Regional Innovation Monitor Plus 2016 - European Commission · 2018-04-26 · Regional Innovation...

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30 May 2016

Regional Innovation Monitor Plus 2016 Regional Innovation Report Flanders (Production related biotechnology)

To the European Commission

Internal Market, Industry, Entrepreneurship and SMEs Directorate-General

Directorate F – Innovation and Advanced Manufacturing

Regional Innovation Monitor Plus 2016

Regional Innovation Report Flanders (Production related biotechnology)

technopolis |group| in cooperation with

Asel Doranova, Technopolis Group Belgium

Regional Innovation Monitor Plus 2016 i

Table of Contents 1. Advanced Manufacturing: Production related biotechnology in Flanders 6!

1.1 Overview of performance and trends 6!1.2 Business sector perspective 10!1.3 Scientific research potential 11!1.4 Role of intermediary institutions 13!

1.4.1 Umbrella organisations 13!1.4.2 Science parks and incubators 14!

1.5 Developing skills for the future 16!1.6 Major investment projects 18!1.7 International cooperation 20!1.8 Policy support and delivery mechanisms 23!1.9 Good practice cases 24!1.10 Leveraging the existing potential 27!

1.10.1 Opportunities 27!1.10.2 Challenges 28!1.10.3 Implications for cross regional cooperation 29!

2. Regional Innovation Performance Trends, Governance and Instruments 32!2.1 Recent trends in innovation performance and identified challenges 32!

2.1.1 R&D intensity in Flanders 32!2.1.2 Flanders in the EU Regional Innovation Scoreboard 34!2.1.3 Challenges 34!

2.2 Institutional framework and set-up 36!2.2.1 Public bodies active in the STI field in Flanders 36!

2.3 Regional innovation policy mix 39!2.3.1 Policy priorities 39!2.3.2 Policy mix 41!

2.4 Appraisal of regional innovation policies 45!2.5 Policy good practice 47!2.6 Possible future orientations and opportunities 49!

Appendix A Bibliography 51!Appendix B Stakeholders consulted 53!Appendix C Research labs at VIB addressing industrial biotechnology 53!Appendix D Important companies in the industrial biotechnology sector in Flanders 54!

ii Regional Innovation Monitor Plus 2016

Table of Figures Figure 1: Estimate of Gross Margin and Employment (FTEs, full-time equivalents) of biobased economy in Flanders ......................................................................................... 7!Figure 2: EPO and EPO-PCT patents statistics in the industrial biotech area ............... 8!Figure 3: Share of Belgium and Flanders in the EU-15 patent portfolio in Industrial Biotechnology ................................................................................................................... 8!Figure 4: Total R&D personnel and researchers, in business enterprise sector by economic activities: 100% bio-based transformation sector (2011) .............................. 17!Figure 5: Total R&D personnel and researchers, in business enterprise sector by economic activities: Partly bio-based transformation sector (2011) .............................. 17!Figure 6: Major members if the BIG-C mega cluster ..................................................... 21!Figure 7: GBEV (indicated as Gent/Terneuzen) and other biofuel and bioenergy clusters in Europe ........................................................................................................... 25!Figure 8: Private partners in Ghent Bioeconomy Valley ............................................... 25!Figure 9: R&D intensity in Flanders: total and by sector of performance, 1993-2012 . 32!Figure 10: International comparison of the R&D intensity for GERD, 2012 ................ 33!Figure 11: Rate of company start-ups (%, average 2008-2012) .................................... 35!Figure 12: Public bodies active in the STI field in Flanders .......................................... 37!Figure 13: Doman and application areas of ‘Flanders Make’ ........................................ 42!

List of Tables Table 1: Key industrial biotechnology companies in Flanders ...................................... 10!Table 2: Scientific organisations in the area ................................................................... 12!Table 3: VIB research groups dealing with industrial biotechnology topics .................. 12!Table 4: Graduate programmes relevant for industrial biotechnology offered in Flanders .......................................................................................................................... 16!Table 5: RDI projects where Flanders cooperate with international partners ............. 22!Table 6: Overview of the various actors in the STI domain in Flanders ....................... 38!Table 7: Innovation hubs of Flander’s STI policy .......................................................... 40!Table 8: Regional innovation support measures ........................................................... 43!

Regional Innovation Monitor Plus 2016 1

PREFACE In the context of the growth and investment package set out in the Investment Plan of the European Commission, the Regional Innovation Monitor Plus (RIM Plus) provides a unique platform for sharing knowledge and know-how on major innovation and industrial policy trends in in some 200 regions across EU20 Member States.

Launched in 2010, the Regional Innovation Monitor aimed at supporting sharing of intelligence on innovation policies across EU regions. Building upon the experience gained and results obtained during the period 2010-2012, the RIM Plus 2013-2014 provided practical guidance to regions on how to use the collected information, via a network of regional experts. Since 2014, the RIM Plus has introduced a thematic focus on advanced manufacturing.

The RIM Plus 2015-2016 evolved from a general monitoring of innovation policies towards establishing a more thematic focus in selected areas in order to contribute to improving the competitiveness of European regions.

Particularly, the RIM Plus aims through its activities and in close cooperation with the regional stakeholders and other relevant initiatives to:

•! Contribute to the development of new and open spaces of collaboration and exchange on advanced manufacturing, each with a clearly defined thematic focus.

•! Play an enabling role in providing evidence-based information on specific themes and bring in outside perspective from other regions.

•! Map out regional practices in support of advanced manufacturing and relevant pilot/demo projects and work towards involving the relevant stakeholders.

•! Provide an easy access and comparative overview of regional innovation policies and relevant actions in the field of advanced manufacturing.

•! Share the lessons learned with the European Commission services to feed into the preparation of future programmes.

The main aim of 30 regional reports is to provide a description and analysis of developments in the area advanced manufacturing with a clearly defined thematic focus and regional innovation policy, taking into account the specific context of the region as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Final EU Regional Innovation Monitor Plus report.

European Commission official responsible for the project is Alberto Licciardello ([email protected]).

The present report was prepared by Asel Doranova ([email protected]). The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Regions, Member States or the European Commission.

Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear.

Further information:

https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor

2 Regional Innovation Monitor Plus 2016

Executive Summary 1. Advanced Manufacturing: Production related biotechnology

In this report, production related biotechnology is defined largely as the industrial biotechnology (also called white biotech) sectors, that focus on bioprocessing technologies for production enzymes, chemicals, biobased materials, biofuels, vitamins, paper, dyes, food, etc. In addition, the selected biobased materials related developments scoped under the chemical sector are linked to industrial biotechnology and the biobased economy in general. Many activities in agricultural biotechnology (green biotech) also have a strong relevance to industrial biotech and biobased economy.

Industrial biotechnology and the bio-based economy is a rapidly evolving field, which offers numerous opportunities for smart specialisation of Flanders. The production related biotech industries have maintained healthy growth despite economic crisis and decline in overall regional industry. Biobased economy industries take up to 9% of the gross margin of the industry in Flanders and 5.7% of employment in the Flemish industry. The most rapidly developing area is biofuels. There is already a considerable research specialisation in industrial biotechnology, covering all areas of industrial biotech. There is an increasing interest from the Flemish chemical industry and an increasing demand for bio-based products. Several initiatives are already being taken in Flanders by a number of stakeholders to develop and implement the value chains defined as priorities in the roadmap for industrial biotech.

At the same time there are still many challenges encountered in promoting production related biotechnology in the region:

•! Challenge 1: Low interest in capital investment in industrial biotech

Despite demonstrated developments and progress over the decade, the industrial biotech in Flanders is seen as a less dynamic area, where returns on investment are slower and riskier than in medical biotech, for example. The uncertainties regarding the future in biotechnology, both technological and fiscal, are a major barrier for attracting venture capital.

•! Challenge 2: Fragmentation of public research and limited collaboration

Public research in biobased economy and industrial biotech is fragmented and spread across small centres of excellence in Flanders. This creates risks in achieving sufficient critical mass for a strong and long-term knowledge base in industrial biotechnology and in maintaining a leading position of Flanders in international scene. Furthermore, there is still limited cross-sectoral cooperation, insufficient collaborative attitude with knowledge institutions and the associated tough discussions about protection of property rights between companies and knowledge institutions.

•! Challenge 3: Lack of clear policy on raw materials and lack of level playing field

European and national targets for renewable energy are backed up by support policies and economic incentives for bioenergy and biofuels, which in some areas causes a negative effect on the price and availability of renewable raw materials for use in other domains, such as in chemicals and other material production.

•! Challenge 4: Lack of standards and labels for biobased products

There is a lack of well-founded norms and standards that could otherwise to motivate both industry and consumers to acquire more biobased products. In industry, there is for example a need for standard specifications that ensure that the buyer can purchase identical commodities from different suppliers. Consumers can often be persuaded


into buying a product with added value through a recognized label. This problem is not only typical for Flanders, but is seen in other countries too.

•! Challenge 5: Falling oil prices might slower the developments in second generation of biofuels

Industrial Biotech in Flanders largely focuses on alternative fuel developments, as well as on products that can substitute petroleum based products. The competitiveness of such products clearly depends on the prices of petroleum. Decline in oil prices since 2014 is seen as a significant threat to industrial biotech products’ competitiveness and lowers the economic interest in investment in Industrial Biotech developments and R&D in particular.

2. Regional Innovation Performance Trends, Governance and Instruments

Flanders is committed to the EU 2020 target of investing 3% of its gross domestic product (GDP) in R&D, one-third being funded by the government (the so-called 1% objective) and two-thirds by the private sector. Over the past two decades Flanders has experienced steady progress in innovation performance, along with continuously increasing government R&D budgets, which did not shrink even during the economic downturn. R&D intensity in Flanders reached 2.42% in 2012. Despite the economic downturn, the total horizontal budget for the science policy of the Flemish government has been increasing over last the 6-7 years.

The innovation performance of Flanders is still challenged by the better performance of other regions. In the 2014 issue of the European Regional Innovation Scoreboard Flanders is in the group of “innovation followers”. In 2008 Flanders was in the group of “innovation leaders”, thus its ambition to be among the top innovative regions in Europe requires further effort.

Policy making focused on STI is done within the EWI Department (of Economy, Science and Innovation) of the Government of Flanders. At the public governance level, STI is dealt with by the commission of the Flemish Parliament and by a single minister in the government. Furthermore, there is a single advisory council and a single administration responsible for preparing and monitoring policy within the policy domain. At the implementation level, the Agency for Innovation by Science and Technology (IWT) assists companies, research centres and knowledge centres in realising their research and development projects by offering funding, advice and a network. For the community competencies there are also specific funding agencies. There are a number of other institutions that constitute the R&I system of Flanders, including 21 renowned research centres and academic institutes.

In terms of policy, the “Flanders in Action” plan aims to achieve a rank among the top-5 EU regions by 2020 for Flanders. It defined several thematic breakthroughs, one of which is the “Innovation Centre Flanders”. Since 2006 it has been focusing on so called thematic “spearheads” for technology and innovation.

There is a wide range of STI policy measures in place, this includes establishment of Strategic Research Centres (e.g. IMEC, VIB, VITO, etc.), a wide range of subsidy programmes for R&D, brain gain mobility, and enhancing the competitiveness of SMEs. There has been a drive towards increasing the focus on the simplification of the set of instruments, which led to the merger of several instruments and re-coordination of the tasks of policy actors.

The efforts within this smart specialisation strategy will specifically be oriented on the elaboration of the missing links in the Flemish innovation instruments; namely, living laboratories and demonstration projects that contribute to the stimulation of product development and to the market introduction/dissemination of innovative products and services.


3. Future Actions and Opportunities

With regard to the Production related biotechnology

The focus of cooperation among regions including the Flemish industrial biotech clusters can centre on specific activities where Flanders can offer something to other regions. But there is a much bigger space for collaboration at the wider European level, where regions can tap into possible synergies, or put forces together to address common challenges at the policy level.

•! Collaboration and support in piloting and demonstration activities

Availability of state-of-the-art facilities for process development and optimisation, scale-up, and custom manufacturing makes the Flanders region an attractive partner in international cooperation initiatives, as well as in small-scale bilateral projects with companies and start-ups from other countries.

•! Focusing on synergies with other regions in promotion of biobased economy

Many European countries and regions are pursuing the development of the biobased economy. There are many common hurdles that are faced by all. At the same time there are many possible synergies that can be beneficial if forces brought together. Often one region has a surplus of a certain feedstock and another region the technological know-how or industrial expertise. An interregional platform, coupled with a web-based portal database would be useful to stimulate co-operation between all stakeholders in the biobased field, and to find partners, funding and investors.

•! Cross-regional cooperation addressing wider political hurdles

There are many political and legislative hurdles that Flanders experiences, which are also common across the EU. This includes the absence of standards for biobased products and input materials, incentives and supporting policies, a lack of ‘level playing fields’ for different application areas for biomass, and the “food versus biomass” debate. There is a need for stronger cooperation among regional and national biobased economy stakeholders to address these challenges in a cooperative manner, and suggest the necessary developments on the EU and international policy level.

With regard to innovation policy

•! Improve condition for translation of R&D inputs into innovation outputs

Flanders’ weak performance in maximising the commercial benefits of R&D would profit from a reduction in administrative barriers and, more generally, measures to unchain entrepreneurship and unleash greater business dynamism. With this aim in mind, Flemish authorities are advised to introduce major policies to facilitate this change. Public innovation support can be further streamlined and made more targeted. To soften the burden for start-ups, social security contributions were already lowered for the hiring of the first five employees. Company expansion beyond this level nevertheless remains hampered, which might necessitate further action and points again to the general need to shift taxes away from labour. Certain non-labour taxes also come across as very counterproductive for entrepreneurship. Therefore, there is a need to soften a number of smaller taxes on capital goods levied at the local level, for example on propulsion. Another area for intervention is the revision of the minimum paid-in capital level for starting the business. Already exiting measures on improving educational skills, boosting entrepreneurship for specific groups, etc. should be implemented in a more coordinated way.


•! Systematic efforts and creation of supporting framework for higher R&D investment and reaching EU 2020 objectives

As the innovation system of the region largely depends on investments made by foreign business units, it is essential to assure a smooth continuation of this inflow of foreign capital and to attract new foreign R&D investments. R&D investments could be made less risky by improving the return on investment through fiscal measures; the creation of opportunities to transform R&D results in tangible products and services should be highly supported. This could be achieved in practice by the establishment of private-public partnerships between companies and universities/public research centres and the development of marketing strategies for testing consumer responsiveness to new products and prototypes. It is also necessary to streamline incentive schemes and reduce the administrative barriers faced by companies and SMEs in accessing public subsidies for R&D.

•! Addressing labour market mismatches via interregional and international mobility

Many policy measures have already been put in place to promote brain gain in Flemish science based organisations. However, this policy support package addresses the problem only partially. A lack of combined business and research skills, as well as low remuneration and language restrictions are additional factors in the overall problem. In addressing this problem, a combination of measures need to be implemented. On one hand, mobility programmes focused on brain gain could be expanded by setting more incentives. Information about the vacancies should be passed systematically through international channels. Interregional collaboration within and outside could also contribute to addressing researchers market mismatches by strengthening link between research organisation and universities in different regions, as well as science and industrial expert network organisations. The experiences of other countries, for example the Netherlands and Denmark, in creating the fiscal incentives for highly skilled foreign workers and researchers can be taken as an example to look into.


