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Opportunities for Synergies Work Package 2 Deliverable 2.4

www.regions4resource.eu

The research leading to these results has received funding from the European Union Seventh Framework Programme ([FP7/2007-2013] [FP7/2007-2011]) under grant agreement n° 319938.

Authors:

TNO (Roald Suurs, Stephan van Zyl, Ton Bastein)

PNO (Ron Weerdmeester, Arjen van Kampen)

ISPT (Chris Eveleens)

Project Coordinator:

SP (Anna Sager)

Contact: anna.sager@sp.se • Tel: +46 (0)10 516 58 37

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Colophon This report has been prepared in relation to the FP7 program Regions of Knowledge.

SP4-Capacities Coordination and support action Coordination (or networking) actions FP7-REGIONS-2012-2013-1 Grant Agreement Number 319938 R4R Chemical Regions for Resource Efficiency, R4R: Improving research and cooperation in the areas of resource and energy efficiency in the Chemicals Industry

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Contents Colophon ................................................................................................................................................. 2

Introduction to the deliverable ....................................................................................................... 4

1.1 Background .............................................................................................................................. 4

1.2 Purpose .................................................................................................................................... 4

1.3 Guide to the reader ................................................................................................................. 5

Mapping the R4R regions ................................................................................................................ 6

2.1 Regional ambitions .................................................................................................................. 6

Aragon ............................................................................................................................................. 6

North Rhine-Westphalia .................................................................................................................. 6

Port of Rotterdam ........................................................................................................................... 6

South West Netherlands ................................................................................................................. 7

Västra Götaland Stenungsund ......................................................................................................... 7

West Pomerania .............................................................................................................................. 8

2.2 Strategic mapping of the R4R regions ..................................................................................... 8

2.3 Regional pathways ................................................................................................................ 11

Technological themes mentioned (see table 1) ............................................................................ 11

Organizational themes mentioned (see table 2) ........................................................................... 12

Meta-SWOT analysis (across the six R4R regions)......................................................................... 15

3.1 Knowledge development and cooperation ........................................................................... 16

3.2 Market formation and entrepreneurial activities ................................................................. 17

3.3 Resources and geography ..................................................................................................... 18

3.4 Policies and regulations ......................................................................................................... 20

3.5 Legitimacy and public support .............................................................................................. 21

Summary of key issues .................................................................................................................. 23

Next steps ...................................................................................................................................... 24

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Introduction to the deliverable

1.1 Background In the project ‘Chemical Regions for Resource Efficiency’ (R4R) six regions across the EU are working together to define a Joint Action Plan (JAP) for Resource Efficiency in the Chemical Industry. In order to achieve this, each of the regions has been subjected to an explorative analysis. These studies have provided insights in the state of play (in terms of actors involved and key innovation functions). The studies have also resulted in an overview of regional ambitions and research agenda's.

The six regional studies have been executed by regional coordinators. For the results of the six regional studies, please refer to Deliverable 2.2 (State of Play) and Deliverable 2.3. (Regional Research Agenda). Methodology and templates, as well as guidance, was provided by TNO, SP, PNO, CIRCE, ISPT and CEFIC. The method was based on a Technological Innovation System approach that was specifically adapted to the needs of the R4R project, and to the skills and expertise of the regional coordinators, who had to work with it. Deliverable 2.1 provides an extensive overview of the approach. Key elements are:

• Surveys • Structured interviews with regional stakeholders • Focus group dialogues / feedback sessions with stakeholders • Literature research

1.2 Purpose The purpose of this study is to consider the six separate regional studies and to subject them to a meta-analysis in order to identify 'Opportunities for Synergies'. The opportunities will be formulated in terms of recommendations to be considered for shaping a Joint Action Plan. The meta-analysis will contain the following elements: • Cross-regional data analysis and data presentation • Synthesis of insights on the basis of a comparative analysis of the regions within the consortium

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1.3 Guide to the reader The following sections contain all the elements of the meta-analysis. In Section 2, the results of the separate regional studies are described and compared with respect to the regional ambitions and innovation pathways. Section 3 provides an overview of the regional strengths, weaknesses, opportunities and threats. Finally, in Section 4, a set of key insights is derived in terms of 'opportunities for synergy'. These will provide an important basis for recommendations towards EU and regional authorities.

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Mapping the R4R regions

2.1 Regional ambitions The following paragraphs will summarise the strategic foci of each of the region in terms of ambitions and key innovation pathways. Afterwards, a schematic analysis of common technological and organisational themes is provided in tables.

Aragon With a strong plastics and fertilizer industry, dependence on imported raw materials and energy, Aragon adopted an agenda that has a strong focus on reduction of resource and energy cost through reduction of fossil energy consumption the use of renewables and cogeneration and trigeneration. Furthermore, bio-based plastics are expected to become a key driver for the region’s chemical industry. As such Aragon falls mainly within the R4R strategic focus on "industrial (including chemical) processes", with potential in "boosting the bio-based economy" and recycling of (plastics) waste.

