From Policy to Practice Actionable Recommendations for a Commercial Bioeconomy 2025

Incentives2 As global approaches move away from top-down regulatory mandates, incentives offer a positive, proactive mechanism to drive future-oriented outcomes. They play a key role in shaping demand signals by influencing consumer behaviour, market dynamics and investment decisions. Incentives can enhance product appeal, lower barriers to adoption and align market activity with policy goals – all while allowing economies of scale to mature and reduce costs over time (Box 4).By strategically deploying financial, regulatory, behavioural and supply chain incentives, governments and private sector actors can strengthen demand signals and accelerate market transformation. Incentives, while designed to be short-lived, provide technologists with the time to develop product-market fit, ensuring emerging technologies can drive business performance long after incentives have phased out.Compelling incentives strengthen demand signals and drive market transformation. Incentives as a tool to drive market adoption BOX 4 Few incentives have been introduced for commercial bio-innovation – and an even smaller fraction have reached commercial viability without support from incentives. The vast majority require additional financial backing and lack adequate incentive structures. As a result, many bio- innovations carry a cost premium compared to incumbent alternatives. This premium discourages adoption and investment by manufacturers, investors and consumers, despite potential transformative benefits.Cost premiums hinder the widespread adoption and market penetration of bio-innovation. At the same time, the lack of a coordinated incentive framework limits the ability to offset early R&D and operational costs or secure guaranteed procurement – both critical for driving market uptake. Without sufficient and widespread financial incentives to offset and reduce costs, commercial adoption remains slow and uneven across sectors and geographies. A phased, government-led approach to incentivization is essential to strengthen demand signals and accelerate the global transition to a bio-based economy. Incentives can take various forms, including tax credits, subsidies, regulatory mandates and procurement commitments. For example, during the COVID-19 pandemic, governments worldwide provided substantial funding for vaccine development and procurement, ensuring rapid distribution and widespread adoption. Government procurement has also been used as a catalyst in programmes like the US Department of Agriculture’s (USDA) BioPreferred certification that prioritizes bio-based products,28 while Germany’s public sector policies actively encourage the purchase of recycled goods and circularity.29 These examples highlight the power of incentives in shaping market dynamics and driving adoption of innovative practices. 15 From Policy to Practice: Actionable Recommendations for a Commercial Bioeconomy