Biofuels under the EU’s New Bioeconomy Strategy

In a fragile geopolitical context, where reliance on fossil fuels has become increasingly unstable and costly, Europe faces a dual imperative: safeguarding its economic resilience while accelerating decarbonisation. As underlined in the Draghi report, cost‑efficient decarbonisation requires a technology‑neutral approach that mobilises all viable solutions. Within this framework, the bioeconomy emerges not as a standalone remedy, but as a strategic pillar of a diversified and competitive transition.[1]

Rooted in biological resources and biogenic carbon captured through innovative technologies, the bioeconomy spans sectors from energy and biofuels to construction materials, chemicals and textiles.

On 27 November 2025, the European Commission adopted a new Strategic Framework for a Competitive and Sustainable EU Bioeconomy (the “EU Bioeconomy Strategy“),[2] building on the original 2012 Strategy[3] and its subsequent reviews in 2018[4] and 2022[5]. The Strategy aims to reduce the EU’s dependence on fossil imports by, inter alia, establishing an ambitious framework to scale up bio‑based industries and build a more resource‑efficient and circular European economy.[6]

It is structured around four pillars: (1) scaling innovation and investments; (2) building new lead markets for bio-based materials and technologies; (3) ensuring sustainable biomass supply across value chains and (4) harnessing global opportunities.

Political backing followed swiftly. On 17 March 2026, the Council of the European Union adopted Conclusions on the EU Bioeconomy Strategy, calling for rapid implementation at both EU and Member State levels.[7] Notably, the Council endorsed the scale-up of sustainable bio‑based industrial deployment – including biogenic carbon capture, biorefineries, advanced fermentation, and bio-based materials manufacturing and processing as well as water-smart solutions – while emphasising the need to safeguard sustainable biomass supply and long‑term resource resilience.[8]

To remain competitive internationally, particularly vis-à-vis the United States and China, and to unlock the value of novel bio-based products, the Strategy emphasises removing existing barriers and scaling up investment and support through several pathways.

Key measures include:

• Simplified regulatory requirements and accelerated authorisation procedures for bio-based products under the EU Biotech Acts (2025-2026);
• The establishment of a European Bioeconomy Regulators and Innovators’ Forum (2026);
• The development of regulatory sandboxes for the bioeconomy, including under the forthcoming EU Innovation Act (2026);
• The creation of a new Bioeconomy Investment Deployment Group (BIDG) to coordinate funding (including through Horizon Europe, the European Competitiveness Fund, and InvestEU), de-risking first‑of‑a‑kind facilities, and crowd in private capital (2026–2028); and
• Ensuring that sustainable biomanufacturing and other bio-based activities are appropriately recognised in the upcoming revisions of the EU Taxonomy Delegated Acts (2026-2028).

These initiatives represent important steps forward. However, it remains to be seen how effectively they will capture biofuels. For example, industry stakeholders are increasingly advocating for a more comprehensive biomanufacturing framework, potentially in the context of the Biotech Act II.[9]

1. Efficient use of biomass

The Strategy emphasises that efficient biomass use involves directing resources toward higher-value applications while reducing pressure on ecosystems, taking into account local conditions and market realities. Residual and secondary biomass streams may be used for energy, especially where no viable alternative decarbonisation solutions are available or where this supports energy security and affordability.

Efficiency in bioenergy-related policy and investment decisions should be assessed on the basis of a number of factors including: “biomass quality; feedstock type (primary vs. secondary); biomass availability over time; alternative ways to supply the same service considering, sustainability, environmental impacts and circularity; infrastructure and processing capacity; and the local context”.

In this context, national and regional policies such as CAP Strategic Plans and National Energy and Climate Plans, will play a key role in implementation. The European Commission will also support knowledge-sharing through the Knowledge Centre for Bioeconomy, including best practices on the cascading principle (2026-2027).[10]  

Biofuels are expected to further receive support under the upcoming Energy Union package, taking into account the experience gained by the implementation of the Renewable Energy Directive (RED),[11] particularly regarding sustainability and GHG emissions saving criteria (2026).In this respect, the European Commission is expected to publish (by 2027) a report under Article 3(3) of the RED on Member State biomass support schemes, which will provide important insights.