Important themes are advanced energy technologies such as renewable energies (Aragón has great solar, wind and biomass potential), co-trigeneration, process monitoring, control and optimization, process intensification and more efficient systems and equipment, but also bio based chemistry (overlap with bio/based), valorization of wastes, residual streams and recycled end-of-life materials as feed, increasing transformation yields, and promoting industrial symbiosis (overlap with recycle).

North Rhine-Westphalia Based on NRW’s goals in the klimatschutzgezetz to reduce GHG emissions with 25% by 2020 and 80% by 2050 (compared to 1990) and its regional character to cover the whole value chain from chemicals, to materials and end-products, NRW is at the centre of R4R’s strategic goals, focusing on “resource and energy efficient processes” based on novel breakthrough processes, including the use of alternative feedstock (i.e. CO2, renewable feedstock) and cross-sectorial synergies and on “Boosting the bio-economy”, focussing in first instance on “drop-in solutions”, in order to facilitate transition in a capital intensive industry.

Main issues are identifying sustainable alternative feedstocks for materials and fuels, finding “drop-in” solutions and process technologies to utilise side-products of one industry as feedstock for another, including CO2 (industrial symbiosis) and new energy technologies (incl. storage) for the process industry.

Port of Rotterdam Embedded in the Port of Rotterdam Vision (Port Vision 2030) to become Europe’s major port and global hub of fuel and energy streams, and forerunner in the area of sustainable and efficient chains. In R4R the PoR region decided to focus fully on the key strategic requirement for the chemical (and other) industries to “Closing the resources loop, by recycling and re-using waste and/or side streams“. This is expressed as “from residuals to chemicals” in which side and waste streams of (production) processes will be valorised and used as input/feedstock for other production processes.

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Important themes are technologies to separate and extract valuable materials, water and energy from industrial side streams as well as from post-consumer waste, pre-treat and reintroduce as resource in industrial processes (overlap with process), novel business and organisational models to valorise waste and side streams, including industrial symbiosis and novel organisational models.

South West Netherlands With a strong footprint in the agriculture, access to aqua culture and the presence of a strong chemical and food processing sector, the Biobased Delta is one of Europe’s key regions for applied Biobased Economy. It has organized the biobased developments under the Biobased Delta with a Triple Helix agenda. With the agenda at hand, the Biobased Delta aims to become a top 3 region in Europe in the field of Agro meets Chemistry with its key themes on Green Feedstock, Green Building Blocks and Sustainable Process Industry, so fully targeted at R4R strategic focus „Boosting the bio-based economy”. Based on its strategy, geographical position and logistic strengths, the Bio-Based Delta goes beyond the R4R region including parts of North Belgium and plays a driving role to foster, expand and leverage on the concept of the ARRR meta-cluster, covering Antwerp, Rotterdam, Rhine and Ruhr as the largest chemical cluster in the world with the best logistic interconnections and potential to drive Europe’s competitiveness in sustainable chemistry.

Important themes for SW-NL are all key technological and organisational solutions to foster the transition to a bio-based economy, based on agro- and aqua-culture (strongholds in the region) and to deal with feedstock innovation, process innovation and product innovation. Overlaps with the strategic focus to develop new and/or adapt existing chemical processes to produce and integrate bio-based chemical building blocks (drop-ins as well as more disrupting) and with recycle to close the loop from agro-food and bio-refineries waste to novel feedstock.

Västra Götaland Stenungsund Based on its vision of “sustainable chemistry 2030” this R4R region focuses on the objective towards a fossil-independent Sweden by 2030 with Stenungsund the centre of production of sustainable products in the chemical industry, with all processes based on renewable resources and energy. As such it includes all of the three strategic R4R foci, however – based on analyses of the regional action plan, with dominant attention for “Boosting the bio-based economy with a particular focus on developing and using bio-based feedstock for the chemical industry” (renewable resources, production of renewable chemicals and materials, as well as renewable fuels) and on “resource and energy efficiency including process integration and use of excess heat”.

Main issues are technologies to replace fossil feedstock and energy with bio-based (including gasification and fermentation of lignocelluloses), better collaboration between industries for industrial symbiosis, and finding better outlets for excess heat from industry (i.e. district heating), including related novel business and organisational models.

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West Pomerania As mentoring region within the project, WP has a slightly different status than other R4R partners. WP is, through its Green Chemistry Cluster, in the process of designing its regional resource efficiency vision and strategy. It has identified the bio/based economy as a potential for the region, but decided to take “recycling and re-using waste and/or side streams“, including renewable waste resources as key strategic focus for the project as a basis for the TIS analyses and to kick off the development of a regional strategic agenda.

