understanding the extent of which national bioeconomy strategies already build on and integrate circular economy approaches. Secondly, it is then essential to understand how countries are currently or could factor in sustainable trade aspects while implementing their bioeconomy or bioscience-related strategies. Conversely, it is equally important to examine how existing trade strategies and agreements might either facilitate or hinder the successful implementation of these national strategies.

Finally, in light of the post-2020 Global Biodiversity Framework, it is imperative for governments to assess how these national strategies will align and interlink with this international framework. The post-2020 Global Biodiversity Framework aims to address biodiversity loss and promote conservation efforts on a global scale. Understanding how the national bioeconomy or bioscience-related strategies synchronize with this framework alongside circular approaches and sustainable trade is crucial for achieving coherent and collaborative actions to tackle pressing environmental challenges.

In light of this context, in the second workshop held on the 16th October 2023, Chatham House and GCRF UKRI Trade, Development and the Environment (TRADE Hub) explored diverse global perspectives on circular bioeconomy strategies and the complex intersection of bioeconomy, circularity, and international trade. The discussion highlighted a need for tailored regional strategies, collaboration, and the alignment of trade and environmental policies to drive the circular bioeconomy forward effectively.

There are evolving priorities in regional bioeconomy strategies across different parts of the world, including examples below. The strategies differ due to resource availability and the specific goals related to replacing fossil fuels by biobased resources. A recent survey by the Word Bioeconomy Forum revealed several differenced in global bioeconomy strategies. The strategies vary based on country-specific characteristics and priorities such as availability of different bioresources, biotechnology, or ecosystem services, differences in land use, and emphasis on biodiversity. Specific sectors like forestry, agriculture, and bio-manufacturing play crucial roles across countries.

• Europe / the EU is keen on replacing fossil-based products with bio-based alternatives, starting with bioenergy and bio-fields. There is an emphasizes biomass and wood-based resources, with no plans for further increases.
• South Africa places biotechnology at the forefront of its bioeconomy strategy.
• Australia lacks a formal strategy but has relevant roadmaps in place.
• Latin American countries, like Colombia and Brazil, focus on biomass resources and biotechnology, emphasizing the circular economy.
• The US focuses on bioresources and aims to increase its domestic biomass use significantly. They also concentrate on biotechnology and has substantial biomass programs.
• Sub-Saharan Africa primarily emphasizes adding value to supply chain resources rather than emissions reduction.
• China focuses on inventorying its biomass resources and aims to protect and deploy its domestic biomass.

Expert insights indicated that, due to the regional differences, there is need for tailored bioeconomy strategies, recognizing that each region possesses unique strengths and circumstances. The expert also highlights that indigenous people and societal aspects should be integrated into bioeconomy strategies, emphasizing responsible resource utilization and sustainable biomass use.

However, it appeared that explicit and outcome-oriented integration of both circular economy and trade aspects into bioeconomy strategies remained limited or only at its initial stages.

Of the examples shared, the East African Bioeconomy Strategy and continental circular economy action plan seem to be the most advanced in terms of integrating bioeconomy, circular and trade related aspects.

A significant portion of Latin America's circular economy exports consists of residues from soybean oil extraction.

Questions arise regarding whether there is a trend to reduce exports of these residues for domestic revalorization or an anticipated growth in such trade, either intra-regionally or globally.

Discussions in the workshop touched on the Chilean circular economy roadmap as an example of its integration with the bioeconomy. Initially, the bioeconomy was not central to the roadmap, necessitating a specific bioeconomy strategy or policy. The roadmap adopted the principle of regenerating natural systems, aligning with Chile's significant bio-based economy. An initiative called "regenerative production systems" was included to promote resilient rural production systems that support biodiversity and ecosystem services. Measurement of the country's natural capital is a significant focus. Trade policy was not central in the roadmap, but bioeconomy sectors offer high-value products suitable for trade, such as bio-fertilizers, bio-stimulants, biopesticides, and more.

Some Latin American governments may avoid serious debates on trade and environment due to concerns of disguised protectionism and export dependency on natural resources.

East African Bioeconomy Strategy, a regional strategy involving nine countries. It aims to promote sustainable development in Africa using the bioeconomy sector, emphasizing various sectors, including food, health, well-being, bio-based industry, and fuels. The strategy focuses on using agricultural and forestry residues and waste, promoting resource efficiency. Trade considerations are highlighted, aiming to boost trade within the region. The integration of circular economy principles is encouraged, particularly in the design and early life cycle stages. The African Circular Economy Alliance works on harmonizing policies to ease trade restrictions and promote circular economy practices.

Discussions about (circular) bioeconomy often emphasize cascading use, side streams, and lower-value applications, with less focus on high-value applications, design, and business model innovation.

African Circular Economy Network Foundation's efforts to promote circular economy transition in Africa, including North Africa. A continental circular economy action plan for Africa was developed in collaboration with the African Union Commission, addressing sectors like water, waste, energy, agriculture, and transportation. The agri-food sector is a priority, focusing on sustainable agriculture and reducing post-harvest losses. Circular economy action plans also focus on biofuels generated from organic waste. More than 55% of waste generated in Africa is organic, offering opportunities for circular economy strategies. Rwanda is a frontrunner in implementing circular economy action plans, and Ghana is making progress by developing its circular economy action plan.