2. Lead markets

The Strategy further identifies and seeks to strengthen lead markets, where bio-based solutions benefit from predictable demand, with the aim of unlocking private investment and enabling scale-up. These markets focus on:

1. Materials, including bio-based plastics, polymers, and fibre-packaging materials capable of replacing fossil-based materials; and  
2. Technologies including biorefineries, advanced fermentation and permanent biogenic carbon storage. These technologies convert primary and secondary biomass into materials, chemicals, fuels and other applications.

Biorefineries will be supported through blended finance instruments particularly for first-of-a-kind facilities, de-risking initiatives to attract private capital, as well as through the development of Industrial Symbiosis Valleys. The latter coordinate feedstocks, infrastructure, and investment planning, to support the development of strong regional clusters (as of 2026).

Advanced fermentation will be supported byimproved access for SMEs and scale-ups to pilot and demonstration infrastructure, alongside streamlined authorisation processes.

Permanent biogenic carbon storage will be supported through the EU ETS including potential recognition of certified removals under the Carbon Removals and Carbon Farming (CRCF) Regulation (2026), as well as through continued support under the Innovation Fund.

Taken together, these measures in principle strengthen the business case for biofuels and biorefineries by improving regulatory certainty, de‑risking capital‑intensive projects and enhancing long‑term climate value.  

The sustainability pillar of the EU Bioeconomy Strategy contains several elements directly relevant to biofuels, particularly advanced and waste‑based fuels. These include prioritising secondary biomass and circularity, safeguarding sustainable biomass supply and ecosystem resilience, strengthening primary sector integration, and incorporating carbon removals and climate incentives into the broader policy framework.

Circularity will be supported through initiatives such as the upcoming Circular Economy Act (2026) and a Tripartite Agreement on the production of biogas and biomethane, and the use of digestate as a bio-based fertiliser (2026).

The EU aims to position the bioeconomy as a strategic pillar of its external policy by strengthening global partnerships and expanding market access for European bio‑based technologies, materials and applications. In parallel, the EU seeks to ensure diversified biomass sourcing, local capacity building and environmentally resilient value chains consistent with its climate and sustainability objectives.

Sustainability and traceability commitments in global biomass trade will be reinforced, notably under the European deforestation legislation, such as the EU Deforestation Regulation (EUDR).[12]

The EU Bioeconomy Strategy spans the coming decade, with key milestones and actions concentrated in the near term, and a longer-term objective of establishing a competitive, sustainable and resilient European bioeconomy by 2040.

While the Strategy itself does not create binding obligations, its legal and practical value stems from its accompanying action plan, which includes future legislative initiatives, policy tools and concrete measures.

For biofuel stakeholders in particular, the implications include:

• Regulatory streamlining – the EU Biotech Acts and the European Bioeconomy Regulators and Innovators’ Forum will improve coordination, help simplify authorisations for new entrants, and remove barriers. Businesses should monitor the legislative process regarding the EU Biotech Acts. They should further monitor the launch of a single online entry point for authorisations and engage with the Forum once operational.
• Enhanced support for first‑of‑a‑kind biorefineries – the BIDG will help create a pipeline of bankable projects by coordinating public and private financing, supporting projects from pilot through demonstration to commercialisation. Operators should engage with the BIDG and monitor its 2026–2029 work plan.[13]
• Recognition under the EU Taxonomy framework – the Commission will work to ensure sustainable biomanufacturing and bio-based activities are appropriately recognised in the upcoming revisions of the EU Taxonomy Delegated Acts (2026 – 2028). Taxonomy alignment is the gateway to green bond financing and ESG investment vehicles, and operators should begin reviewing their activities against anticipated eligibility criteria ahead of the revision.
• Recognition of waste‑ and residue‑based bioenergy – Waste- and residue-based bioenergy is recognised as strategically important, with demand for biofuels in aviation, maritime and long-haul heavy-duty transport expected to rise, driven in part by ReFuelEU Aviation and FuelEU Maritime.
• RED compliance – the Energy Union package (2026) and the Commission’s forthcoming report under Article 3(3) of the RED on Member State biomass support schemes (by 2027) are key reference points for how support frameworks will evolve. Businesses should continue monitoring the legislative developments as regards the RED sustainability and GHG emissions saving criteria. Those dependent on national support schemes should engage with Member State authorities ahead of the report’s publication.
• The cascading principle – the Strategy prioritises food security first, then higher-value material uses, with energy use reserved for residual and secondary streams where no alternative decarbonisation solution exists by creating competitive pressure for conventional producers relying on primary biomass. Such producers should continue monitoring the legislative developments under the RED and engaging with the regulators, as well as reviewing their feedstock strategy in light of this direction of travel.
• Increased scrutiny of biomass sourcing and traceability – sustainability and due diligence requirements in biomass procurement will be reinforced, notably under the EU Deforestation Regulation (EUDR). Companies procuring non-EU biomass should proactively review their supply chain documentation and due diligence systems now.
• Industrial symbiosis valleys and bioeconomy hubs – expanded funding and cluster opportunities will be available, including Industrial Symbiosis Valleys coordinating feedstocks, infrastructure and investment planning at territorial level from 2026. Businesses should engage with regional and national authorities on potential designations at an early stage.
• Bio-based Europe Alliance (BEA) – The Commission will support the creation of the BEA, a voluntary corporate alliance committed to collectively purchasing bio-based materials and products worth EUR 10 billion by 2030. Businesses should monitor the development of the relevant bioeconomy pilot project under the Competitiveness Coordination Tool, within the framework of which the BEA will be established. Once launched, corporate buyers should assess their eligibility to participate.
• IPCEI opportunities – large-scale biorefinery projects may consider early engagement with national authorities regarding potential participation in an IPCEI, as the IPCEI framework provides specific State aid compatibility rules that may allow support beyond what is permitted under the general guidelines.
• Carbon farming as a new revenue stream – The Commission is establishing an EU Buyers’ Club to pool voluntary corporate demand for carbon farming and permanent carbon removals under the CRCF framework, creating new revenue streams for farmers and foresters. Businesses integrated within biomass supply chains should assess whether participation in CRCF-aligned schemes could provide a supplementary revenue source.
• Public procurement opportunities – the forthcoming revision of the Public Procurement Directives will seek to promote and facilitate the public procurement of bio-based solutions. Suppliers able to demonstrate the environmental credentials of their bio-based products and technologies should position themselves ahead of this revision.

The EU Bioeconomy Strategy confirms that biofuels and biorefineries are no longer peripheral to EU climate policy but are embedded within the broader competitiveness and strategic autonomy agenda.

The next phase will depend on the effective implementation of legislation, funding instruments and sustainability frameworks. Elements of this shift are already emerging, including initiatives under the Commission’s Automotive Package -allowing internal combustion engine (ICE) vehicles to still play a role beyond 2035-[14] and the proposed Industrial Accelerator Act,[15] which prioritises “made in Europe” zero‑ and low‑carbon solutions. Together with forthcoming measures under the RED and related frameworks, these instruments will determine the practical role of biofuels in Europe’s decarbonisation and industrial strategy.

Fieldfisher’s EU Regulatory and ESG Team will continue to monitor these developments carefully.

Authors:

Bobby Arash | Fieldfisher, Andromachi Kila | Fieldfisher, Ayana Dootalieva | Fieldfisher

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[1] See The future of European competitiveness, available at 97e481fd-2dc3-412d-be4c-f152a8232961_en, p.50.

[2] See Commission presents new Bioeconomy Strategy.

[3] See Innovating for sustainable growth – Publications Office of the EU.

[4] See A sustainable bioeconomy for Europe – Publications Office of the EU.

[5] See Report COM/2022/283: EU Bioeconomy Strategy Progress Report – European Bioeconomy policy: stocktaking and future developments | Knowledge for policy.

[6] See Strategic agenda 2024-2029 – Consilium (section titled “A prosperous and competitive Europe”).

[7] See the Council Conclusions on the EU Bioeconomy Strategy, available at https://data.consilium.europa.eu/doc/document/ST-7397-2026-INIT/en/pdf, p.5.

[8] Ibid, p. 5-15.

[9] See Draft Biotech Act II Position Paper.

[10] See Bioeconomy.

[11] See Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (recast).

[12] See Regulation on Deforestation-free products – Environment.

[13] See New platform to help unlock funding for a bio-based future – Environment.

[14] See Commission takes action for clean and competitive automotive sector.

[15] See Industrial Accelerator Act – Internal Market, Industry, Entrepreneurship and SMEs.