Important themes are technologies to produce fuels and chemicals from waste, use waste as additives or fillers for fertilizers and composites, but also analyses to understand the content and (potential) value of waste streams, new waste and waste re/use monitoring systems, organisation, knowledge development and transfer initiatives and mechanisms. While the strongest focus is on recycle there is certainly an overlap with processes related to the integration of resource streams from waste into production processes.

2.2 Strategic mapping of the R4R regions The figure below provides a visual and schematic representation of some of the most important synergies and overlaps of the strategic foci of the R4R regions. The figure shows how the six R4R regions position themselves in three overlapping strategic foci:

• Boosting the bio-based economy with a particular focus on developing and using bio-based feedstock for the chemical industry (in line with PPP SPIRE Key Component 1 FEED and BRIDGE)

• Increasing resource and energy efficiency in industrial (including chemical) processes (in line with SPIRE Key Component 2 PROCESS)

• Closing the resources loop, by recycling and re-using waste and/or side streams (in line with SPIRE Key Component 4 Waste2 Resource and BRIDGE)

Looking at the analyses using a “helicopter view”, one can note three higher level strategic synergies which are highlighted in the map:

1. 3 R4R regions (Port of Rotterdam, South West Netherlands (both with links to Antwerp) and North Rhine West Phalia), establish 3 key geographical strongholds for the so/called ARRR meta-cluster; the Port of Antwerp in Belgium; the Port of Rotterdam in the Netherlands; and the Ruhr and Rhine areas in Germany. Together they produce 66% of Europe’s chemicals and establish the largest chemical cluster in the world. Moreoever there is a huge exchange of products and inter-dependence between those four sub-clusters, creating interesting foundations for potential synergies and symbiosis. Europe's future competitiveness in chemicals will require strong innovation and improved logistics. Cluster development is expected to play a central role. “The clustering of chemicals sites in Europe has helped companies improve operating efficiencies and boost innovation. But further integration is needed to enable players to compete with low-cost producers in the Middle East and Asia. Combining several clusters to form mega clusters could provide a solution“1.

1 Fred du Plessis, president of the European Chemical Site Promotion Platform

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The three mentioned R4R regions can leverage on this geographically unique position to boost their collaboration and improve competitiveness covering all three of R4R strategic foci with strong logistic connections.

2. Bio-based feedstock and processes are expressed as key in 3 out of the six R4R regional reports

from South West Netherlands, Västra Götaland Stenungsund and North Rhine West Phalia, some of them with a bold and ambitious strategy towards 2030. As one of the key European strategies to improve resource efficiency (see also BRIDGE and SPIRE PPP-s), and given the important knowledge, technology, innovation and organisational challenges to overcome in realising the transition to a bio/based economy, the three regions may find good opportunities to join forces and set/up a joint action plan.

3. Recycling in combination with industrial symbiosis is mentioned as a key strategy in ALL R4R regions. This clearly shows the importance of this “resource efficiency strategy” and the buy/in of stakeholders to find optimal ways to reduce and re/use waste and/or industrial side streams or post/consumer waste. Several partners have important experiences in developing resource sharing and optimisation on industrial sites (industrial symbiosis) using “Total Site Analyses (TSA)” approaches which can be shared and further improved with other R4R regions as a best practice and starting point for further innovations. Moreover, in combination with develop bio/based chemicals (as mentioned under 2) and leveraging on the wider ARRR meta-cluster with its sophisticated logistic and pipeline connections and as a potential market for new waste based resource streams, R4R is likely to find interesting synergies for a Joint Action Plan.

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Figure 1: Strategic mapping of the six R4R regions, in terms of ambitions and pathways

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2.3 Regional pathways The two tables below visualise technological and organisational themes that have been identified by the regions within their reports. Since some regions have defined broad technological themes rather than specific technological pathways, Table 1 is structured in 11 broad technological themes in order to summarise the regions priorities. Table 2 provides an overview of the regions’ organisational and horizontal themes that apply to many different technological themes at the same time. The tables focus on the regions’ most relevant fields of action that could be extracted from the reports. Note that 'empty fields' do not imply that a region is not active or interested in the theme. With help of the two tables, regions can see their potential of cooperating with other regions in a specific field of interest. The most concrete matches at this stage have been highlighted.

Technological themes mentioned (see table 1) Biobased feedstock technology - Technology focused on increasing the yield and quality of the feedstock, like genetic modification of crops and production systems for algae. Biobased processing technology - Technology aimed at converting biobased feedstock into building blocks and fibers which can be used in the production of end-products. Biobased product technology - Technology aimed at converting biobased building blocks, fibre or crude biomass into end-products, like chemicals, materials, fuels and energy. Integration of renewable energy - Renewable energy technology from solar, wind and biomass sources for use in industrial processes. Energy efficiency in industry – Technologies aimed at the reduction of energy use in industrial processes. Process monitoring & management - The reduction of energy/material use in industrial processes by means of the implementation of better process monitoring & management measures. Material efficiency in industry - Technologies aimed at reducing material and feedstock use in industrial processes. Water recycling - Technologies aimed at the treatment of waste water from industrial processes and reuse of water in these processes. Industrial gases - Processes aimed at the treatment of industrial gases from industrial processes and reuse of water in these processes. Recycling of organic chemicals (by-) products – Technology which enables the recycling of an organic chemical product or by-product, which is released during production of the organic chemical. Recycling of inorganic chemicals (by-) products - Technology which enables the recycling of an inorganic chemical product or by-product, which is released during production of the inorganic chemical.