1.!Advanced Manufacturing: Production related biotechnology in Flanders

1.1!Overview of performance and trends In the economy of Flanders, the biotechnology sector is seen as one of the most important strategic sectors and significant attention has been given to its development over recent decades. The strategic importance of this sector relies on its historical knowledge development in the area of life sciences and well-developed life sciences network of businesses, universities, research centres, service providers, hospitals and public bodies. A number of top pharmaceutical companies have operations in Flanders, including major R&D activities. Life sciences are an area of major focus for many biotech companies. Flanders and Brussels is home to 146 companies with biotech activities, of which 122 have R&D activities. Over 13,000 employees are active in these life sciences companies. The overall size of the Flanders biotechnology industry can be seen as rather significant in comparison to the size of the country. The Belgian biotech market cap counts for 20% of the whole European biotech market cap (for reference, Belgium’s GDP represents just 2% of the European GDP) Its total turnover is about €1.9b, which is dominates largely by medical biotech. 1

While the Flemish biotech industry is largely specialised on the medical sector, the region is also well equipped to play a significant international role in the industrial biotechnology sector, which is at the core of the knowledge-intensive bio-based economy. A fifth of Flemish biotech companies are involved in industrial biotech activities, with a focus on bioprocessing technologies of enzymes, chemicals, biobased materials and biofuels2. Flanders hosts the largest integrated bio-energy production complex in Europe, Ghent Bioeconomy Valley (GBEV). There are also companies that focus on sustainable agriculture, from marker assisted breeding to genetic modification of crops. A few ongoing research projects are focused on exploitation of algae in food, animal feed or cosmetics industries and traditionally scoped under the green chemistry area, which is one of the streams of the industrial biotech field.3

A feasibility study on industrial biotechnology from 2008 assessed the economic size of the Flanders industrial biotech sector. The sectoral scoping in this study was wide, covering three categories of companies, namely 1) the companies that have biotechnology as a core activity among producers of enzymes, yeasts and fermentation products such as citric acid and bioethanol 2) the users of industrial biotechnology (mainly enzymes) such as starch companies (glucose producers), pulp and paper companies, certain chemical plants, the animal feed industry, detergent manufacturers, and 3) the "traditional" biotech companies, such as breweries, certain dairy companies, industrial bakeries and acetic acid producers. The study shows that, in total, this sector generates more than €3.3bn and represents more than 10,000 jobs (CINBIOS 2015).

The biobased economy assessment by the Flemish government (2013) demonstrates that the size of the biobased economy of Flanders has increased, and so has its share in the overall region’s economy. When calculating economic impact (gross margin) and employment of the biobased economy, it found that up to 1.5% of the total Flemish gross margin and 0.8% of the total Flemish employment is generated by the biobased economy (see Figure 1). The biobased economy takes up to 9% of the gross margin of the industry in Flanders and 5.7% of employment in the Flemish industry. Over half of the gross margin from biobased economy is accounted for by the biofuel, chemical

1 http://www.investinflanders.be/EN/sector/Life-sciences/chapter/Facts-and-Figures 2 http://cinbios.be/industrial-biotech-in-flanders/ 3 http://flandersbio.be/life-sciences-in-flanders/facts-and-figures/


and bioplastics industries. The gross margin for biofuels has doubled in 2008-2010 and new jobs have been created. This rapid growth is due to the launch of new industrial facilities by Alco Bio Fuels in 2009-2010. Today Belgium is the sixth largest bio-ethanol producer in EU4. While the bioplastics industry showed decline in terms of gross margin and employment over indicated years, the biobased chemistry industry had a substantial €176m increase in gross margin, which however did not add new jobs. If we look into the numbers of the biofuels, bioplastics and biobased chemistry, we can see that their share in the region’s economy has also increased from 0.54% to 0.60%. This is remarkable if one considers the crisis that hit the Flemish economy and the decline of its overall industry in this period. While Flemish industry employment decreased by 10%, there was only a 1% cut in jobs within industries in the biobased economy. Compared to 2008, the Flemish bio-based economy in terms of gross margin rose by 12% while the Flemish industry decreased 6%.

Figure 1: Estimate of Gross Margin and Employment (FTEs, full-time equivalents) of biobased economy in Flanders

Source: Flemish Government 2013, based on annual accounts of 2011

The biotech industry in Flanders ranks 3rd in Europe for R&D investments5. The private and governmental investments in biotech R&D amounted to €550m and €270m in 2007, respectively (PwC 2011). On top of that, since 2005, eight Flemish biotech IPOs have raised, between them, around €0,5b.6 R&D spending in industrial biotech and biobased chemistry is not specified in the official statistics.

The annual patenting performance in the industrial biotech area is presented in the figure below. The table below shows the absolute numbers of patent families (EPO and EPO PCT patents) in the area of Industrial Biotechnology in Flanders, Belgium, EU15, EU27 and World total. (CINBIOS 2015)

4 http://epure.org/media/1270/european-ethanol-installed-production-capacity.png 5 ibid. 6 http://flandersbio.be/files/Factsheet_FINAAL.pdf


Furthermore, the patent analysis study showed that the share of Flanders within Belgium averaged 63% for EPO patents (and 64% for EPO PCT patents). About 1% of global patents in the Industrial Biotechnology area originate from Flanders. The share for Belgium is 2% (ibid.)

Figure 2: EPO and EPO-PCT patents statistics in the industrial biotech area

Source: CINBIOS (2015): appendiz 1, Patent analysis prepared by Julie Callaert, Mariette Du Plessis, Xiaoyan Song, KU Leuven, Contact: [email protected]

Figure 3: Share of Belgium and Flanders in the EU-15 patent portfolio in Industrial Biotechnology

Source: CINBIOS (2015): appendix 1, Patent analysis prepared by Julie Callaert, Mariette Du Plessis, Xiaoyan Song, KU Leuven, Contact: [email protected]


The European market in industrial biotechnology has on average 38% of the global patent pool in the area. To further zoom in on the position of Belgium and Flanders in Europe shows that the shares of Belgium and Flanders in the European industrial biotechnology patents amount on average to 4.4% and 2.7%, respectively. They evolve according to a similar trend (Figure 3). This refers both to patents applied for by research institutes and over patents applied for by companies. When put into a wider perspective, one can see that the number of patents that are being requested in Flanders in this area relative to the total number of patent applications is greater than the average in Europe and in the rest of the world (ibid).

The availability of venture capital, loans and borrowings in industrial biotech is considerably weaker than in the case of medical biotech, which is one of the most dynamic sectors in terms of attracting private investments in Belgium and internationally7. The availability of seed capital and grants from foundations dedicated to industrial biotech developments is also rather low. There is a high availability of government funds for general R&I and demonstration activities, but it is not always clear which criteria have to be fulfilled to in order to receive this public funding. The uncertainties regarding the future in biotechnology, both technological and financial, are a major barrier for obtaining financing. (PWC 2011)

The largest developments on industrial biotech in Flanders is linked to the Ghent Bioeconomy Valley (GBEV)8, which is the biggest European industrial biotechnology cluster focusing on biofuel and bioenergy. GBEV has operated since 2005 and was an initiative of Prof Wim Soetaert as a Public Private Partnership between Ghent University, the City of Ghent, the Port of Ghent, the Development Agency East-Flanders and a number of industrial companies related to the Ghent region, active in the fields of generation, distribution, storage and use of bio-energy.

In the domain of industrial biotechnology/biobased economy sectorial innovation system in Flanders the important player is CINBIOS9, which is the partnership between cluster organisations and associations working in the industrial biotechnology and biobased economy field (see also section 1.4.1). CINBIOS focuses on the development of new bio-based concepts and solutions, promotes collaboration and networking among various actors, facilitates new projects in industrial biotech involving research and industry actors in them.

The chemical sector has been playing and increasing its role in the industrial biotechnology sector and contributes to building the biobased economy in region. The growing importance of sustainability and demands for greener products and processes motivated chemical companies to be more active in biobased product innovation. Flanders Innovation hub for Sustainable Chemistry (FISCH)10 has taken a driving role in this. Based on a joint initiative of the chemical industry and the Flemish government, FISCH is serving as a platform for open innovation commissioned to accelerate the transition to sustainable chemistry.

Many research, demonstration and transfer activities are implemented under the umbrella of the Flanders Institute for Biotechnology (VIB – Vlaams Instituut voor Biotechnologie)11(see also section 1.4.1). VIB is a major life sciences research institute based in Flanders, with more than 1470 scientists from over 60 countries performing basic research with a focus on translating scientific results into pharmaceutical, agricultural, and industrial applications. It covers a large spectrum of research areas, the majority of which are linked to biomedical topics. Among the 74

7 Source: interview and Roadmap of Flanders Industrial Biotechnology (CINBIOS 2015) 8 See further details in section 1.9 ‘Good practice case’ 9 http://cinbios.be 10 http://www.fi-sch.be/en/ 11 http://www.vib.be


research groups of VIB, the activities of three groups focus to various degree on industrial biotechnology or the biobased economy. VIB also offers a wide range of training, technology transfer, and bio-incubation services. So far VIB has set up 14 companies that employ around 610 people and involved a collective capital investment of approximately €570m. In addition, VIB ensures that intellectual property rights are protected with patent applications. It also places great value on intensive collaboration with industry; this translated for example into 130 industrial research and licensing agreements in 2014 (VIB 2015)

Another important player is VITO, the Flemish Institute for Technological Research, the largest multidisciplinary research centre for energy, materials, environmental and terrestrial observation in Flanders. Under its sustainable chemistry research strain, VITO is involved in applied R&I and demonstration projects the in area of biofuels, bio-material based production, exploitation of algae based products development.

1.2!Business sector perspective The business landscape in the production-related biotechnology industry in Flanders is made up of a range of companies involved in the production of enzymes, yeasts and fermentation products. Fermentation products include bioethanol and citric acid, chemical plants, the animal feed industry, detergent manufacturers, agrotextile and biodegradable manufacturing. In addition are the "traditional" biotech companies, such as breweries, certain dairy companies, and industrial bakeries.

In an international benchmarking context, the Flanders biotech industry, is seen overall as a follower rather than the frontrunner. However, the region is noted to be a very strong follower, with leading positions in areas such as having the largest integrated bio-energy production complex in Europe, the well known Ghent Bio-Economy Valley.

Biofuels is the most dynamic sector within the industrial biotechnology area in the region. The Flemish biofuel production industry has seen rapid growth in the last decade, with several companies adopting biofuel production technology, as well as companies such as Bioro and Alco Bio Fuel launching new facilities. As discussed above, the gross margin for biofuels doubled over the period 2008-2010 and as did the number of jobs. Further growth is envisaged with a major investment from ArcelorMittal to construct Europe’s first ever commercial-scale production facility focused on creating bioethanol from waste gases produced during the steelmaking process (see section 1.6 for more details on this investment project).

There are a number of important companies, operations and facilities in the region. Table 1 below, as well as Appendix D provide overview of the key industrian biotechnology companies working in Flanders.

Table 1: Key industrial biotechnology companies in Flanders Company name Activities Alco Bio Fuel12 Biorefinery. Processing corn and wheat into bio-ethanol, protein-rich feed,

electricity, liquid CO2, and a number of other by-products (e.g. corn oil). Bioro13 Production of biodiesel from rapeseed

Tereos Syral14 Cereal processing with production of starch and sweeteners. Also has a combined heat power plant and, since 2008, a bioethanol facility.

Citrique Belge15 Citric acid, sodium citrates, and other co-products based on indusial fermentation.

12 http://www.alcobiofuel.com/ 13 http://www.bioro.be 14 http://www.tereos-starchsweeteners.com/en/contact/our-sites/aalst 15 http://www.citriquebelge.com/


Company name Activities Cargill16 Production of industrial chocolate, sweeteners, starches, and malt, as well as

speciality texturising ingredients. It also does grain and oilseed crushing, refining, bottling, hardening and sales

De Saedeleir Textile Platform17

Production of (biodegradable) fibres, carpets and nonwovens from renewable resources, namely from polylactide polymer, which is a compostable material made from plants.

Ecover18 Production of washing and cleaning products with plant-based and mineral ingredients.

Du Pont Industrial Biosciences19

Production of its industrial enzymes.

Two notable start-ups in the industrial biotech area have emerged in the last three years in Flanders:

•! Inbiose20 was founded in mid 2013, as a spin-off company from Ghent University. It is located at the Technology park of Ghent University. The company developed a versatile fermentation-based production platform for the supply of specialty carbohydrates addressing wellness, nutrition, and biomedical needs. Speciality carbohydrates are high added value, rare and complex carbohydrates that are difficult or impossible to produce with conventional technologies. Inbiose addresses these issues via special biofermentation technology, which enables the production of any specialty carbohydrate for which a fermentative production route is feasible.

•! GlobalYeast21, established in 2015, is a spinoff of KU Leuven, VIB and Performa Investimentos, an independent Brazilian private equity and venture capital company. It will develop and deliver superior industrial yeast strains for bioethanol and the green chemicals industry. The focus is on production of bio-ethanol from waste streams, converting the total amount of sugars in cellulosic biomass into ethanol (see more information on GlobalYeast in section 1.6).

1.3!Scientific research potential Flanders has a well-established scientific research base in the area of biotechnology, which plays a significant role in maintaining the region’s competitiveness in the biotechnology sector. Building the scientific base has been a central strategic element in the region’s overall economic development, and in concretely promoting the biotechnology industry.

There is a wide and mature network of research centres and academic institutes with a strong reputation in biotech research. The biotechnology sciences hubs near the five main universities house most biotech companies in 13 research parks and 14 incubators, research institutes, academic hospitals and clinical research organisations (PWC 2011).

Flanders Institute for Biotechnology (VIB)22 unites almost all of the region’s research organisations active in biotechnology areas. While the dominant focus of the VIB research network is on medical biotech, several institutes within these organisations focus on production related biotechnology covering industrial

16 http://www.cargill.be/en/about/index.jsp 17 http://www.dstextileplatform.com 18 http://be.ecover.com 19 http://biosciences.dupont.com/ 20 http://www.inbiose.com 21 http://www.vib.be/en/business-opportunities/spinoffs/Pages/GlobalYeast.aspx 22 http://www.vib.be


biotechnology and related agriculture biotechnology. VIB houses the biggest R&D hub for plant biotech.

While the research focus on medical biotech is strong across all of the region’s universities, research on production related biotechnology (or industrial biotech) is concentrated at two university science clusters in Ghent and Leuven. The main technology and application areas in which the regional scientific institutions have a specific competitive advantage include: genetic technologies for development of superior industrial yeast and lignocellulosic biomass fermentation, both for production of second generation bio-fuel and green chemicals.

Below are the regional scientific research players that either directly deal with the production related biotech area or contribute to the area with basic scientific research (e.g. in biology, microbiology, biochemistry), which can be useful in the development of industrial biotech products and processes.

