What is the need and potential for a dedicated risk finance instrument at EU level to sustain investments for mature projects in bio-based industries and in the blue economy?
This study led by Ernst & Young has surveyed relatively large and mature projects (with a Technology Readiness Level of 6 and higher) in the bio-based industries and in the blue economy in the EU with the purpose of analysing their access-to-finance conditions for investments in these sectors, and as such assess the need and potential for a new public instrument at EU level.
Trinomics has worked on analysing such projects and their access-to-finance to private and public capital in the EU in the blue economy. This covered projects using marine resources as feedstock in the food, nutrition, health, energy (i.e. multi-use offshore platforms) and mining sectors, as well as in aquaculture.
The key findings of this analysis are the following:
- The EU market for products coming from the Blue economy sectors is not mature yet, but a number of developments in this field happen in certain coastal regions. The size of the larger investments in these sectors varies between 1-5 million euros, with some projects having an investment size of 10 million euros or more.
- The sectors are still dominated by SMEs, in particular the blue biotechnology sectors, which limits the size of the investments made.
- Access to private financing is difficult, as European banks and investors are not ready to take the financial risks these projects currently have. The majority of these larger size projects are financed through EU funds, in particular the FP7 and Horizon 2020 funds. As a results, many projects are still not yet commercialised but rather focus on developing the first prototypes and demonstration plants.
- The market is very much interested in having a dedicated risk finance instrument at EU level to support these investments. Nevertheless, having such an instrument is not suited to all needs, as many project developers are looking for investors and buyers of their products.