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Organizational themes mentioned (see table 2) Logistics – Organizing the efficient distribution of feedstock, intermediates and end-products to enable new sustainable production systems. Education/Training – Providing the local work force with the knowledge to work with or develop new technologies needed for the transition towards sustainable production systems. Social acceptance – Make sure that stakeholders involved in setting up new sustainable production systems accept the new technology and mitigate the potential risks associated with these technologies. (Cross-sectorial) Cooperation within region (in open innovation setting) - Establishing new, open and cross-sectorial forms of cooperation between organisations within a region by setting up joint projects, platforms, shared visions in which knowledge is shared as much as possible to enable new sustainable production systems. International Cooperation – Setting up international collaboration projects with organizations or regions in other countries in order to perform joint R&D, exchange knowledge or exchange feedstock. Removing regulatory barriers – Altering regulation which hampers innovation. Centralized data gathering and management – Establishing a central information system which is accessible to all actors in a region, which contains basic information which is essential for all actors to position themselves in the regional innovation process (data could for example be the waste streams available in the region). An additional element could be central actor which actively manages the information and acts as a broker between demand-supply of materials or knowledge) SME Support – Establish an entrepreneurial climate (a.o. networking, funding, strategic and legal advice, mentoring) for SME’s to be set up, grow and actively participate in local innovation processes. Shared infrastructure and facilities – Establish joint research facilities, demonstration plants and infrastructure in order to reduce the individual costs and risks associated with the innovation process and to facilitate knowledge exchange.

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Table 1: Technological themes of potential cooperation

Bio-technology Processes Recycling

Biob

ased

feed

stoc

k te

chno

logy

Biob

ased

pro

cess

ing

tech

nolo

gy

Biob

ased

pro

duct

te

chno

logy

Inte

grat

ion

of

rene

wab

le e

nerg

y

Ener

gy e

ffici

ency

in

indu

stry

Proc

ess m

onito

ring

& m

anag

emen

t

Mat

eria

l effi

cien

cy in

in

dust

ry

Wat

er re

cycl

ing

Indu

stria

l gas

es

Recy

clin

g of

org

anic

ch

emic

als (

by-)

prod

ucts

Recy

clin

g of

in

orga

nic

chem

ical

s (b

y-) p

rodu

cts

West Pomerania x X x X North Rhine-Westphalia X X X x x X Västra Götaland Stenungsund X x x X x x X X Aragon X X X x x x X Port of Rotterdam X X X X South West Netherlands X X x x x x

Overlap Stenungsund and South West Netherlands in lignocellosic biorefinery, fibre separation and gasification/fermentation. However, this might also apply to other regions which have mentioned green feedstock and/or forest chemistry.

Overlap Rotterdam/Stenungsund in plastic waste. Also Aragon mentions plastic waste , in that case as a “feedstock for gasification”

Both NRW, VGS and Aragon mention the need for more efficient processes (e.g. through process intensification), leading to more material (resource) efficiency in current and future (incl. bio-based) processes.

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Table 2: Organisational themes of potential cooperation

Logi

stic

s

Educ

atio

n/Tr

aini

ng

Soci

al a

ccep

tanc

e

(Cro

ss-s

ecto

rial)

Coop

erat

ion

with

in

regi

on (i

n op

en

inno

vatio

n se

ttin

g)

Inte

rnat

iona

l Co

oper

atio

n

Rem

ovin

g re

gula

tory

ba

rrie

rs

Cent

raliz

ed d

ata

gath

erin

g an

d m

anag

emen

t

SME

Supp

ort

Shar

ed

infr

astr

uctu

re a

nd

faci

litie

s

West Pomerania X X X North Rhine-Westphalia X X X X X X Västra Götaland Stenungsund X X X X X Aragon X X X X X Port of Rotterdam X X X X X South West Netherlands X X X X X X X

Cooperation is a key ODP as it is the basis for innovation in all regions. Companies from different sectors will have to collaborate as openly as possible in order to achieve new sustainable value chains in the region.

Those regions are planning to overcome regulatory barriers, e.g. by introducing new waste legislation and policies.