Table 2: Scientific organisations in the area Institutions Unit/department Ghent University: •! VIB Department of Plant Systems Biology, UGent

•! Institute of Plant Biotechnology Outreach (IPBO) Catholic University Leuven:

•! VIB Department of Molecular Microbiology, KU Leuven •! VIB Laboratory of Systems Biology, KU Leuven •! VIB Laboratory for Bioinformatics and (eco)systems Biology

University of Antwerp: •! VIB Department of Molecular Genetics, University of Antwerp Vrije Universiteit Brussel •! VIB Structural Biology Research Center VITO, the Flemish Institute for Technological Research

•! Sustainable chemistry research programme

Dedicated industrial biotechnology, or biobased economy related research is largely concentrated in Ghent and Leuven. Out of 74 research groups or Labs at VIB, three have the most relevant focus on industrial biotechnology 23. Table below and Appendix C present information about these research groups.

Table 3: VIB research groups dealing with industrial biotechnology topics VIB Lab Research focus Johan Thevelein Lab24 Novel genetic technologies and their application for the generation of

superior industrial yeast strains. Application: production of bio-ethanol from cellulosic biomass, as well as in beer brewing, wine production, bakery applications, production of biochemical/green chemicals, etc.

Kevin Verstrepen Lab25 Optimisation and improvement of industrial processes, with special emphasis on fermentation/generation of yeast strains that are better suited for industrial application. Application: Production of beer, wine, bread, chocolate, ethanol

Wout Boerjan Lab26 also known as Bio-energy Group27.

The main focus of this research group is to understand the biosynthesis of plant cell walls to provide the fundamental knowledge necessary to design plant cell walls that are easier to process into simple sugars that can then be further fermented to bio-ethanol or other bio-based products, such as bioplastics

There are also a number of relevant research project and R&D feasibility studies under the umbrella of the Flanders Innovation hub for Sustainable Chemistry (FISCH)28. Examples of such projects are ‘OMEGA-Extract’, ‘iAlgaePro’,

23 interview with J. Cardoen 24 http://www.vib.be/en/research/scientists/Pages/Johan-Thevelein-Lab.aspx 25 www.vib.be/en/research/scientists/Pages/Kevin-Verstrepen-Lab.aspx 26 http://www.vib.be/en/research/scientists/Pages/Wout-Boerjan-Lab.aspx 27 http://www.psb.ugent.be/bio-energy 28 http://www.fi-sch.be/en/overview-projects/, see following section for profile of FISCH


and ‘DEMOSPIR’ on cultivating and/or exploitation of algae in food, animal feed or cosmetics industries; ‘CARBOLEUM’ focusing on processes of low-grade sugar containing materials into detergents; ‘BIOVERTOL’ on sustainable synthesis of branched alcohols from bio-based raw materials; ‘AMBER’ on processing plant based material for ink and paint formulation; ‘BIO WAX’ researching economically viable bio-based alternatives to petroleum-based wax and olefins production; ‘CHITINSECT’ on production and application of chitosan based on insect biomass at lab and pilot scale; ‘LIGNIWASTE’ on lignin recovery using residual heat; ‘LipaMetics’ on biological method of production of esters of fatty acids with lower alcohols that are used in food and personal care; ‘MAIA’ on Manufacturing of Advanced & Innovative bio-Aromatics from converting waste wood or flax shives. All projects are based on multiple-partnerships, involving KU Leuven, Ghent University, VITO. Several projects involve industrial companies.

A few industrial biotech companies (presented in section 1.2) also pursue R&D activities in collaboration with Universities or at private research labs. For example, DuPont Industrial Biosciences runs its crucial process development and testing at the unit in Bruges and has built strong relationships with the University of Ghent. Citrique Belge has its R&D lab focusing on research of new yeast strains producing citric acid, which are more resistant to external factors, more flexible on raw materials, etc. Cargill has an R&D centre in Vilvoorde29, which does advanced analytics, development of novel ingredient, process and product, including industrial starch, polyols and dextrose, proteins, fibres, lipids, food starches and maltodextrin, applications with emphasis on bakery, confectionery, convenience and pharmaceutical and personal care. The private partners in Ghent Bioeconomy Valley are involved in R&D related activities, projects and initiatives, with a focus on biofuel process optimisation and production of second generation bioethanol.

1.4!Role of intermediary institutions Demonstrating the importance of the biotechnology sector, the region has dedicated intermediary organisations to support development in the sector, including umbrella organisations, 13 science parks and 14 incubators. Not all of these, however, specialise in industrial biotech. The role of these actors has been shown to be significant in promoting R&D activities, as well as the diffusion of R&D results and the uptake of production related biotechnology areas in Flanders. One has to note, however, that their role is less prominent in working with existing industrial biotechnology companies, including the range of small, medium and large companies in traditional areas such as food, chemical industries. Furthermore, their focus is largely dominated by the biomedical industries, making the number of research parks and incubators that strategically focus on the area of industrial biotechnology smaller.

1.4.1!Umbrella organisations

FlandersBio30 is an umbrella organisation founded in 2004 as a not-for-profit organisation to support and further develop the life sciences & biotechnology sector. The objective is to ensure that life sciences remain a strong driver of economic growth in the region, and is to ensure critical mass is sufficient for the attraction of new R&D companies, investors, service & technology providers as well as of skilled employees. FlandersBio currently counts more than 300 members, dominant majority being in medical sector. It offers an up-to-date life sciences database31 containing all the life sciences companies with biotech activity in Flanders, and all FlandersBio members.

29 http://www.cargill.be/en/products/cargill-rd-centre-europe/index.jsp 30 http://flandersbio.be/ 31 http://flandersbio.be/life-sciences-database/


VIB32 is a major life sciences research institute based in Flanders, with more than 1,470 scientists from over 60 countries performing basic research with a focus on translating scientific results into pharmaceutical, agricultural, and industrial applications(see also section 1.1). It covers a large spectrum of research areas, the majority of which are linked to biomedical topics. Among 74 research groups of VIB, three groups’ activities focus on industrial biotechnology33. Additionally, VIB offers wide range of trainings, technology transfer, and bio-incubation services.

CINBIOS Industrial Biotech Cluster34 is one of the key actors with a special mandate to support industrial biotechnology companies (see also section 1.1). It is a joint initiative of FlandersBio, Ghent Bioeconomy Valley and Essenscia Vlaanderen, which is financially supported by the Flemish government through IWT Vlaanderen. CINBIOS aim to strengthen the position of Flanders internationally as an industrial biotech region. It supports links between companies from various industrial sectors, and between these companies and the knowledge organisations working in the field of industrial biotechnology. CINBIOS focuses on the development of new bio-based concepts and solutions for the chemical, pharmaceutical, textile, agri, food, environmental, energy and other sectors. It is committed to support innovation in these sectors by:

•! Centralising and providing access to nationally and internationally available scientific information and technological know-how.

•! Starting up problem-driven research projects within the CINBIOS working groups on bioplastics and biopolymers, bio-catalysis and fermentation, 2nd-generation biofuels, bio-based chemicals and micro-algae.

•! Promoting the broad commercialisation of the available academic and industrial knowledge and expertise in industrial biotechnology.

Other relevant actors in the area are Essenscia vzw/asbl and FISCH, primarily dealing with the chemical 35industry, but increasingly focusing on promoting green/biobased innovations in the chemicals sector. Essenscia36 is the Belgian Federation for Chemistry and Life Sciences industries. It is a multisectoral umbrella organisation that represents the numerous sectors of activities in the field of chemicals and the life sciences. Flanders Innovation hub for Sustainable Chemistry (FISCH)37 is a public-private partnership, which was recently recognized by the Flemish government as a Spearhead cluster for sustainable chemistry. In the portfolio of FISCH a number of research and demonstration projects on biological materials (plants, algae) based products (see section 1.3).

1.4.2!Science parks and incubators In Flanders, several science parks and incubators offer facilities for young, research-based companies and innovative enterprises. Often, these are spin-off companies from a university or a public research organisation and are located close to the knowledge centre in question. In some cases, an incubator is specifically oriented towards a particular scientific area. Biotechnology focused science parks and incubators are located around Ghent, Leuven and Diepenbeek. These institutions play an instrumental role in promoting the diffusion of R&D results and start-ups. A number of companies benefit from the facilities offered by science parks and incubators, which

32 http://www.vib.be 33 see section 1.3 for description of each group 34 http://cinbios.be/ 35 http://www.fi-sch.be/en/ 36 www.essenscia.be 37 http://www.fi-sch.be/en/


help them to develop and test their products and processes before they enter the larger markets. The profiles of the bioeconomy and industrial biotech oriented science parks and incubators are presented below:

Ardoyen Science Park (Zwijnaarde-Ghent) 38 hosts the general incubation and innovation centre of Ghent University39 and the VIB biotech incubator Gent40 . There are over 40 companies employing about 1,500 scientists. Most of the companies are biotech and ICT companies, which are spin-offs of Ghent University or the Flanders Institute for Biotechnology (VIB). As of March 2015 Ardoyen Science Park and business and industrial park Eiland Zwijnaarde41 are positioned internationally under the name of Tech Lane Ghent Science Park42

Bio-Accelerator Gent43 is a business service centre for rapidly expanding biotech and life-science companies. It offers laboratory facilities and offices with high level technical specifications. It also provides a range of shared services, fully fitted to the needs of the users. The Bio-Accelerator is situated in the Technology Park in Zwijnaarde near Ghent, amidst a cluster of bio-tech and life-science companies. Its location provides users with a unique opportunity for networking and know-how exchange, enhancing development and growth opportunities. The Bio-Accelerator is a project initiated by DG Infra+, B.S.I. and Foremost Immo. This initiative was catalysed by VIB and supported by the Ghent University.

Bio-incubator Leuven44 is fully dedicated to biomedical life sciences and offers opportunities for both start-ups and established companies. Bio-incubator Leuven is situated in the Arenberg Science Park, which houses many ICT and other high-tech companies. In response to the increasing demand for specialised incubation space in the life sciences sector, the existing facilities have been expanded with a third building. The three Bio-Incubator buildings each have several modules that offer state of the art laboratory and office facilities. For the construction of the second and third Bio-Incubator building the European Regional Development Fund has contributed €1,970,470 and €1,222,090 respectively45.

There are also two upcoming relevant projects including Bioscape incubator46, which is under construction in the neighbourhood of other biotech facilities in Ghent and which will focus on life-science research. Another is the Feed Food Health campus science park, which is a project of Leuven-Tienen Feed Food Health campus47 aiming to create an enterprise zone reserved for research-driven businesses in or on the periphery of the food industry. Biogenerator Tienen48 is expected to become the centrepiece of the science park and the campus.

38 http://www.ardoyen.be 39 http://www.iicugent.be/ 40 http://www.vib.be/en/business-opportunities/facilities-for-enterprises/Pages/Locations.aspx 41 http://www.eilandzwijnaarde.be 42 http://www.techtransfer.ugent.be/en/support-for-industry/Tech-Lane-Ghent-Science-Park 43http://www.vib.be/en/business-opportunities/facilities-for-enterprises/Pages/Bio-accelerator-

Ghent.aspx 44 http://www.bio-incubator.be/en/ 45 ibid. 46 http://www.bioscape.be/ ; http://www.svr-architects.eu/wp-content/uploads/PF_Bioscape.pdf 47 http://www.ffhtienen.be/en 48 http://www.ffhtienen.be/en/campus/incubation


1.5!Developing skills for the future Life sciences is an industry in which people play a crucial role. In researching pharmaceuticals, in developing the latest industrial processes, but also in production, logistics and a wide range of support services.

As discussed above, Flanders has a strong scientific base in the biotechnology area, which is largely tied to the regional universities. Companies have the opportunity to plug into a pool of scientists and technicians from five universities (Leuven, Gent, Antwerp, Brussels, and Hasselt) and the research group network of the biotech research institute VIB.

Flanders’ educational institutions provide a good stock of potential personnel for the biotechnology industry, including production-oriented biotech. Nevertheless, there is a shortage of so called “industry-ready talents” 49. While the universities and technical schools in Flanders produce a sufficient number of graduates with biotechnology science knowledge, the graduates largely lack industry/business knowledge and entrepreneurship skills that are needed in companies or for setting up a new business 50. See Table 4 for a list of universities and programmes.

Table 4: Graduate programmes relevant for industrial biotechnology offered in Flanders University Relevant graduate programmes Ghent University Master of Science in Chemistry

Master of Science in Biochemistry and Biotechnology Master of Science in Biology Master of Science in Food Technology International Master of Science in Rural Development Master of Science in Bioinformatics (Bioscience Engineering)

KU Leuven Master of Biophysics, Biochemistry and Biotechnology Master of Biology Master of Chemistry Master of Bioinformatics Master of Chemical Engineering Master of Food Technology Master of Molecular Biology Master of Industrial Sciences: Biochemical Engineering Master of Industrial Sciences: Chemical Engineering European Master of Food Science, Technology and Nutrition

University of Antwerp Master of Biochemistry and Biotechnology: Molecular and Cellular Gene Biotechnology Master of Industrial Sciences: Biochemistry Master of Industrial Sciences: Chemistry Master in Biology: Biodiversity, Conservation and Restoration Master of Biology: Cell and system biology Master of Biology: Ecology and environment Master of Chemistry �

Vrije Universiteit Brussel

Master of Science in Biology Master of Science in Biomolecular Sciences Master of Science in Chemistry Master of Science in Molecular Biology Master of Science in Chemical and Materials Engineering

Hasselt University Master in Industrial Sciences: Biochemistry Master in Industrial Sciences: Chemistry Master in Industrial Sciences: Energy

Research networks have also emerged between academic centres in Flanders and the neighbouring regions, namely in so called ‘euroregion’ including universities in Liège, Aachen, Maastricht, Eindhoven. These interregional networks offer additional access to the pool of highly skilled researchers and engineers for Flanders. Furthermore, it is

49 interview with W. Dhooge 50 interview with W. Dhooge


reported (PwC 2011) that the current reputation of the Flemish biotech clusters, e.g. Gent Bioeconomy valley, allows the companies and the research organisations to attract the right skill base.

The European Bioeconomy Observatory51 presents R&D personnel statistics. While these are not precise numbers on the industrial biotech sector, they can provide some insight on the skilled labour forces in relevant industries. Figure 4 and Figure 5 show that within the biobased economy in Belgium, around 1,200 employees with R&D skills are concentrated in the food and beverages industry and over 2,000 of them in the chemical industry.

Figure 4: Total R&D personnel and researchers, in business enterprise sector by economic activities: 100% bio-based transformation sector (2011)

Source: EC Bioeconomy Observatory 2014

Figure 5: Total R&D personnel and researchers, in business enterprise sector by economic activities: Partly bio-based transformation sector (2011)

source: EC Bioeconomy Observatory 2014

51 https://biobs.jrc.ec.europa.eu/


1.6!Major investment projects This section presents the major investment projects in industrial biotechnology in Flanders. This includes projects funded by private investors, as well as by public funds from the European and Flemish governments.

Bio Base Europe52.