In Germany, a circular economy law mainly addresses waste issues but lacks a strong focus on wider, upstream circularity. The German bioeconomy strategy is mentioned in the resource efficiency program, emphasizing biotic materials used as materials. The Dutch circular economy program sets ambitious targets, with a strong focus on replacing biotic resources with biotic resources. The discussion highlighted the need for a more holistic and integrated approach to aligning circular economy and bioeconomy strategies in both EU countries, emphasizing the importance of trade in resource management.

The focus on putting bio-based products in the Dutch circular economy program was mentioned, with concern about potential environmental rebound effects if the biobased economy were perceived as having no environmental impact. The importance of considering the growing world population and economy in evaluating the environmental impacts of the bioeconomy was stressed. Clear communication and policies addressing the substantial environmental impact of the bioeconomy are needed.

Initial attempts to involve the World Trade Organization (WTO) in improving the sustainability of biobased trade had not been perceived very promising. In particular, the attempts to improve biofuels standards and trade faced challenges due to diverse standards and protectionist measures. However, the importance of trade in bioeconomy strategies has grown, with regions like East Africa considering trade, especially in regional trade agreements. It was suggested that discussions on bioeconomy and circular economy within trade agreements should occur at a larger regional level rather than solely at the national level. However, national-level awareness on trade-related dimensions of bio- and circular economy often triggers the integration of trade considerations into negotiations related to bioeconomy strategies.

Many countries in Africa are transitioning to circular economy practices to enhance their capacity to meet trade requirements set by the EU and other countries, focusing on sustainable agricultural techniques, reduced use of chemical fertilizers, and the utilization of biofuels and waste-derived fuels to align with EU trade regulations. Trade's role in driving circular and bioeconomy practices is particularly significant in the current African context.

There are several measurement challenges in identifying circular products and residues being traded internationally. Efforts have been made to scrutinize the harmonized system (HS) and national trade classifications to uncover circular products, particularly those derived from agricultural residues. One major flow identified is the export of rigid residues from soybean oil extractions to Southeast Asian countries from Latin America and the Caribbean. Biodiversity commitments in trade agreements are growing, but they often remain soft law, necessitating the development of Key Performance Indicators (KPIs) to quantify their outcomes. Accountability mechanisms and government actions are needed to translate soft law commitments into tangible results. The European Union is a promising region for bioeconomy and circular economy strategies, offering hope and potential initiatives. Regional coalitions, like the one in Latin America and Africa, can play a role in discussing these issues, emphasizing the importance of trade in resource management.

Trade in the bioeconomy was a crucial point of discussion, with the intersection between trade flows and trade policy being a significant concern. An example was given of a recent trade challenge between Mexico and the United States revolving around GMO corn and glyphosate regulations, based on food safety and compliance with biodiversity and cultural heritage conventions. Trade agreements now include commitments to biodiversity, indigenous and cultural rights, and multilateral environmental agreements. These commitments, while not always enforceable, represent steps forward. Concerns were raised about how such commitments could lead to trade restrictions and justifications for trade disputes, emphasizing the need to modernize trade agreements to introduce greater flexibility and prevent trade restrictions. The impact of biotechnology and genetically modified organisms (GMOs) on deforestation in Latin America, especially in the Amazon and charcoal regions, was discussed.

Consideration of trade flows should be complemented with attention to the ways trade policy and international agreements impact national laws, including Technical Barriers to Trade and Sanitary and Phytosanitary Standards.

Trade agreements like the Mercosur-European Union trade agreement and their contradictions were noted, along with environmental concerns. The inclusion of bioeconomy in trade and environment debates, access and benefit sharing of genetic resources, and community involvement in resource conservation were all highlighted.

There is inherent complexity of implementing circular and bioeconomy strategies, given the risk of them increasing biomass demand, coupled with limited biomass resources like agriculture and forest residues, may lead to conflicts.

For example, the EU consumes around 1 billion tons of bioresources, with approximately 70% crop-based and 30% forest-based. Precise data on available bioresources in regions is often based on national estimates. The situation in Ukraine, a significant source of agricultural residues, has been affected by war, reducing available biomass resources. Efficient resource management in the circular and bioeconomy context is critical, given the competition for biomass resources.

There is a need to account for diverse perspectives and discussions on circular and bioeconomy strategies. The importance of transitioning from forest-based to crop-based bioresources was highlighted.

Biotechnology for bioresource utilization and risk management through biosecurity and biosafety measures was seen as vital part of sustainable bioeconomy strategies. The United States, China, and India actively work on biotechnology, considering biosecurity and biosafety, and the EU is encouraged to incorporate these aspects into its strategies.

Discussions on jobs and training within circular economy and bioeconomy strategies and research on employment transition to boost the role of the bioeconomy in international trade are topics of interest.

There is a also strong need for improved collaboration between government departments to manage cross-ministerial coordination between circular economy and bioeconomy topics.

Best practices and evidence on successful cross-departmental coordination are required to break down silos and improve collaboration. There are some positive signs indicating a shift towards better inter-ministerial coordination.