For most of the regions, a centralized overview of the wastes/residual streams is necessary to appropriately (re-)use these streams in (bio-)chemical processes

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Meta-SWOT analysis (across the six R4R regions) For each of the R4R region, a SWOT-analysis was conducted that is related to the specific ambitions of the region. In this section, these SWOT-analyses are combined in order to derive the most important issues for the various regions. This meta-analysis was done in the following way: • For each innovation function, main topics of interest were established. From an inductive

analysis of the six regional reports, strengths, weaknesses, opportunities and threats have been identified with relevance for most of the regions.

• A comparative analysis was made, indicating important differences as well as similarities. Here, special attention was given to overlapping themes, as well as to 'extreme' outliers.

The overall results are represented in the figure below. In the remainder of the chapter, each of the topics will be discussed and illustrated with example material.

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3.1 Knowledge development and cooperation The knowledge infrastructure is generally considered as a regional strength. Issues revolve around cooperation and linkages between actors from fundamentally different worlds, e.g. cross-sectoral innovation. This is generally considered a weakness. Another critical issue is a lack of technically skilled personnel, as well as a lack of educational facilities able to change this. Knowledge infrastructure is strong for most regions Most regions indicate that they have a strong position in terms of the required R&D infrastructure. Especially North-Rhine Westfalen shows to have a very good educational system, excellent academia and successful and innovative start-ups. Also Stenungsund and West Pomerania have a strong base for R&D. In comparison with other regions, South-West Netherlands scores lowest in terms of university density, since it has no single university or knowledge institute dominating the region. Still, even this region explains that this can be compensated by building an industry centered research platform and by having close relations with such actors residing elsewhere. “The west Swedish region has for a long time been strong in knowledge development due to strong universities and good collaborations with industry. This is also according to the interviewees, one of the largest strength of the cluster since it includes strong research actors such as Chalmers and SP.” (Stenungsund - regional state of play) “Knowledge (R+D) development capacity in Aragón is seen as a great strength for the region, many technological and research centers, as well as a respected University operate there. As the main knowledge developers of the region linked to the chemical sectors. (Aragon - regional state of play) “An important threat is that the funding opportunities are strongly application oriented. In this situation, it becomes more and more difficult to provide the necessary amount of fundamental research.” (NRW - regional state of play) Lack of cooperation hampers interregional innovation Many regions indicate that there is generally a lack of cooperation across actors from different worlds. This concerns the triple helix relationships (government, market, RTOs) that are crucial for innovation. It also concerns cooperation between actors from widely differing sectors, such as agri-food and petrochemistry. For example, Stenungsund states that the focus on technological research over-balances the need for organization and entrepreneurial experimentation. West Pomerania states that the innovation level remains low and (maybe due to) the critical mass of firms that is too small. A positive exception is constituted by the smaller regions, such as South West Netherlands and Stenungsund. Here triple-helix clusters have been shaped in the years passed. Still, the challenge of bridging people from different sectors remains. “There is no coordinated, large-scale activity related to knowledge development in the region.” (West Pomerania - regional state of play) "There is a lack of knowledge institutes in the region. But: In general knowledge development is considered positive. Universities, RTOs are on arm’s length and the region has its own Center of Expertise Biobased Economy (CoE).” (South West Netherlands - regional state of play)

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Lack of education Generally there is an experienced lack of sufficiently skilled technical personnel. This is especially the case in the regions with a strong knowledge infrastructure. Apparently, the strong knowledge infrastructure that exists today is hard to maintain and develop. In some regions, there is a threat of skilled people leaving the region (brain drain). “The severe reduction in the Public investment for Research, Ph.D. grants and other grants for experimented researchers (cumulative reduction of 40% since 2009). This is leading into a low-paid professionals involved in research and the consequent Brain-drain, which is considered a serious threat.” (Aragon - regional state of play) “Too much valuable human resources (including graduates) migrate from the region” (West Pomerania - regional state of play)

3.2 Market formation and entrepreneurial activities The absence of well-articulated demand for resource efficient technologies / products is generally considered as a weakness. The same is true with respect to entrepreneurial activities, even though there are important exceptions to be mentioned. Absence of a near-market perspective paralyses entrepreneurial activities All regions consider the absence of a near-term market for green chemistry as an important threat . weakness. The biggest pitfall for a biobased or circular economy is that current markets are insufficiently picking up biobased materials. And there is, as yet, limited stimulation via policies and licenses (see the section on policies) to compensate for this. The trend of increasing energy costs is interpreted differently, as a threat or opportunity, depending on the regional interests. For regions with recycling ambitions, this is perceived as a setback. But in Stenungsund, for example, this is regarded as an incentive for R&D on process efficiency. This can be explained by the ambition of Stenungsund to become 100% fossil-free. “Since most of the chemical companies in Stenungsund are directed towards the B2B market, they have difficulties in seeing a specific market for green products with a premium price. Overall, the existing markets for green products are very small and not very stable so the need for a first larger market is critical in the development of the region. Of course the existing climate change creates opportunities based on political willingness and customer awareness, however the experience from the interviewees are that alternatives are still too advantageous for existing or new customers.” (Stenungsund - regional state of play) "The market is not prepared to pay a premium for biobased products. The biobased products should be available at the same price with the same specifications as the traditional products. This combination is extremely difficult to achieve in the short term (if at all)” (South West Netherlands - regional state of play) Entrepreneurial engagement in a region is still challenging A generally perceived strength is the active involvement large numbers of entrepreneurs and innovative SMEs. The challenge is to align the interests and activities of the entrepreneurs and SMEs with the ambitions of the region. For example, South-West Netherlands and Port of Rotterdam have a strong position in this sense. South-West Netherlands has the availability of flagships (open for SMEs) and a lot of initiatives being