Bio Base Europe is the largest investment project in Flanders in the area of industrial biotech and the biobased economy (see also section 1.9). It is Europe’s first open innovation and education centre for the bio-based economy. The initiative started in 2005 as an INTERREG project. Flanders and its neighbour, the Zeeland province of the Netherlands, joined forces to build state-of-the-art research and training facilities for bio-based activities. Bio Base Europe is the result of a strategic alliance between Ghent Bioeconomy Valley (Ghent port area, Flanders) and Biopark Terneuzen (Terneuzen port area, Zeeland, the Netherlands). With a combined production of 1.2m tonnes of bio-fuels per year, the ‘Ports Group of Ghent and Terneuzen’ is already market leader in Europe. The new project is set to transform the region into the main bio-economy gateway in Europe (FIT 2013).

The project has two elements: The Pilot Plant located in Flanders and the Training Centre, located in the Netherlands. The goal of this initiative is to speed up the development of a sustainable bio-based economy in Europe. Both governments have allocated, between them, a total of €21m to this unique project53.

•! The Bio Base Europe Pilot Plant54 was launched in 2010 and focuses on second generation technologies to convert agricultural waste products and non-food crops, such as wheat straw, corn cobs, wood chips, jathropa and algae oil into bio-fuels; bio-plastics and other bio-products. The facility is located near Ghent. From 2013 to 2015, Bio Base Europe Pilot Plant successfully conducted 129 bilateral (private) projects with 71 different small, medium and large sized companies.55 On top of these private/bilateral projects, the Bio Base Europe Pilot Plant was involved in 18 public project consortia under the umbrellas of EU and Flemish programmes56

•! Bio Base Europe’s state-of-the-art Training Centre57 was opened in 2012 and addresses an industry-wide shortage of skilled process operators and technical maintenance specialists, especially for the bio-based economy. It will feature training facilities for bio-based activities and operate according to an open education model, providing standard as well as company-specific training and education. The centre is located close to Terneuzen (Zeeland, the Netherlands).

GlobalYeast

In 2015, KU Leuven, VIB and Performa Investimentos, an independent Brazilian private equity and venture capital company, established GlobalYeast, a new company that will develop and deliver superior industrial yeast strains for bioethanol and the green chemicals industry58 (see also section 1.2). The company raised a total of €6.25m from an investor consortium composed of a Brazilian venture capital fund

52 http://www.bbeu.org/ 53 interview with Professor Wim Soetaert 54 http://www.bbeu.org/pilotplant/ 55 http://www.bbeu.org/pilotplant/projects/bilateral-projects/ 56 http://www.bbeu.org/pilotplant/category/projects/ 57 http://www.bbetc.org/over-bbetc 58 https://lrd.kuleuven.be/en/news/ku-leuven-vib-and-performa-investimentos-establish-globalyeast-to-

deliver-superior-industrial-yeast-strains-for-the-production-of-bio-ethanol-and-green-chemicals


(Performa Investimentos), two Belgian funds (KU Leuven Gemma Frisius Fund59 and SOFI) and VIB and will focus on the Brazilian market and large groups worldwide.

Yeasts are used in the production of bio-ethanol from waste streams. Until recently, not one single strain of yeast was capable of converting the total amount of sugars in cellulosic biomass into ethanol. The Johan Thevelein lab (VIB/KU Leuven) succeeded in producing genetically engineered yeast strains capable of fermenting C5 sugars from concentrated and non-detoxified streams. GlobalYeast is based on the science and technology platform of Professor Johan Thevelein (VIB/KU Leuven) and will offer proprietary superior yeast strains, together with tools to monitor and control the fermentation process for the second and first generation - bioethanol and green chemicals industry. This full set of products and services allows to improve production and reduce production costs.

Its executive team is based both in Belgium, in the Bio-incubator facilities in Leuven, and in Brazil, in Rio de Janeiro, to conduct business development and R&D activities. The executive team is headed by Dr. Marcelo do Amaral, an industrial scientist with extensive experience in industry, academia and consulting, who will lead the company’s business development from Brazil. Professor Johan Thevelein, scientific founder, will be the Chief Scientific Officer of GlobalYeast and will be in charge of all research and the continuous development and improvement of the technology platform.

ArcelorMittal bioethanol plant60

A rather remarkable project has been initiated by an unusual player – a steelmaking company – which is also a champion in the investment to be made in the industrial biotech sector. In July 2015, ArcelorMittal announced its partnership with LanzaTech and intent to construct Europe’s first-ever commercial scale production facility to create bioethanol from waste gases produced during the steelmaking process. The resulting bioethanol can cut greenhouse gas emissions by over 80% compared with conventional fossil fuels. It will predominantly be used in gasoline blending, but it can also be further processed into other products such as drop in jet fuel.

Construction of the €87m flagship pilot project61, which will be located at ArcelorMittal’s steel plant in Ghent, Belgium, has commenced, with bioethanol production expected to start in 2017.

Approximately 50% of the carbon used in the chemistry of steelmaking leaves the process as carbon monoxide. Today, this waste gas stream is either flared or used to heat and power the steel mill. In either case, the carbon monoxide is combusted and the resulting CO2 is emitted. LanzaTech’s technology, however, recycles the waste gases and ferments them with a proprietary microbe to produce bioethanol. Every tonne of bioethanol produced, displaces 5.2 barrels of gasoline as well as reducing ArcelorMittal’s CO2 emissions by 2.3 tonnes62.

BASF and Avantium joint venture on bio-based polymer63

In March 2016 BASF SE has announced a joint ventures to make materials for packaging from renewable resources in Belgium. The JV announced between Ludwigshafen, Germany-based BASF and Avantium of the Netherlands, will use

59 https://lrd.kuleuven.be/en/spinoff/gemma-frisius-fund 60 http://corporate.arcelormittal.com/news-and-media/our-stories/lanzatech-circular 61 http://corporate.arcelormittal.com/news-and-media/our-stories/lanzatech-circular 62 http://corporate.arcelormittal.com/news-and-media/our-stories/lanzatech-circular 63 https://www.avantium.com/press-releases/2016/basf-avantium-intend-establish-joint-venture/ and

http://www.process-worldwide.com/new-polymers-player-basf-and-avantium-plan-to-cooperate-on-bio-based-chemicals-a-526102/


Avantium's YXY process to make and market furandicarboxylic acid (FDCA), which is made from plant-based industrial sugars, and is a chemical building block for polyethylenefuranoate (PEF), used in food packaging film and plastic bottles.

Avantium’s proprietary YXY process, developed in its laboratories in Amsterdam, is currently used at its FDCA pilot plant in Geleen, Netherlands. The joint venture will enable the process to be further developed and a reference plant to be built at BASF’s Verbund site in Antwerp, Belgium. It is intended that this FDCA plant will have a production capacity of up to 50,000 metric tons per year.

Other projects

There are also a number of research, innovation and demonstration projects that have been supported through the regional and EU R&I funding programmes (see also section 1.7).

VISIONS64 is one of the major Flemish projects aiming to promote the biobased economy in the region. The project identifies the main organic waste streams and by-products in Flanders with the ambition to use these products in new value chains. The project is the initiative of CINBIOS, financially supported by the Flemish Agency for Innovation by Science and Technology (IWT). It is co-funded by a large consortium of companies interested in either valorising their waste stream or in finding alternative feedstock for biobased processes. The total budget of the project is around €2.45m65. In the project, an inventory of organic waste streams and by-products that are abundantly available in Flanders is developed. The products are clustered depending on their composition. For each cluster, an efficient processing technology that turns the waste-stream into a valuable resource for new biobased value chains, is identified. Since these technologies are not making use of edible substrate, they are called second generation.

1.7!International cooperation Bio Innovation Growth mega Cluster (BIG-C)

One of the largest cooperation initiatives that can have implications for the biobased economy is the Bio Innovation Growth mega Cluster (BIG-C)66. This is the cross-border Smart Specialisation initiative aiming at transforming Europe’s industrial mega cluster in the Belgium region of Flanders, the Netherlands and the German state of North Rhine-Westphalia into the global leader of biobased innovation growth. This cluster is also known as Antwerp-Rotterdam-Rhine-Ruhr (ARRR) as it includes ports of Antwerp and Rotterdam and the regions along the rivers Rhine and Ruhr. The ARRR region benefits from the density of its academic institutions, research institutes and industrial R&D centres, innovative chemistry industry sector, well established infrastructure including roads, railways, aviation, shipping, as well as complex system of pipelines starting from sea ports connects industrial production sites with each other, especially those of the chemical industry. The region also has a history of cooperation and complementary investments in biorefinery feedstocks and in other value chains.

A schematic overview of the PPP-network, a selection of the universities, knowledge institutes and pilot facilities that make up the BIG-C mega cluster is presented in Figure 6.

64 http://www.bbeu.org/pilotplant/visions/ 65 http://www.bbeu.org/pilotplant/visions/ 66 www.era-ib.net/sites/default/files/big_c_innovation_cluster.pdf


Figure 6: Major members if the BIG-C mega cluster

source: www.era-ib.net/sites/default/files/big_c_innovation_cluster.pdf

BIG-C aims to realise value chains, starting from renewable feedstock via building blocks to polymers or materials for consumer products. This is intended to be achieved by consortia of companies that cover the entire value chain: at the feedstock level, the conversion to basic building block level, and the use of these blocks in polymer or material production (including blending and product design). BIG-C addresses four feedstock-to-product value chains: lignocellulose, agro-based, CO2 and organic waste. Technically, BIG-C addresses the holistic production, processing and utilisation of various regional resources of carbon whether its primary origin is the region itself (e.g. agro-biomass) or whether it is consigned to regional recycling in the sense of a cascade usage (e.g. municipal waste or industrial side streams including CO-and CO2-emission).

Bio Base NWE

Bio Base NWE67 was a three-year project (2013-2015) supported by the European Comission to promote the development of the biobased economy in North West Europe (NWE). Partners form Belgium, the Netherlands, UK, Ireland and Germany joined forces in this project. The €6.2m project helped entrepreneurs and companies in NWE countries to facilitate innovation and business development in biobased technologies68. More details on this project are provided in section 1.9, presenting good practice cases.

67 http://www.biobasenwe.org 68 http://www.biobasenwe.org/en/news/press-releases/1-december-2015-results-bbnwe/


International cooperation in RDI

A number of multi million euro RDI projects based on cooperation between Flanders and partner organisations from other countries have been and still are being implemented. Examples of these projects are presented in Table 5 below.

Table 5: RDI projects where Flanders cooperate with international partners Project title Description

iAlgaePro: Innovative Algae Processing for nutraceuticals in Food and Feed69

The innovative technology studied in project provides solutions for the exploitation of algae as an alternative source for high quality functional proteins for food and animal feed, and bring more efficient cultivation and drainage principles, as well as mild pre-treatment and separation processes. The partners are FEI (Research Association of the German Food Industry), FISCH (Flanders Innovation Hub for Sustainable Chemistry), DIL (Deutsches Institut für Lebensmitteltechnik eV), ILU (Institut für Lebensmittel- und Umweltforschung e.V.), VITO (Vlaamse Instelling voor Technologisch Onderzoek), BoerenBond Projecten vzw.

Marisurf - Novel, Sustainable Marine Biosurfactant/ Bioemulsifier for commercial exploitation70.

This Horizon 2020 project is based on a partnership of UK, Belgian, Greek, Spanish and German research and industry actors. It aims to develop biobased way of producing surface active agents (SAs), or surfactants and emulsifiers, an indispensable component in almost every sector of modern industry, which is manufactured from petrochemicals.

CarboSurf71

The project aims to develop new biobased processes as well as products, and solves bottlenecks in the fermentative production of biobased biosurfactants and specialty carbohydrates. Specifically, it targets different glycolipid biosurfactants with a wide range of application fields and specialty carbohydrates, i.e. complex Human Milk Oligosaccharides that find applications as neutraceutical, pharmaceutical and cosmetic ingredients. CARBOSURF brings together 11 partners from 4 countries including Belgium, Germany, France, UK. Research and Technology Organisations address the research challenges in this.

Pulp2Value72

The project developed multiple extraction techniques to isolate more valuable products from fraction of sugar beet pulp. By demonstrating an integrated and cost-effective cascading biorefinery system to refine sugar beet pulp, the project significantly increases (20-50 times) the value of the sugar beet pulp. The project is funded under Horizon 2020 programme and involves partners form the Netherlands. Belgium, Germany and UK.

2G BIOPIC73

The project proposes a new approach in bioethanol production from lignocellulosic biomass. This technology is based on a highly effective clean deconstruction of lignocellulosic biomass, an advanced organosolv technology. It is a Horizon project with participation of partners from the Netherlands, Sweden, France, and Belgium.

IB2Market - Bringing Innovative Industrial Biotechnology research to the market74.

This FP7 project targeted the development, scale-up, market exploration and market introduction of new industrial biotechnology processes that have recently been developed to produce biosurfactants, surface-active ingredients with a wide range of applications, and Specialty carbohydrates, mainly for pharmaceutical and cosmetic applications. Partners come form Germany, Belgium, UK, Italy

NanoBioEngineering of BioInspired BioPolymers75

This FP7 project aimed to develop biotechnological production systems for nanoformulated chitosans, which are among the most versatile and most promising biopolymers and have excellent physico-chemical and material properties and a wide range of biological functionalities. Partners are from Germany, Belgium, Sweden, France, Denmark, India

Novosides - Novel Biocatalysts for the

Glycosylation can drastically improve both the physicochemical and biological properties of the molecules (e.g. slow release, improved solubility and stability,

69 http://www.fi-sch.be/en/overview-projects/ialgaepro/ 70 http://www.bbeu.org/pilotplant/marisurf/ 71 http://www.carbosurf.eu 72 http://www.bbeu.org/pilotplant/pulp2value/ 73 http://www.2gbiopic.eu/ 74 http://www.bbeu.org/pilotplant/ib2market/ 75 http://www.bbeu.org/pilotplant/nano3bio/


Project title Description Production of Glycosides76

taste modification, drug targeting), but few biocatalysts are currently available to perform this modification cost-efficiently at industrial scale. The FP project brought together partners form Czech republic, the Netherlands, Germany, Belgium and UK

1.8!Policy support and delivery mechanisms With the concept of the Biobased economy picking up in the country, the importance of production based biotechnology has also been stressed in the policy discourse. The bio-economy was identified in the Flemish Materials Programme77 of Flanders in Action (VIA) project as beneficial in coping with societal challenges faced by the region.

In 2012, the Interdepartmental Working Group for the Bioeconomy (IWG BE) was set up by the Flemish government. The overall strategic aim of this working group is to create market pull and push policies to foster biobased production. In 2013, the IWG produced the strategy “Bioeconomy in Flanders: setting out the Flemish government’s vision and strategy with an integrated cross-policy approach for a sustainable and competitive bioeconomy in 2030” (Flemish government 2014a). The IWG is responsible for the further development of the action plan and for monitoring its implementation.

Other Flemish governmental bioeconomy initiatives include the New Industry Policy, a biomass inventory, Innovation steering groups and the Action Plan for Biomass Residues.

In 2013, the Flemish government launched a call for the development of a “Roadmap for Flanders” for Key Enabling Technology (KET) Industrial Biotechnology. The CINBIOS consortium was granted the execution of the roadmapping exercise for the KET Industrial Biotechnology. The Roadmap lists a series of policy recommendations, which will serve as a basis for the establishment of a regional industrial strategy. In addition to this, a recent report78 established that the Flanders region has issued a high number of patents79 in industrial biotechnology. Four value chains are considered most promising for the Flanders region: (1) production of fine chemicals, (2) production of second generation sugars from agricultural and industrial residues, (3) use of lignin-rich resources for the production of high added value materials and chemicals, (4) the conversion of carbon rich (waste) gases to chemicals (CINBIOS 2015).

