A governance framework for a sustainable bioeconomy: Insights from the case of the German wood-based bioeconomy

Abstract

Increasing the sustainability of economic processes and products requires a path transition from the present, predominantly fossil resource-based “throughput economy” towards a renewable resource-based circular flow economy. The bioeconomy concept can contribute to such a transition. However, an adequate governance framework is necessary not only to overcome the current carbon lock-in and create fair competitive framework conditions for bioeconomy processes and products (enabling function), but also to ensure the sustainability of an increased use of bio-based resources (limiting function). At the same time, achieving a path transition is challenging due to, inter alia, interacting market failures which distort allocation decisions, and uncertainties about the economic, environmental and socio-economic impacts of different bio-based production pathways. Moreover, transitioning to a new “upper state” sustainability equilibrium requires a corresponding politico-economic equilibrium in markets for regulation that allows for the provision of necessary transition policies. In this chapter, we discuss the challenges of establishing an effective governance framework for the bioeconomy. Furthermore, focusing on the case of the German wood-based bioeconomy, we analyse how the enabling and limiting governance functions have been implemented in practice. Based on this, we identify scope for improvements. In particular, the case study highlights the important role that policies have to play in establishing fair competitive framework conditions for bioeconomy applications, fostering innovation and safeguarding sustainability. While existing measures remain fragmented and insufficient to initiate a path transition, gradually developing them further may contribute to a dynamic that stimulates demand for more far-reaching transition policies on political markets.