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deployed by individual companies, while Port of Rotterdam has a strong innovative capacity within SMEs of the chemical sector. “The Green Chemistry Campus is a safe haven and incubator where young entrepreneurs can grow their business from lab scale research to pilot phase to production. From an R&D point of view the campus focusses on bio-aromatics and functional molecules for performance materials, chemicals and coatings.” (South West Netherlands - regional state of play) Several interviewees respond that the cluster needs to invite and better manage small entrepreneurial companies. Industry can here provide a business case for interesting technology or other solutions that will increase the entrepreneurial activities in the cluster. One interviewee discussed the potential of tying an incubator to the cluster, that will function as a facilitator to new and small companies and in return the cluster gains new and interesting knowledge from those actors. (Stenungsund - regional state of play) Presence of large companies In a number of regions, especially Nord Rhein Westfalen and Port of Rotterdam, the presence of large companies is mentioned as a strength, implying investment power and easy access to international markets. At the same time, large companies are considered a threat in terms of counter-lobby. "Due to the large companies that are involved the international markets are available. Companies like DOW, Yara and SABIC supply the world markets. Furthermore, the European market is considered as a valuable market." (South West Netherlands - regional state of play) 'One of the handicaps mentioned by some interviewees is the dominancy of large firms and multinationals in platforms and associations, where SME interests are not enough represented and it´s difficult for them to survive. Another important threat is their relocation." (Aragon - regional state of play)

3.3 Resources and geography All regions report the crisis as a threat when it comes to budgets available for research, development and innovation. A topic that is generally perceived as a threat is the global rise of shale gas implementation. Other key topics are the scale of the region, its location and its access to raw materials. With respect to the latter, the six regions differ a lot. The economic crisis puts severe pressure on budgets available for experimentation Most regions indicate that financial resources are lacking and that the financial crisis results in declining budgets for R&D. The critical issue is that projects with a more experimental nature tend to receive less support. A general threat is the drastic reduction on public expenditures, which in most cases helped to start new technologies, installations, etc. The crisis also results in reduced investment capital market, particularly venture capital. The lack of budget is especially severe with respect to pilot projects and demonstrations, as mentioned by Stenungsund (GoBiGas demonstration facilities, district heating system) and Rotterdam (PlantOne). Such facilities are crucial to gain a first position in terms of market attention, however in times of crisis funding lacks to keep these projects continued.

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" Private actors, companies, support the ambitions, but with a lower level of commitment. Due to the current economic situation, only a handful of them are in an active position regarding resource efficiency. They have now other problems to solve, to overcome the crisis. Also due to the lack of support (especially economic support), not many companies start new innovative projects nowadays.” (Aragon - regional state of play) “The negative scoring on entrepreneurial experimentation is due to the lack of venture capital in the region (and outside the region).” (South West Netherlands - regional state of play) The advent of shale gas threatens the global market for renewables The shale gas revolution is currently changing the 'rules of the game' in the chemical industry. Still Europe does not have a clear vision on how to deal with shale gas yet. Poland seems to invest in shale gas, while in France the central government has forbidden shale gas until 2017. For most regions, shale gas is considered as a threat. For example, shale gas is in direct competition with ethanol production from biomass. Next to that, it is expected that venture capital funds will more easily invest in shale gas companies as the return on investment is expected to be higher. In South West Netherlands, shale gas is also mentioned as an opportunity for the specific business case of the region. The advent of shale gas is considered a stimulant for bio-based C2-chemistry, since shale gas lacks C3 and C4 building blocks as well as aromatics compounds. And bio-aromatics production is part of the research agenda of the Biobased Delta. "Business wise the fossil alternative is a strong competitor for a resource efficient technologies, since the use of shale oil etc. will push forward peak oil status and prices will be continuously low for a longer period of time. This leaves bio-based development in the hands of policy makers and potentially early market adopters.” (Stenungsund - regional state of play) Geographically all regions are well positioned / Access to raw materials may pose a threat to some. All regions are considered geographically well positioned. This is especially the case for Aragon, North-Rhine Westfalen, South-West Netherlands and Port of Rotterdam. Key factors are a nearby position of agri-food and/or chemical industry. Other strengths, mentioned by the regions, are the existence of infrastructure and well a logistics infrastructure. The availability of sufficient raw materials is important for those regions with ambitions to invest in a bio-based or residue-based regional economy. Most regions indicate to have abundant access to green resources, like wind, sun and biomass, and consider this topic as an opportunity. At the same time, the access to feedstock is a crucial factor in realizing the resource efficiency ambitions. Here, the competition over biomass (e.g. food vs. fuel) really poses uncertainties to business. "One of the big benefits of the region is its geographically location (between world leading harbours, access to the ocean, access to markets and feedstock) and the infrastructure that is available in the region. The region has excellent road, rail and water connections and is part of the “buisleidingenstraat” (pipeline, see chapter 3) from Rotterdam to Belgium. The region has been chosen multiple times as “logistieke hotspot” (logistics hotspot) and therefore a cross-over between logistics and biobased seems possible." (South West Netherlands - regional state of play) “Large areas to feed biobased products, biofuels and biomass: Aragón is a large region (4th in Spain) of 47.719 km², with a characteristic low population density and several climate zones, which allows large fields for several crops to feed the demand for biobased chemistry, biomass, etc. It is also a region with an important agricultural and agrifood sector, with which synergies can be found.” (Aragon - regional state of play)