In the framework of the targeted Flemish innovation policy and the New Industrial Policy of the Government of Flanders, the “Flanders Innovation hub for Sustainable Chemistry” (FISCH) was created as a tool for facilitating the transition of Flemish chemical industry towards more sustainability (Flemish government 2013). FISCH creates a forum where small, medium and large enterprises from all Flemish industries realise sustainable chemical solutions (including bio-based), through open collaboration for a positive contribution to the current and future societal challenges and supports for the realisation of new value chains based on the application of sustainable chemistry.80

The governmental R&D funding support is organised by the government agencies Flanders Innovation and Entrepreneurship (AIO) dealing with applied research and innovation and the Research Foundation Flanders (FWO), which itself

76 http://www.bbeu.org/pilotplant/novosides/ 77 http://www.vlaamsmaterialenprogramma.be/flanders-materials-programme 78 presented in CINBIOS 2015 and discussed in section 1.1 above 79 EPO and EPO PCT patents 80 http://www.fi-sch.be/en/fisch/history/


deals with fundamental research. Budgets are not specifically dedicated to sectors or domains, but to project types.

Next to AIO and FWO, Flanders has intermediary innovation structures that can award a certain budget to innovation projects and activities within their sectors and/or strategic topics. These structures are often public-private partnerships between industrial players and the government with a yearly budget ranging around €1-8m81. FISCH being one such structures, has been managing a portfolio of €5-6m for funding of R&I and demonstration projects in renewable chemicals, side stream valorisation, process intensification, advanced sustainable products82.

Among the projects that have received finding via FISCH, biobased chemistry and industrial biotechnology is used as a tool in quite a number of them.

Among the other innovation support measures in Flanders, are attractive tax breaks (up to 75%) which are available on researcher salaries. Belgium also offers one of the world’s most favourable tax systems for patent income (6.8% tax rate). Another attractive tax break is the notional interest mechanism, which allows companies to reduce their tax base by deducting a percentage of its total equity 83 84.

The Governmental investments are available for innovative business start-ups and projects through public investment companies. One of the investment funds is the Biotech Fonds Vlaanderen85, which was set up in 1994 to provide venture capital to existing and starting medium and large sized companies in the Flemish biotechnology sector. The Participatiemaatschappij Vlaanderen (PMV)86 and Limburg Investment Company (LRM)87 also offer entrepreneurs a unique mix of venture capital and real estate. PMV and LRM are evergreen funds backed by the Flemish government and have developed specific expertise in the field of life sciences and cleantech. They are independent organisation owned by the Flemish government that support economic investment initiatives in Flanders.

1.9!Good practice cases This section presents the examples of the most successful projects and initiatives in the areas of industrial biotechnology in Flanders region.

Ghent Bioeconomy Valley (GBEV)88,

One of the most notable developments on industrial biotech in Flanders is linked to the Ghent Bioeconomy Valley (GBEV). It is located in the area of the port of Ghent. Being one of the largest industrial biotechnology clusters, it hosts several companies that produce biofuels and bioenergy at a large scale, as well as companies specialising on biobased products

they maintain all the functions from the initial stage such networking, incubators etc. There are also and. The University of Ghent is the prominent academic actor of the cluster

81 http://www.industrialbiotech-europe.eu/map/belgium/ 82 http://www.industrialbiotech-europe.eu/map/belgium/ 83 http://flandersbio.be/files/Factsheet_FINAAL.pdf 84 more information on the notional interest mechanism is available on

http://minfin.fgov.be/portail2/belinvest/downloads/en/publications/bro_notional_interest.pdf 85 http://flandersbio.be/life-sciences-database/biotech-fonds-vlaanderen/ 86 http://www.pmv.eu 87 http://www.lrm.be/home/en 88 http://www.gbev.org/en/who-is-gbev/history


GBEV has operated since 2005 and is currently the largest cluster in this area. Figure 7 below shows the biofuel and bioenergy clusters in Europe and compares them by their production capacity.

Figure 7: GBEV (indicated as Gent/Terneuzen) and other biofuel and bioenergy clusters in Europe

Source: Drouilon M. (2011)

The cluster was founded through the initiative of Prof. Wim Soetaert as a Public Private Partnership between Ghent University, the City of Ghent, the Port of Ghent, the East-Flanders Development Agency, and a number of industrial companies related to the Ghent region and active in the fields of generation, distribution, storage and use of bio-energy.

Figure 8: Private partners in Ghent Bioeconomy Valley

By joining forces, companies were hoping to obtain an as-large-as-possible production quota for biofuels from the Belgian government. In addition, the partnership was intended to tackle common problems related to production, feedstock or infrastructure. Finally, GBEV also provided a platform to inform the general public on these new products and technologies (BERST 2015).

• Biochemical producer Genencor • Biofuel producers Alco-Bio Fuel, Oleon Biodiesel and BIORO • Biopark Terneuzen (NL) that promotes symbiotic activities under the name of “Smart Links” • Energy suppliers Electrabel and Electrawinds • Storage and transport specialists, such as Oiltanking Ghent, Sea-Invest • Engineering and construction companies like Fabricom, Grontmij • Waste treatment specialist Organic Waste Systems • Paper recycler Stora Enso LangerBruges N.V. • Consultancy firms and Ernst & Young • Venture capital firm Capricorn Venture Partners


GBEV succeeded in acquiring 80% of the Flemish quota for biofuels in October 2006, representing an investment of €120m in the port of Ghent89. Production at Bioro and Alco Bio Fuel started in the spring of 2008.

In 2008, GBEV obtained a legal identity becoming a non-profit organisation, supporting all biobased activities in the region, including bioenergy. GBEV activities include collaborative programmes, joint initiatives and synergy creation between the partners in the fields of Research & Development, structural measures and policy, logistics and communication towards the general public.

GBEV is a partner in many research and study projects funded by regional and European research support programmes. These includes projects as VISIONS, BIOCLUSTERS, BIOKATALYSE, DEMPPROBIO, Ghent Syngas Cluster supported by Flemish government90 and Bio Base NWE project supported by European programme INTERREG and involving international partnership activities (also see details below)

Bio Base Europe91

Bio Base Europe started as the largest INTERREG project so far and benefited from a contribution of €21m from Europe, Flanders and the Netherlands (see also section 1.6). The founding fathers are Ghent Bioeconomy Valley and Bio Park Terneuzen (NL). Within the project, Flanders and the Netherlands joined forces and established a state-of-the-art research and training facility which consists of the Bio base Europe pilot plant located in Ghent, Belgium and the Bio Base Europe training centre located in Terneuzen in the Netherlands.

The Bio Base Europe Pilot Plant is a test facility for the companies active in biobased processes. It was built with the aim of closing the gap between scientific feasibility and industrial application. The pilot plant hosts a range of process equipment to scale up biobased processes to an industrial scale. Tests done in the pilot plant enable an assessment of operating costs, specific strengths and weaknesses of new biobased processes before costly, large-scale investments in production plant facilities are made. The Bio Base Europe Pilot Plant has no industrial shareholders, and operates according to the open innovation service model. Companies and research centres throughout the world that are active in the biobased economy can access these facilities for their technological developments

The Bio Base Europe training centre offers companies a wide range of training for their process operators and technical staff. For example, a training portfolio can be accessed by logging into a web-based learning management system. Furthermore, specific training and a full training programme for technical staff are offered, and support in hiring new process operators can be obtained. In addition, the Bio Base Europe Training Centre is developing dynamic process simulators which can be used for the training of operators.

Bio Base Europe is a project partner in a series of EU funded and regional projects. In addition to this, the pilot plant has cooperated with more than 80 private partners including large companies, SMEs, research organisations, technical start ups, to help with their piloting activities and their testing of new technologies.

In 2009, Bio Base Europe has been awarded the Sail of Papenburg prize for best innovative project by the Association of European Border Regions (AEBR).

The Bio Base Europe pilot plant is seen as one of the best practices and the European front-runner in terms of industrial biotechnology. In 2014 it was selected by the European Commission as an exemplar model for a shared pilot line for the industrial

89 interview with Professor Wim Soetaert 90 http://www.gbev.org/en/what-does-gbev-do/technological-innovation 91 http://www.bbeu.org


biotechnology Key Enabling Technology (KET) by the Multi Key Enabling Technologies Pilot lines. KETs are considered to directly or indirectly stimulate Europe’s competitiveness and generate jobs, growth and wealth in the economy.

Bio Base NWE project92

Among the project based best practices, there is the Bio Base North-West Europe that involved the actors from GBEV and Bio base Europe, presented above (see also section 1.7). This three-year project was co-financed by the INTERREG IVB programme and successfully completed at the end of 2015. The Bio Base NWE consortium brought together biobased economy experts from eight organisations in five different countries. They provided networking opportunities and technological solutions to more than 500 SMEs, identifying hurdles that SMEs encounter during their innovation track and translated these into policy recommendations that were discussed with regional and European policy makers. Furthermore, web-based training tools (process simulation and e-learning) were developed to help tackle the shortage of skilled professionals in North West Europe’s biobased industries.

Bio Base NWE successfully implemented an Innovation Coupon Scheme. A coupon represented maximum value of €30,000 for feasibility studies and scale-up work undertaken at the Bio Base Europe Pilot Plant (BBEPP). BBEPP is an independent, flexible, state-of–the-art demonstration facility in Ghent, Belgium, and the work conducted trough this scheme was to validate innovative biobased technologies and scale them up to an industrial level. Early collaboration with experienced personnel in a flexible facility with a wide range of pilot equipment can substantially reduce costs, risks and development time and reinforces the chance to successful market entry. This scheme became a very attractive support mechanism for many SMEs. Eventually, 27 SMEs working on sound and ambitious biobased innovations were selected across the NWE region. Evaluation of the progress these SMEs made after the trials show a huge leverage effect. Seventeen SMEs either signed contracts with investors or are negotiating, five signed contracts with customers and four biobased products were commercialised before the end of the project. Sixteen SMEs reported having concrete plans to build a dedicated pilot line for further development or a new production line for a total investment of over €71m. Forty-three new jobs were created, and an estimated 275 new jobs will be created in the coming years.93

1.10!Leveraging the existing potential

1.10.1!Opportunities CINBIOS and a number of relevant stakeholders conducted a Roadmap exercise for analysing opportunities in industrial biotechnology area in Flanders (see CINBIOS 2015). The analysis shows that the field of industrial biotechnology and the bio-based economy is a rapidly evolving field, which offers numerous opportunities for smart specialisation in Flanders. The production related biotech industries have maintained healthy growth despite the economic crisis and decline in overall regional industry (output). Biobased economy industries take up to 9% of the gross margin of the industry in Flanders and 5.7% of employment in the Flemish industry (ibid.).

Furthermore, patent analysis shows that there is already a considerable specialisation in industrial biotechnology, covering all areas of industrial biotech, in Flanders. The number of EPO and EPO-PCT patents that are being requested in Flanders in this area relative to the total number of patent applications is greater than the average in

92 http://www.biobasenwe.org/ 93 http://www.biobasenwe.org/en/news/press-releases/1-december-2015-results-bbnwe/ http://www.biobasenwe.org/en/skills-expertise/success-stories/


Europe and in the rest of the world94 (see also Figure 2 and Figure 3 presented in section 1.1).

There is an increasing interest from the Flemish chemical industry and an increasing demand for bio-based products from the local and international market, which provide opportunities for creating new value chains.

The Roadmap exercise analysed potentially interesting value chains for Industrial Biotechnology and the Biobased Economy, revealing four value chains as being promising for Flanders, including the following:

•! Production of fine chemicals from sugars and starch and other biobased feedstock

•! Generation and use of second generation sugars as feedstock for Industrial Biotechnology and green chemistry processes

•! Use of lignin-rich resources for the production of high added value materials and chemicals (e.g. bio-aromatic compounds) which otherwise based on petroleum resources

•! Conversion of CO2 and CO gases to chemicals using fermentation processes (syngas fermentation)

More recent discussions on strategic development in Flanders focus on the development of biopolymers via microbial processes. A variety of biopolymers are naturally produced by microorganisms. These range from viscous solutions to plastics, and their physical properties are dependent on the composition and molecular weight of the polymer. The genetic manipulation of microorganisms opens up enormous potential for the biotechnological production of biopolymers with tailored properties suitable for a wide range of applications, from packaging to textile to high-value medical application such as tissue engineering and drug delivery. The region has a good basis to pursue industrial development in this area and rely on its strong scientific development in microbiology. In addition, the local chemical sector has an increasing interest in biobased production of bioplastics, biotextiles and other products that can substitute traditional plastics manufacturing.

Several initiatives are already being taken in Flanders by a number of stakeholders to develop and implement the above described value chains. More specifically, collaborations are being set up for research and demonstration activities in the fields of bio-aromatics, syngas fermentation and logistics of second-generation resources. These bottom-up initiatives in collaboration with industry can form an important stimulus for the development of the identified value chains on a relatively short term.

Nevertheless, there is a need for important new developments to overcome the technological, logistical and regulatory hurdles preventing the realisation of these value chains in Flanders and abroad.

1.10.2!Challenges The Roadmap-led analysis has exposed a number of challenges encountered in promoting industrial biotechnology in the region, which have also been stated in the interviews with the experts in the field:

•! Challenge 1: Low interest in capital investment in industrial biotech

Flanders’ medical biotech industry is one of the most attractive industries for venture capital investments. However industrial biotech does not share this success with

94 the patent analysis study is presented in CINBIOS (2015), appendix 1. It is prepared by Julie Callaert, Mariette Du Plessis, Xiaoyan Song, KU Leuven, Contact: [email protected]


medical biotech. Despite the developments and progress demonstrated over a decade, industrial biotech in Flanders is seen as a less dynamic area, where returns on investment are slower and riskier. To some extent this is also related to the less mature market, weaker cost-competitiveness for biobased products and therefore a still-small market for these products. The availability of seed capital and grants from foundations is also rather low. There are government funds available, but it is not always clear which criteria have to be fulfilled in order to receive this public funding. The uncertainties regarding the future in biotechnology, both technological and fiscal, are a major barrier for obtaining financing.

•! Challenge 2: Fragmentation of public research and limited collaboration

Public research is fragmented and spread across small centres of excellence. This creates risks in achieving sufficient critical mass for a strong and long term knowledge base in industrial biotechnology, and in maintaining the leading position of Flanders in the international scene. Industrial biotech players can rely on support from different public sources but coordination between the different levels of government is an issue. There is also no clear-cut funding channel for pilot and demonstration activities, while the available funding for fundamental and basic research is too narrowly specified and prevents it being used it for pilot and demonstration activities. Furthermore, there is still limited cross-sectoral cooperation, insufficient collaborative attitudes amongs knowledge institutions and the associated tough discussions about protection of intellectual property rights between companies and knowledge institutions.