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An important outlier, in this respect, is North-Rhine Westfalen. This region identifies its complete lack of raw materials as a weakness and a threat. Differences in scale matter: coordination vs. investment power The scale of a region has advantages and disadvantages. While large regions more easily gain investment power, small regions are more easily coordinated. As an effect, small regions find it more difficult to compete with large regions, and large regions suffer from cumbersome coordination. Examples of the regions that are large in size are Aragon and North-Rhine Westfalen. Examples of regions rather small in size are Port of Rotterdam, South-West Netherlands and Stenungsund. “As a weakness, many interviewees pointed to difficult, or even the lack of coordination, between economic sectors (such as between chemical sector and agricultural or agrifood sector), together with a weak awareness of some companies. More specifically, an important fact that is hampering entrepreneurial experimentation is the current waste regulation, that delays or makes not possible experimentation that is technically possible.” (Aragon - regional state of play) “The main strength of NRW consists in the presence of large and internationally active chemical companies, accompanied by a sound SME base. All actors from the industry and academia are very well connected already and they intensely collaborate.” (NRW - regional state of play) “Still too small (though growing) critical mass of firms, institutions and relations that would form appropriate background for such activities. There are too few larger companies that would be capable of carrying out bigger experiments and/or acting as leaders.“ (West-Pomerania - regional state of play)

3.4 Policies and regulations In terms of policies and regulations, much coherence can be observed between regions. Generally speaking, policies and regulations are regarded as important drivers for innovation in the industry. At the same time, severe issues are identified with laws and regulations that provide perverse incentives in respect to a resource efficient chemical industry. The EU policy agenda is a major opportunity for the development of regional innovation clusters Within all six regions, a strong focus lies on the EU policy agenda, mainly due to the on-going trend to support regional development, e.g. through Horizon 2020, SPIRE and BRIDGE. In most regions, this trend is seen as a strong and stimulating opportunity. For example, the South West Netherlands region - where regional stakeholders are working pro-actively on the development of a Triple Helix innovation network called Bio Based Delta - the Horizon2020 PPPs SPIRE and BRIDGE are considered as opportunities for teaming up with European players. This will allow the Biobased Delta to reach its ambition and to overcome its weaknesses and the hurdles of various regulations and policies. “Horizon2020 and the PPPs SPIRE and BRIDGE are very interesting for the Biobased Delta. Membership to these PPPs can be considered as an intervention to overcome the weakness of the small geographic area.” (SWNL - regional state of play) Regulatory pressure is crucial as a stimulating incentive for innovation in the chemical industry Regulations in place (on various levels) are generally perceived as important incentives to stimulate innovation in the chemical industry. Examples of policies that create such incentives are REACH, Eco-labeling, Biocide Directive.

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For example, the REACH directive is considered beneficial to the improvement and protection of human health and environment. At the same time, REACH enhances innovation and competitiveness of the EU chemicals industry. The benefits of the REACH system are expected to come gradually, as more and more substances are phased into REACH. “It is widely believed that Policies and Regulations such as REACH, Ecolabels, Biocide Directive, IPPC, etc. play an important role in the protection of environment and health, and also driving innovation and technology development” (Aragon - regional state of play) “REACH Regulation and CLP Regulation (Classification, Labeling and Packaging) influence the design of new materials and products in order to use chemicals and materials with low environmental impact and/or less hazardous properties. These regulatory systems encourage the industry and stimulate actions. However, some chemicals and materials are difficult to be substituted, and research needs time and other resources.” (NRW - regional state of play) Regulatory adaptation is too slow, especially with respect to waste legislation A threat, perceived by the regions, is that regulations are only poorly adapted to the needs of resource efficient technologies. Moreover, the regulatory system differs across regional borders, even for EU regulations (which are translated differently by each member state). This has partly to do with the vast number of chemical substances involved, which poses a huge challenge to regulators in keeping up with new technological possibilities. For example, this is especially urgent in the field of waste recycling, where the waste concept is ill-defined with respect to the possibilities of reuse. The waste legislation is commonly considered as rigid and slow. It hampers alternative raw material use. "Waste regulation is seen as a barrier for technology developing, waste 2 resources strategy, biobased chemistry and industrial Symbiosis" (Port of Rotterdam - regional state of play) “Complex and long bureaucracy that is needed to use a waste makes it difficult for companies to start projects and make best use of wastes. For instance, any company that wants to use, even a small quantity of waste in its process must also be registered and approved as authorized waste agent, whose bureaucracy includes almost the same steps as needed for a landfill or other kind of industrial site for final treatment of waste. “In addition, if a waste material is transported from Aragón to France, the company should pay attention to the different regulations depending on the area (Aragón, Catalonia or France).” (Aragon - regional state of play)

3.5 Legitimacy and public support Legitimacy for resource efficient innovation provides the basis for much required lobby power On many topics, the reflected legitimacy and public support is problematic. In many occasions, economic interests provide political legitimacy for the exploitation of cheap fossil energy sources. "A regional and specific threat for the region of Aragón is the fact that most regulations are focused on reducing fossil fuels. Carbon mining sector is a strategic sector for Aragón, with coal reserves. Aragón suffers from an important depopulation of the countryside, and the carbon mining has traditionally helped rural populations to continue living in the countryside and to reduce migration to the capital city." (Aragon - regional state of play)

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This concerns the continuing dominance of fossil fuels in the political arena, as well as the actual headlines that are closely followed by the public, such as the food-vs.-fuel debate and the already mentioned shale gas revolution. Still, positive exceptions show that it is possible to mobilize stakeholders into a powerful triple helix configuration that has the power to influence inter-regional politics. “Opinion makers are opportunities in the sector since a social requirement of more sustainable products and processes is being developed. For example, there is new ecolabels in the market that can be obtained by products which are produced sustainably. This fact can cause pressure to implement more efficient technology and environmental friendly options in the industry in order to obtain positive market position.” (Aragon - regional state of play) All participants in the region contribute because of internal legitimation (shareholder value, stakeholder value, survival of the fittest etc.). Most of the companies interviewed also state that their legitimation comes from local conditions, e.g. the land in the region is excellent for growing potatoes and (South West Netherlands - regional state of play)

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Summary of key issues The following key issues can be derived from the preceding meta-analysis:

Common issues • Need to facilitate cooperation across triple-helix actors. • Need to facilitate cooperation across sectors. • Need to stimulate Open Innovation processes and infrastructures • Need to stimulate and promote specific technical educational programmes • More finance for high-risk RD&I (big demos required) • Facilitate transition of highly capital intensive industry • More support for SMEs to bring innovation to market • Harmonise existing regulation to support transition (level playing fields, stable policies, standards

on waste , slow decision making etc) Process efficiency • Better collaboration between (different) industries/companies to integrate process flows

between ciompanies in cluster (industrial symbiosis) – based on Total Site Analyses (TSA) • Lack of knowledge on effective collaboration and business models • Higher priority on regional planning for re-use of residual heat in clusters • LCA tools to assess environmental footprint over the value chain Bio Based issues • Lacking multiple, versatile and cost-effective bio-based feedstocks • Focus on green-fuel instead of green-chemicals • Hesitant interest in B2B market – need for some convincing business cases (demo’s) • Lack of competences for transition to bio-based processes , technologies • Competition against fossil feedstock and no level playing field • Difficulty integrating chemistry and agro/forestry • Shale gas expected to be a game changer (postpone urgency of bio-based/reduces interst of

investors) Waste issues • Lack of insight in content waste steams • Limited willingness to invest/capital • Limited local market (s) • Need to favour market intro of innovations (SMEs) • Need to demonsrate the benefits (business show cases) • Need for an independant «market regulator» to map and foster exploitation of valuable waste

and side streams.

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Next steps

The meta-analysis presented in this document should provide insights in the major overlaps and key differences with respect to: • Regional ambitions • Technological and organizational innovation pathways envisioned • Insights into the major strengths, opportunities, weaknesses and threats • Key issues Together, these insights provide a basis for the remainder of the R4R project: • Recommendations for regional authorities (D2.5) • Recommendations for EU authorities (D2.5) • Recommendations for the R4R consortium (D2.5) • Joint Action Plan (WP3)

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Figure 2: Strategic mapping of the six R4R regions, in terms of ambitions, pathways and key issues.