•! Challenge 3: Lack of clear policy on raw materials and lack of level playing field

The absence of a clear policy on raw materials is one of the challenges in fostering bioeconomy in the region. There is also the lack of a “level playing field" for the different application areas of biomass and the lack of proper norms and standards for this. European and national targets for renewable energy are backed up by support policies and economic incentives for bioenergy and biofuels, which in some areas cause a negative effect on the price and availability of renewable raw materials for use in other domains, such as in chemicals and other material production. However, the Flemish strategy for bioeconomy puts forward the cascade principle, in which biomass is used only for the more high-quality applications, before moving on to more low-value applications such as energy.

•! Challenge 4: Lack of standards and labels for biobased products

There is a lack of well-founded norms and standards that could otherwise motivate both industry and consumers to acquire more biobased products. In industry, there is, for example, a need for standard specifications that ensure that the buyer can purchase identical commodities from different suppliers. Consumers can often be persuaded into buying a product with added value through a recognised label. This problem is rather common in other countries too.

•! Challenge 5: Falling oil prices might slow the developments in second generation of biofuels

Industrial Biotech in Flanders largely focuses on alternative fuel developments, as well as on products that can substitute petroleum based products. The competitiveness of such products clearly depends on the prices of petroleum. The decline in oil prices since 2014 is seen as a significant threat to industrial biotech products’ competitiveness, and lowers the economic interest in investment in industrial biotech developments and R&D in particular.

1.10.3!Implications for cross regional cooperation As discussed in this report, the Flemish industrial biotechnology industry in the European context can be seen as a strong ‘catching up’ cluster that already has leading


positions in certain aspects. The model of transition to the biobased economy used by Flanders can provide interesting examples and insights to other regions. At the same time Flemish biotech actors can learn from the developments and strategic choices other regions take in their development of industrial biotechnology and the biobased economy.

The focus of cooperation among regions including the Flemish industrial biotech clusters can focus on specific activities where Flanders can offer something to other regions. However, there much more space for collaboration at European level, where regions can tap into possible synergies, or join forces together to address common challenges at the policy level.

•! Collaboration and support in piloting and demonstration activities

Availability of state-of-the-art facilities for process development and optimisation, scaling-up, and custom manufacturing, makes the Flanders region an attractive partner in the international cooperation initiatives, as well as in small-scale bilateral projects with companies and start-ups from other countries. The facilities for pilot and demonstration activities at Bio Base Europe Pilot Plant are among the best in Europe. The plant is ready to assist a wide range of companies from various countries and regions in any phase of the innovation chain. Furthermore, the Pilot Plan has built an extensive experience in international cooperation projects and hosted at its premises many foreign companies running pilot activities.

•! Focusing on synergies with other regions in promotion of biobased economy

This was one of the recommendations generated by the Flemish Roadmap exercise, as well as analysis of BIO-TIC project (2015c). Many European countries and regions are pursuing the development of the biobased economy. There are many common hurdles that are faced by all. At the same time many possible synergies can be achieved if the actors from different regions or countries join their efforts together or exchange experience and knowledge. Both the Flemish and the foreign clusters will need to map their complementary strengths, in addition to the internal analysis of the biobased economy that many regions have conducted. International co-innovation capacity can be fostered via increased participation in European programs. Flanders, as well as other regions, can assess to what extent their regional subsidy channels can be adapted or extended to transnational projects. It was noted that the initiatives like BIG-C (Bio Innovation Growth Mega Cluster), a cross-border initiative between Flanders, the Netherlands and North Rhine-Westphalia that the region wishes to develop into a world leader in the bio-based economy, deserve every support (BIG-C initiative is discussed in section 1.7 on international cooperation projects). Furthermore, the European Vanguard Initiative offers opportunities for learning and cooperation through its Bio-Economy pilot project 95, in which Flanders is a partner. This pilot project concerns the implementation of synergies in new bio-based value chains across regions based on their smart specialisations. Flanders builds on its biotech expertise in further developing its sustainable chemistry cluster96.

Often one region has a surplus of a certain feedstock and another region has the technological know-how or the industrial expertise. BIO-TIC (2015c) suggests that an interregional platform, coupled with a web-based portal database would be very useful to stimulate co-operation between all stakeholders in the biobased field. Such an open web portal could be helpful in finding partners for new and innovative value chains. It can also give an overview of all research and demonstrative biobased activities in the different regions and existing interregional cooperation, calls for partners, etc. In

95 http://s3vanguardinitiative.eu/cooperations/bio-economy-interregional-cooperation-innovative-use-non-food-biomass

96 http://s3vanguardinitiative.eu/partners/vlaanderen


addition, the web-based portal could contain a search engine for funding resources, including calls launched by government agencies, European funding programmes and an overview of all business angels and potential investors.

•! Cross-regional cooperation addressing wider political hurdles

The European level study analysing bioeconomy prospects brought to light existing many political and legislative hurdles Flanders has been experiencing and showed that those are common across the EU (BIO-TIC 2015a,b,c). This includes, among others:

•! The absence of standards for biobased products and input materials, incentives and supporting policies,

•! Lack of stable financial and regulatory support from governments,

•! Poor definitions of industrial biotechnology products and processes which makes it difficult to communicate about them,

•! A lack of ‘level playing fields’ for different application areas for biomass,

•! A “food versus biomass” debate.

The study has stressed a need for stronger cooperation among regional and national biobased economy stakeholders to address these challenges in a cooperative manner, and suggest the necessary developments on the EU and international policy level.


2.!Regional Innovation Performance Trends, Governance and Instruments

2.1!Recent trends in innovation performance and identified challenges The economy of Flanders represents about 57% of the Belgian economy as measured in gross domestic product (GDP). The region’s GDP grew over the past decades. According to The Institute of National Accounts and HERMREG97, the real GDP growth of Flanders was on average +0.4% during 2008-2013. Regional GDP per capita reached €33,000 PPS98 in 2013, and was estimated at €33,700 PPS in 2014 (Flemish government 2015). It is steadily about 25-30% above EU28 average GDP per capita. The economy of Flanders is also a very open economy: according to the EU definition, exports from Flanders are worth almost 134% (2013) of its GDP (ibid).

Economic growth in Flanders was brought about by an employment increase (+0.6%). At the same time there was a real labour productivity decreased by 0.2%, due to the financial economic crisis during that period. The employment rate in Flanders was 71.9% in 2013, which is higher than EU28 average of 68.4%.

2.1.1!R&D intensity in Flanders The Government of Flanders recognises the importance of research and innovation as a necessary condition for maintaining wealth and well-being in Flanders. Flanders is committed to the EU 2020 target of investing 3% of its GDP in R&D, one-third being funded by the government (the so-called 1% objective) and two-thirds by the private (business) sector.

Over the past two decades, Flanders has experienced steady progress in its innovation performance along with continuously increasing government R&D budgets, which did not shrink even during the economic downturn. R&D intensity (that is expenditures for R&D as a percentage of GDP) in Flanders reached 2.42% in 2012. The R&D expenditure in the private sector (BERD) was 1.62% of GDP and in the public sector (non-BERD) 0.80%. (Flemish government 2014b)

Figure 9 below shows the total and sectoral R&D intencity trends in Flanders during twenty years period.

Figure 9: R&D intensity in Flanders: total and by sector of performance, 1993-2012

Source: Flemish government (2014b)

97 HERMES: Harmonised Econometric Research for Modeling Economic Systems, HEMREG=HERMES-ES+REG (REG short for regional).

98 GDP per capita in Purchasing Power Standards (PPS). The volume index of GDP per capita in PPS is expressed in relation to the EU28 average set to equal 100.


Figure 10 shows how Flanders’ R&D intensity compares to other European regions.

Figure 10: International comparison of the R&D intensity for GERD, 2012

Source: Flemish Government (2014b)

In 2012, total expenditure on research and development amounted to €5.204 bn, which represents almost two-thirds of all R&D expenditure in Belgium (GERD). Of this amount, €3.483bn was expenditure on R&D by business (BERD), in which the chemical and pharmaceutical sector led the way with 34% (2012). Other main performers in BERD were motion picture, video and TV production, computer programmes, engineering, technical testing and analysis activities (ibid).

The business enterprise sector spent €3.483 bn on R&D activities in Flanders in 2012. This is the Business Expenditure on R&D (BERD), which corresponds to a R&D intensity (BERD as a % of GDP) of 1.62%. This level a small decrease compared to 2011 (1.64%). When the total R&D intensity of the BERD is broken down by source of funding, 1.51% comes from private funds and 0.13% from public funds (2011). The share of the BERD in the GERD was 67% in 2012. The R&D activities (expenditure) within companies in Flanders are mainly focused on the following high-tech sectors (2011):

•! Chemicals and pharmaceuticals - 34% of total BERD expenditure on R&D;

•! Technology, electronic products, optical products and electrical equipment -14%;

•! Motion picture, video and TV production, computer programmes, engineering, and technical testing and analysis activities - 16%;

•! Machinery and transport - 12% (in 2012, the R&D intensity in the business sector was 1.62%.)

Compared to all EU areas, Flanders ranked 29th in R&D intensity in 2011, which is within the first quartile of best performing regions (Flemish government 2015). Estonia, Lisbon and Slovenia are three regions that reported a rapid increase in their R&D percentage over the past years to a level, which was higher than that of Flanders in 2011 (ibid.)

Despite the economic downturn, the total horizontal budget for the science policy of the Flemish government has been increasing from €1.78 bn in 2009 to €2.2 bn in 2014 (RIM 2012, Flemish government 2014b). In 2014, the €1.35 bn of this budget was for R&D and €0.82 bn for non-R&D science and innovation. The R&D budget of Flanders represents almost half of Belgium’s total budgetary R&D allocations. In addition to this, about €300m from federal budgets are available each year for research actors in Flanders, and roughly €160 m flows back to Flanders each year from EU sources (FP7, Horizon 2020).


The new Flemish government Agreement 2014-2019 states that a growth path towards the 3% R&D intensity target will be maintained, whereby the government strives towards a goal of 1% public R&D-outlays for 2020. The legal and budgetary basis of institutes was strengthened by modifications in the Flemish Parliament Act on Science and Innovation (Wetenschaps- & Innovatiedecreet), with the integration of all R&D&I actors (Hercules Foundation, policy on Science communication, the five provincial innovation centres) into a single framework Act (published in the Belgian State Gazette August 2014). Also, the regulation on the Special Research Fund (Besluit Industrieel Onderzoeksfonds) was altered with clarifications in the definition of valorisation-oriented parameters (spin-off companies) (RIO 2014)

2.1.2!Flanders in the EU Regional Innovation Scoreboard The innovation performance of Flanders is challenged by the better performance of other regions. In the 2014 issue of the European Regional Innovation Scoreboard (RIS 2014), covering 190 regions across the EU, Croatia, Norway and Switzerland, Flanders is in the group of “innovation followers”. In the RIS 2014 there are 34 regions in the top group of “innovation leaders” and 57 regions in the second group of “innovation followers”.

In RIS 2014, Flanders is in the top performers’ group (>120% of EU average) in the following indicators:

•! Percentage of the population aged 25-64 having completed tertiary education,

•! SMEs innovating in-house as a percentage of all SMEs,

•! Innovative SMEs collaborating with others as a percentage of all SMEs,

•! SMEs introducing product or process innovations as a percentage of all SMEs

The region is in the second best performers group (90%-120% of EU average) in the following indicators:

•! R&D expenditure in the public sector as a percentage of GDP,

•! R&D expenditure in the business sector as a percentage of GDP,

•! Non-R&D innovation expenditures as a percentage of turnover,

•! EPO patent applications per € billion of regional GDP (PPS€),

•! Employment in medium-high/high-tech manufacturing and knowledge-intensive services as a percentage of total workforce,

•! Sales of new to market and new to firm innovations as a percentage of turnover

In the following indicator the performance of Flanders was significantly lower, which placed in the group with 50%-90% of EU average performers:

•! SMEs introducing marketing or organisational innovations as % of SMEs

Since 2008, when Flanders was in the group of “innovation leaders” its position in the RIS has somewhat declined. Consequently, its ambition to be among the top innovative regions in Europe requires further effort.

2.1.3!Challenges Flanders faces some challenges, which slow down the benefits of the innovation support efforts.

•! Challenge 1: Mixed picture on innovation outputs vs innovation inputs

In spite of relatively solid performance on R&D spending and other input parameters, performance indicators for innovation output paint a more mixed picture. The strengths of the research and innovation system are inadequately translated into economic performance, with a general lack of fast-growing firms in innovative sectors.


This is also evident in the comparatively low share of total company sales resulting from new innovations. Furthermore, Belgium, including Flanders, has a rather low start-up rate, which suggest a business climate that is unfavourable to the generation of new activities and natural expansion (COM 2015/85, see also Figure 11). This in turn lowers the pressure on existing firms to become more efficient. The low start-up rate can be related to several factors that discourage company expansion, including high labour costs due to high taxes, and other non-labour taxes. (COM 2015/85)

Figure 11: Rate of company start-ups (%, average 2008-2012)

Source: European Commission, via COM (2015)85

The World Bank’s ‘Doing Business’ report (2015)99 ranks Belgium 13th out of 189 countries for ease of starting a business, with a low number of procedures to go through and days involved. Businesses are, however, required to have relatively high levels of minimum paid-in capital: 17.2% of income per capita in Belgium against 9.6% in OECD countries’ average100. In addition, a certificate of company management is required to be allowed to start a commercial activity. The objectives of company survival and smooth market access therefore do not appear to be well balanced, as is evident from the low start-up rate. Start-up rates have been found to show a robustly positive reaction to changes in the cost of starting a business and exporting, even during the crisis (COM 2015/85). It is harder for SMEs than for larger businesses to get loans, and stakeholders consider production and labour costs, the regulatory burden and the costs of international trade to be the main problems. (EC 2014b)

•! Challenge 2: Labour market mismatches - lack of highly skilled workers

The translation of technology into new ideas and products also hinges on the availability of a vast pool of aptly skilled workers. The OECD’s 2013 Economic Survey of Belgium notes that longstanding structural labour market problems remain, such as

99 http://www.doingbusiness.org/data/exploreeconomies/belgium 100 http://www.doingbusiness.org/data/exploreeconomies/belgium


high structural unemployment, including large labour market mismatches (OECD 2015). Vacancies are mostly for skilled workers but 80% of job-seekers are low or medium skilled workers. While Belgium has a generally well-qualified workforce with a high participation rate in tertiary education, the share of science and engineering graduates remains low. Shortages in these fields could become a major barrier to innovation with shortages already emerging for certain functions. This is the case for professional digital skills, for example. Whereas Belgium has good broadband infrastructure and is above the EU average in computer and internet skills, there is a shortage of qualified ICT experts such as application developers. In 2014, 37.7% of enterprises with job vacancies requiring specialised ICT skills reported problems in filling these positions. (COM 2015/85 final) For the ICT workforce alone, the shortfall is expected to rise from about 8,000 in 2012 to 30,000 in 2020 (ibid.) In several knowledge intensive sectors there is also a need for highly skilled personnel. As discussed in the analysis of the production based biotech industry, the industry also lacks a workforce that has not only scientific knowledge, but a combination of business practice knowledge with a strong scientific base. Prevention of brain drain, realising brain gain and increasing the mobility of researchers and highly skilled personnel are aspects of this challenge. Furthermore, Flanders performs more poorly in terms of lifelong learning. In 2013, 7.1% of the adult population participates in lifelong learning. With respect to all 134 EU regions, Flanders occupies 85th place, which is well within the bottom half. This is a clear deterioration compared to 2002 (33rd) (OECD 2015).

•! Challenge 3: Attaining the EU 2020 targets

Flanders is committed to the EU 2020 target of investing 3% of its gross domestic product (GDP) in R&D, one-third being funded by the government (the so-called 1% objective) and two-thirds by the private (business) sector. As the statistics show, over time the region has made progress in achieving this target by reaching 2.42% in 2012. Traditionally, Flanders has relatively low public funding for research. The government is keen on its performance to raise the budgets heavily in the past few years. It will continue to be challenged to achieve 1% by 2020, which will require to bring close to €1m of investment in R&D annually. However, while research intensity of the private sector increases, BERD intensity stagnates. All in all, this leads to an under financing of research. The overall business R&D intensity in recent years has been driven by a particularly strong performance of the bio-pharmaceutical sector. In this sector, high scientific quality, business investment, product innovation and trade performance reinforce each other. Knowledge intensification and broadening of the innovation base beyond this sector has improved but there is a need for further progress.

2.2!Institutional framework and set-up

2.2.1!Public bodies active in the STI field in Flanders A wide range of actors and stakeholders are involved in the Flemish STI landscape: public administrations and agencies, advisory bodies, knowledge institutes and centres, universities, university colleges, scientific institutes, public research organisations (PROs), various networks active in (collective) STI, university hospitals, various collective research centres, data collection institutions, incubation centres, science and technology parks, technology transfer offices, other intermediaries and (last but not least) many private companies and professional (technology and other) organisations. The public bodies involved in STI in Flanders is set out in


Figure 12, below.

In past few years there has been a drive towards increasing focus on the simplification of the set of instruments, which led to the merger of several instruments and re-coordination of tasks of policy actors (RIM 2012, Flemish Government 2016).


Figure 12: Public bodies active in the STI field in Flanders

Source: Flemish government (2016)

Policymaking principally focused on STI in Flanders is done within the EWI Department of the Government of Flanders (EWI = Economie, Wetenschap en Innovatie, or Economy, Science and Innovation). The department was established in 2006 as part of a major administrative reform, entitled BBB (Better Governance), initiated by the Flemish public authority. Previously, the competencies and activities of the current EWI Department were divided between two distinct departments and policy domains. By merging these competencies and activities, the Flemish government wanted to emphasise the link between economy (industrial policy) and entrepreneurship on the one hand and scientific research and innovation on the other hand (Flemish government 2016).

At the public governance level, The Vlaamse Raad voor Wetenschap en Innovatie (VRWI, Flemish Science and Innovation Policy Council) is the advisory body of the Flemish Government and the Flemish Parliament for science and innovation policy. The governing agreement for the period 2014-2019 announced that VRWI would cease to exist in its current format, and be integrated into a new entity: “Vlaamse Industrieraad voor Ondernemen en Innovatie (VARIO)”,or Flanders’ Industry Council for Enterprise and Innovation, resulting a merger of the VRWI with the Industry Council of Flanders. (ibid)

Whereas the Flemish Government’s departments prepare, monitor and evaluate public policy, a number of agencies are charged with the implementation of the policy decisions. In the STI field, the responsible agencies have established a wide variety of initiatives and support instruments to implement R&D and innovation policy. These agencies are:

•! AIO: Flanders Innovation and Entrepreneurship;

•! FWO: Research Foundation Flanders;

•! PMV: Flanders Holding Company (to a limited degree);

•! LRM: Investment Company LRM.

Flanders Innovation & Entrepreneurship (Agentschap voor Innoveren en Ondernemen, AIO) is charged with implementing the economic and enterprise policy in Flanders. It was established in January 2016 based on a merger between 2016 the


Agency for Innovation by Science and Technology (IWT) and Enterprise Flanders (AO) as a result of decisions to mitigate overlaps in the institutional set up of the Flemish STI system (Flemish government 2016). The AIO support all types of innovations in Flanders. It assists companies, research centres and knowledge centres in realising their research and development projects, by offering funding, advice and a network of potential partners in Flanders and abroad. (ibid)

The Research Foundation Flanders (FWO) stimulates and supports ground-breaking fundamental research in all areas of science at the universities of the Flemish Community, including collaboration agreements between these universities and other research institutions. The FWO funds both excellent and promising researchers, as well as research projects, following an interuniversity competition and an evaluation by national and international experts. The only criterion is the outstanding quality of the researcher and the research proposal. Researchers can apply for support from the FWO through a broad range of funding instruments, providing they are affiliated to a university within the Flemish community. The two main instruments of the FWO are support to fellowships (Ph.D. students, postdoctoral researchers, etc.) and to research projects. (Flemish government 2014b, 2016).

The Flanders Holding Company (ParticipatieMaatschappij Vlaanderen - PMV) supports innovative companies with guarantees, loans, risk capital, etc. It supports investment projects that strengthen the structure of the Flemish economy and fit the government’s economic policy objectives. The organisation creates, structures and manages co-operation with private partners. Its goals are to support innovative starters, facilitate the growth of Flemish companies, stimulate “spearhead” sectors, support specific sectors and solve the temporary liquidity problems of creditworthy companies. The PMV’ has developed a wide range of instruments aimed at different purposes and various target groups, ranging from the pre-start phase to the international growth phase. The total value of the amounts managed by the different PMV instruments exceeds €1bn. (Flemish government 2014b )

LRM (Limburgse Reconversiemaatschappij ) is an investment company that develops and stimulates economic growth in the Flemish region Limburg. LRM targets all sectors and companies, from starting companies to growing SMEs and larger businesses. LRM provides venture capital to growth-oriented companies who are related to Limburg and is a catalyst for the transition of the Limburg manufacturing economy towards an innovative and technological economy. LRM is developing qualitative clusters within the spearhead sectors in Limburg (Flemish government 2016)

There are a number of other institutions that constitute the R&I system of Flanders, including 21 renowned research centres and academic institutes. The following table presents a brief overview of the main types of institutes and players acting within this system:

Table 6: Overview of the various actors in the STI domain in Flanders Type of organization Actors

Public authority: policy preparation, monitoring and evaluation

EWI department

Public authority: policy execution (agencies)

AIO, FWO, PMV, LRM

Advisory council VARIO

Strategic research centres IMEC, VIB, VITO, iMinds, Flanders Make (including Flanders Drive and FMTC)

Scientific institutes (Flemish Community)

Botanic Garden Meise, ILVO, INBO, KMSKA, AOE

University associations (one university with one or more

Antwerpen, Brussel, Gent, KU Leuven, Limburg


Type of organization Actors

higher education institutions)

Other knowledge institutes ITMA, VLIZ, Energyville, CMI, NERF, CRC, BioBase Europe

Innovation platforms FISCH (including Flanders Plastic Vision), Flanders Drive (now a division of Flanders Make), Flanders FOOD, Flanders Inshape, Flanders Synergy, MIX, SIM (including Flamac), VIL, VIM, MIP3.0, Social Innovation Factory

Mixed initiatives: innovative networks, technical knowledge centres, knowledge clusters

I-Cleantech, DSP Valley, Tecnolec, FlanSea, Smart Grids Flanders, Gen4Wave Energy platform, Microsoft Innovation Centre, Flanders DC, Flanders Care, Living laboratories (in the fields of electric vehicle, house renovation, care innovation, and on social innovation(currently an innovation platform))

Technology transfer offices (TTO)

KU Leuven Research & Development, UGent Tech Transfer, Tech Transfer UHasselt, Interface AUHA, Vrije Universiteit Brussel

Provincial innovation centres (PIC)

One in each of the five Flemish provinces with and an overarching VIN, run by the AIO

Federal scientific institutes Belgian Institute for Space Aeronomy, Royal Meteorological Institute of Belgium, Royal Observatory of Belgium, Royal Belgian Institute of Natural Sciences, Royal Museum for Central Africa

Federal research centres Scientific Institute of Public Health, Veterinary and Agrochemical Research Centre, National Institute for Radio-elements, Nuclear Energy Centre

Collective research centres Belgian Institute for Wood Technology and Wood Training Centre; Belgian Welding Institute (BWI); Belgian Research Centre for the Cement Industry (CRIC); Belgian Road Research Centre (BRRC); Scientific and Technical Service Centre for the Belgian Textile Industry (Centexbel); Belgian Building Research Institute (BBRI); Scientific and Technological Research Centre for Diamond; Collective Centre for the Belgian Technology Industry (SIRRIS)

International institutes located in Flanders

Von Karmann Institute ((Sint-Genesius-Rode), IODE (Ostend), EMODnet (Ostend), IRMM (Mol)

Science / technology parks

Greenbridge (Ostend), Evolis (Kortrijk), Ardoyen, Eiland Zwijnaarde (Ghent), Waterfront (Niel), Zellik (Asse), Arenberg, Haasrode (Leuven), Feed Food Health (Tienen), Thor Park (Genk), Research Campus Hasselt (Hasselt), Greenville (Houthalen-Helchteren)

Innovation and incubator centres (IIC)

Greenbridge IIC (Ostend), IIC Kortrijk (Kortrijk), iCubes – iMinds Incubator, IIC UGent 1&2, VIB Bio-incubator (Ghent), Textile Innovation Centre (Ronse), IIC Brussels (Asse), Bio-incubator KULeuven, Creative Minds - De Hoorn, Greenhill Business Incubator, ICT-cluster Arenberg, IL Research Building Haasrode, IIC Leuven, Spin-off Centre (Leuven), UBCA UA (Edegem), Innotek (Geel), Technology House of Environment (Mol), C-Mine, Energyville (Genk), Kaai 16 (Hasselt), Incubator Science Park Limburg, Bioville (Diepenbeek), IIC Lokeren (Lokeren), Bio- generator Tienen (Tienen)

2.3!Regional innovation policy mix

2.3.1!Policy priorities The Government of Flanders is aware of the importance of research and innovation as a necessary condition for maintaining wealth and well-being in Flanders. As early as the mid-1990s, it started to elaborate a broad-based strategy for STI policy. Since then STI policy has been developed through a whole series of treaties, acts, decrees, agreements, decisions, Memoranda of Understanding (MoUs) and statements. All of these policy developments strived towards a common goal or have been seeking to achieve other legislative measures that shape, implement and evaluate policy in the broad field of science, research and innovation. In the “Innovation Pact” of 2003


Flemish public and private stakeholders committed themselves to strive towards the 3% R&D expenditure/GDP target. The “Flanders in Action”101 future plan aims to rank Flanders among the top-5 EU regions by 2020. It defined several thematic breakthroughs, one of which is the “Innovatiecentrum Vlaanderen”/”Innovation Centre Flanders” (Flemish government 2014b).

In terms of the thematic priorities, the region’s STI policy since 2006 has been focusing on so called “spearheads” for technology and innovation. In 2011, a long-term vision was elaborated for the future oriented innovation and addressing economic and societal challenges, including in the “spearhead” areas. As a result, two transversal and four vertical “innovatieknooppunten” (innovation hubs) were defined (ibid).

Table 7: Innovation hubs of Flander’s STI policy Innovation hub Strategic focus

Economic transformation through innovation

Embedding economic activity with sustainable and diversified employment. This transversal innovation hub has four sub-hubs in various industries: manufacturing, construction, sustainable chemistry and creative industries.

Eco-innovation Sustainable material management, cyclical economy, cleantech.

Green / sustainable energy

Renewable energy, energy-efficiency, clean-tech (energy).

Health care innovation Ageing, health, independent living

Sustainable mobility and logistics

Sustainable and efficient mobility and logistics.

Social innovation Creative entrepreneurship for new solutions to societal and economic challenges and needs.

Source: Flemish government (2014b)

Based on Flanders in Action (ViA) and a number of comparative economic/technological advantages, Flanders has put forward the following cluster domains for a smart specialisation strategy in which R&D to be strengthened and the transformation of knowledge into economic and societal valorisation to be promoted (Enterprise Flanders 2014):

•! Sustainable chemistry;

•! Specialised manufacturing;

•! Personalised health care;

•! Specialised logistics;

•! Specialised agro-foods;

•! Integrated construction-environment-energy cluster;

•! Smart systems;

•! Creative industries and services.

The efforts within this smart specialisation strategy will specifically be oriented on the elaboration of the missing links in the Flemish innovation instruments; namely, living laboratories and demonstration projects that contribute to the stimulation of product development and to the market introduction/dissemination of innovative products and services.

101 Flanders in Action (Vlaanderen in Actie, ViA), the future plan for 2020, which is composed of several Breakthrough initiatives, including “Innovation Centre Flanders”, and the related Pact 2020, with 20 thematic chapters that set specific targets and strategic objectives for the ViA Breakthroughs. See more on http://www.vlaandereninactie.be/en/about


These are all steps in the development of a more focussed demand-driven approach. In this respect, Flanders has already initiated at the end of 2013 the Vanguard Initiative for new growth through smart specialisation. As a result, a number of EU regions are engaged for interregional cooperation based on clustering and the principle of smart specialisation. The purpose is to contribute to the European agenda of industrial transformation by innovation.

In recent years significant attentions has been given to revamping the Flemish manufacturing sector. After the shrinking automotive industry in recent years, the Flemish government has been attempting to create a foundation for new economic activity in the manufacturing industry by bundling a number of already existing and new initiatives in the set-up of a new, fifth Strategic Research Centre for Advanced Manufacturing. The decision to support the centre was taken by the Flemish government in May 2014. It integrates Flanders' DRIVE (vehicle industry) and FMTC (mechatronics) in cooperation with the manufacturing department of Sirris. Together with the Flemish universities, these three research groups conduct research that will find its way to the broad manufacturing industry via strategic diffusion partners such as Sirris. The Research Centre has to support Flemish companies in multiple industries with industrial research and product development and production technology and processes in order to help them compete in international markets. The aim is to contribute to growth of small and large businesses into real factories of the future in the long term. The budget for 2014 is €15.4m (including the financing for the already existing initiatives in this field). The results of the SRC Manufacturing Industry must find their way to the manufacturing companies, using a broad implementation programme ‘Made Different’. (RIM 2014)

Flanders is also continuing its policy of developing public research organisations able to provide high-quality service to businesses, with the establishment of a similar organisation in the field of advanced manufacturing. In addition, the STEM action plan102 aims to attract more students in scientific and technological fields (RIM 2014)

2.3.2!Policy mix Because of the autonomy of the regions in the federal structure of Belgium, Flanders has a wide range of STI policy measures in place. In fact, the comprehensiveness of the set of instruments would be comparable to that of a national innovation system, except for tax incentives and several large research centres and infrastructures, which are arranged at federal level. Analysis of Flanders’ policy measures in 2012 showed that “Research & Technologies” is the most addressed area, others being “Creation and growth of innovative enterprises”, “Human resources”, “Governance and horizontal R&I policies” (RIM 2012).

Flanders has Strategic Research Centres (SOCs) in five specific areas of strategic importance: microelectronics, biotechnology, energy & environment, ICT driven innovations and, most recently, advanced manufacturing (see also Table 6) . While SOCs were established and initially funded by the Flemish government, the public funding is now only a minor source and it is matched by the contracts with industries, research grants from the European and other sources. Each SOC is set out below.

•! IMEC - independent research centre in micro- and nanoelectronics, nanotechnology, design methods and technologies for ICT systems.

•! VIB - the Flanders Institute for Biotechnology, is an autonomous entrepreneurial research institute that conducts strategic basic research in life sciences, including molecular biology, cell biology, developmental biology, structural biology, genetics, biochemistry, microbiology, genomics and proteomics.

102 http://stem-academie.be/sites/default/files/STEM-actieplan.pdf


•! VITO - the Flemish Institute for Technological Research, the largest and best-equipped multidisciplinary research centre for energy, materials, environmental and terrestrial observation in Flanders.

•! iMinds – an independent research institute that stimulates innovation in information & communication technology (ICT) and broadband.

•! Flanders Make – the most recently launched (in October 2014) Strategic Research Centre focused on promoting Smart Manufacturing, more specifically on production technology and know-how in the field of smart assembling. It will be known in English as Flanders Make. The focus of the research lies in four technological domains and seeks to achieve results in four application areas. Figure 13, below summarises these areas.

Figure 13: Doman and application areas of ‘Flanders Make’

Source: Flemish government (2014)

In coming years Flanders foresees the development of three Strategic Innovation Platforms (SIPs) in sustainable chemistry, agro-food and mobility that may develop into SOCs. Furthermore attention is announced for transitions in energy, care and sustainable materials. (RIO 2014)

All types of networks have been set up to promote cooperation (by way of the VIS-scheme103, which supports collaborative projects) and subsidies are available for projects in industry (R&D projects for companies programme, SME-programme) as well as for ‘strategic basic research’ projects at universities and other science based organisations.

There are also a number of national policy measures that stimulate R&D and attract research personnel and activities into the country. For example, tax deduction on patent income is a federal measure that allows up to 80% of exemptions for income from certain patents. This gives Belgium the lowest effective tax burden on patent income (a maximum of 6.8%). The measure applies to all Belgian companies subject to corporate tax, but also to all Belgian branches of foreign companies that are subject to corporate tax. The scheme covers patents resulting from a company's activity in a research centre in Belgium or abroad; obtained as a result of further development or through a license if development is continued by a research centre in the country or abroad (BeFTA, 2014).

Table 8 below presents the overview of innovation support measures applied in Flanders.

103 http://www.iwt.be/subsidies/vis-trajecten


Table 8: Regional innovation support measures Title Duration Policy priorities Budget, € Organisation

responsible More information

ARKimedes and ARKimedes II

2005-2018

1. Strengthening research, technological development and innovation

221,100,000 EWI & PMV https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/arkimedes-and-arkimedes-ii

Competence Poles /Centres of Excellence

2005 - ongoing


40,205,000 AIO https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/competence-poles-centres-excellence

Flemish Cooperative Innovation Networks

2002-2016

1. Strengthening research, technological development and innovation 3. Enhancing the competitiveness of SMEs

18,719,000 AIO https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/flemish-co-operative-innovation-networks-vis

Flemish Innovation Fund (VINNOF)

2005- 2017


20,000,000 Vlaams Innovatiefonds (VINNOF)

https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/flemish-innovation-fund-vinnof

Industrial Research Fund (IOF)

2004 1. Strengthening research, technological development and innovation

27,868,000 EWI https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/industrial-research-fund-iof

Innovation Centres 2007-2014 1. Strengthening research, technological development and innovation 3. Enhancing the competitiveness of SMEs

4,125,000 AIO https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/innovation-centres-0

R&D projects for companies 2001-ongoing


90,017,000 AIO https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/rd-projects-companies

SME Programme 2001-2006


28,558,000 AIO https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/sme-programme

Strategic Basic Research financing channel (SBO

2003-ongoing


40,259,000 AIO https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/strategic-basic-research-support-channel-sbo

Strategic Research Centers (SOCs)

1993-2018 1. Strengthening research, technological development and innovation

169,599,000 EWI https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/strategic-research-centres-socs

Technology Transfer Fund 1996- 1. Strengthening research, technological 9,686,000 AIO https://ec.europa.eu/growth/tools-


Title Duration Policy priorities Budget, € Organisation responsible

More information

(TETRA) ongoing development and innovation databases/regional-innovation-monitor/support-measure/tetra-fundhttp://www.iwt.be/subsidies/tetra

Kenniscentrum Innovatief Aanbesteden/ Knowledgecenter Procurement of Innovation

2008-ongoing


n/a AIO http://www.innovatiefaanbesteden.be/kenniscentrum_ia

www.vlaanderenonderneemt.be

2014-ongoing


N/a (one stop-shop portal providing links to various support measures and clarifications for entrepreneurs)

EWI https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/support-measure/wwwvlaanderenonderneemtbe

‘Transformation, Innovation and Acceleration’ Fund (TINA)

2011-ongoing


200,000,000 PMV http://www.pmv.eu/en/services/tina

I innovate/ ik innoveer 2014 1. Strengthening research, technological development and innovation 3. Enhancing the competitiveness of SMEs

n/a support tool to help enrepreneur to become more innovative

AIO http://www.ikinnoveer.be/

SPRINT projects 2013-ongoing


250,000 AIO http://www.iwt.be/subsidies/sprint

VIS-trajectories for innovation/ VIS trajecten

2013-ongoing


20,000 AIO http://www.iwt.be/subsidies/vis-trajecten

SOFI-fund 2013-ongoing


10,000,000 PMV http://www.pmv.eu/en/services/sofi

Innovation Mezzanine 1. Strengthening research, technological development and innovation 3. Enhancing the competitiveness of SMEs

N/A AIO pmv-kmo.be


The Belgian tax system also provides attractive conditions for employers, including reduced employment costs for foreign executives and researchers. Expatriate employees posted to Belgium generate additional costs for the employer. To ease these costs, significant relief is allowed to employers on up to 75% of these payroll costs (BeFTA, 2014).

Companies that invest in research and development of new environmentally friendly products and advanced technologies can enjoy increased investment incentives or a tax credit, according to each company's choice. The selected benefits can be applied immediately or over an agreed period. (ibid.)

The rising total R&D intensity also reflects stronger public support for business spending as the different levels responsible have developed detailed policy plans over the years. The federal level has focused on fiscal incentives with a payroll withholding tax exemption for researchers of 80% and an equal deduction for patent revenues. Regions provide direct support through subsidy schemes as well as indirect support through facilitator policies, with e.g. a focus on clusters in Wallonia — a policy which the Flanders government has announced it will give more emphasis to as well. (COM 2015/85 final)

2.4!Appraisal of regional innovation policies It has to be noted that Flanders’ innovation policy portfolio is fairly well developed and well oriented to address many innovation challenges, including the ones discussed in section 2.1

•! Supporting entrepreneurship and start-ups

As discussed above, the recent rhetoric of the government suggests a shift from a science and technology based innovation policy towards an entrepreneurship driven innovation policy. Entrepreneurship is supported via financing innovation, venture capital, guarantees and loans, and shaping demand for innovative products and services. For instance, the Flanders Holding Company (PMV) provides financial leverage to innovative start-ups, and their projects, acting as an ‘entrepreneur’ and as a facilitator that creates, structures and manages co-operation with private partners. It has developed a wide range of instruments aimed at different purposes, and at various target groups, and ranging from the pre-start phase to the international growth phase. The total value of the amounts managed in the different PMV instruments exceeds €1bn (RIO 2014).

Among PMV’s instruments there are several innovation-oriented initiatives. The Flemish Innovation Fund (Vinnof) is specifically aimed at innovative start-up companies. It provides risk capital for the early stage of a company. Vinnof invests seed capital during three stages: pre-start, start and initial growth. PMV also manages the 200m TINA-fund, which is aimed at supporting innovative projects.

The SOFI-fund has been established to support spin-off companies from research results in one of the four Flemish PROs (IMEC, VIB, VITO, iMinds) or the universities (SOFI2- fund). Another example is Flanders’ Care Invest, designed to invest in innovative companies in the care sector. Finally, the Innovatiemezzanine scheme is a subordinate loan for starting companies that have already received a grant from the IWT.

BAN Vlaanderen, the business angels network in Flanders, is a platform in which starting or growing entrepreneurs seeking risk capital are matched with informal private investors, so-called ‘Business Angels’. The latter offer not only money but also their know-how, experience and contacts.

There is also GIMV (Flanders Investment Company), which is a private equity and venture capital provider. It makes venture capital investments in promising high-tech companies and also focuses on buyouts and growth financing, to support companies’ development and growth. Initially it was set up by the Flemish government that still holds a minority stake in the company. (RIO 2014))


Incubators aim at supporting and fostering start-ups and can receive dedicated subsidies to maintain their activities. The Hercules Foundation has adopted a measure supporting R&D infrastructure through new subsidies for incubators. It gives incubators the opportunity to support initiatives for housing spin-offs and start-ups with an R&D profile. This should ensure that there are adequate housing opportunities, that these start-ups are given effective customised counselling, and that opportunities for investing in joint research infrastructure can be linked (EC 2014b).

As discussed above, along with increases in R&I support from the government, increasing attention is being given to more ‘downstream instruments’ closer to the market, which can have greater influence on spinoffs. Moreover, the regulation on the Special Research Fund (Besluit Industrieel Onderzoeksfonds) was altered with clarifications in the definition of valorisation-oriented parameters, i.e. spin-off companies (RIO 2014).

•! Attracting highly skilled workers

Flanders has been highlighting and trying to address the problems of a shortage of skilled labour in the workforce for many years. It already has well a developed technical and university education system to start with. Furthermore, there are brain gain programmes such as Odysseus104 , visiting postdoctoral fellowship grants105, and brain drain prevention measures, such as the Methusalem programme106. There is also a Pegasus programme for foreign postdoctoral researchers who want to stay either one or three years at a university, co-funded by the EU’s Marie Curie Fund107. These brain gain instruments become increasingly important in Flanders. Until recently, instruments boosting researcher mobility in Flanders are primarily aimed at providing research budgets. From 2011 onwards, Flanders has been investing substantially in setting up tenure tracks (€3,5m), and graduate schools (€4m) (RIO 2014).

FWO has underwritten the Science Europe roadmap, which is the result of an update of the former EUROHORCS roadmap. FWO fellowships are therefore open to all nationalities, except for the pre-doctoral grants where a Master’s degree from a university of a European member state is required (ibid).

Furthermore, inward mobility is being promoted at federal level by the scientific visa since 2007, which is implemented by law and which improves framework conditions for foreign researchers. The procedure to obtain a visa and a residence permit for any researcher from a third country hosted by a chartered organisation in Belgium is simplified.

It has to be noted that attracting highly skilled workers and researchers is a systematic problem experienced in many EU regions that are developing knowledge intensive economies. In the academic sector, Flanders has a standard set of instruments for attracting researchers. However, these instruments, while offering some solutions, do not ensure sufficient brain-gain. Policy measures neither seem to offer a sufficient solution in addressing the demand for skilled workers in industry. Other persistent problems noted in this regard include low remuneration of researchers and highly skilled knowledge workers, as well as language restrictions hampering internationalisation of the region’s science and technology system.

•! Attaining the EU 2020 targets

Overall, governmental innovation policy support measures are well anchored to the 3% R&D intensity goal. Flanders has been making visible progress in achieving this

104 http://www.fwo.be/en/fellowships-funding/research-projects/odysseusprogramme/ 105 http://www.fwo.be/en/fellowships-funding/postdoctoral-fellowships/ 106 http://www.researchinflanders.be/ 107 http://www.fwo.be/en/fellowships-funding/postdoctoral-fellowships/%5Bpegasus%5D%C2%B2-marie-

sk%C5%82odowska-curie-fellowships/


goal. While the larger contribution comes from the business sector (1.7% in 2012), especially in pharmaceuticals, the public sector has increased its contribution from 0.5% in the early 2000s to 0.8% in 2012 via a set of subsidy programmes, which are listed in section2.3.2 on policy mix.

Notably, behind the Flemish public innovation subsidies, there is an assumption that relates to private innovation investment trends. An evaluation study launched by IWT in early 2000 already then proved that achieving the 1% objective has, through leveraging, a positive impact on private investment in innovation (Aerts & Czarnitzki, 2002). In other words, higher government R&D funding leads to more private investment in R&D. The studies established a clear causal relationship and also concluded that no crowding-out effects of subsidised R&D would occur. Thus is it justified to invest in companies’ R&D activities with an expectation that there will be good supplementary private investment. There are no more recent studies analysing whether this assumption still holds, however trends since 2005 seem to point to the reinforcing nature of public and private R&D investment. However, it has been argued that access to public support is considered complex and time-consuming, and the support available is fragmented (COM2015/85 final). This discourages absorption, especially by smaller companies. A proliferation of initiatives and institutions also weakens the focus of policies. Consequently, Belgium (including Flanders) has been recommended to streamline incentive schemes and reduce administrative barriers (COM2015/85 final).

When it comes to measuring the impact of R&D investment in Flanders, a recent study by Czarnitzki and Lopez Bento (2012) has estimated the macroeconomic impact of Flemish subsidies on the local economy in terms of R&D jobs that are created. It showed that on average, one supported project creates or maintains five R&D jobs. If we consider the total portfolio of IWT funded projects, then in total the IWT funding helped to create more than 10,000 R&D jobs. Given the average duration of the projects (1.5 years) 16,800 persons-years of R&D employment was positively affected by the IWT funding.

2.5!Policy good practice This section presents best practices of policy initiatives and measures applied in Flanders.

Flemish Strategic Research Centre – IMEC108

Strategic Research Centres (Dutch: Strategische Onderzoekscentra (SOCs)) are very important instruments in the Flemish innovation policy. The aim of the SOCs is twofold: they are to (a) develop excellent R&D with a global reputation in the domains of strategic importance: microelectronics, biotechnology, energy & environment, ICT driven innovations and, most recently, advanced manufacturing, and (b) strengthen the Flemish region, notably in terms of economic added value and the innovative power of the Flemish industry. The main rationale for the instrument is a lack of translational capacity to turn the high- quality knowledge of Flanders into innovative products and services. Therefore, the SOCs do not only invest in high-quality front-end research, but also offer technology transfer services to both national and international companies (RIM 2012).

A powerful example to demonstrate how this instrument has achieved successful development is IMEC, the SOC that focuses on micro- and nanoelectronics, nanotechnology, design methods and technologies for ICT systems. IMEC was founded in 1984 as a non-profit organisation led by Prof. R. Van Overstraeten and supervised by a Board of Directors, which includes delegates from industry, Flemish

108 http://www2.imec.be/be_en/about-imec.html


universities and the Flemish government109. One of the strong points of Flemish policy with regard to IMEC is that the decision to support IMEC was made at the right time, i.e. early in the microelectronics industry growth cycle and before the consolidation set in. It was also well timed with regard to the major EU policy initiatives in microelectronics that took place in the 1980s. The Flemish government has been consistent in its support for IMEC, thus creating a policy environment in which IMEC could develop and grow. It also supported the creation of a physical research institute centred around large and expensive research facilities and outside the university structures. By concentrating resources into one institute, the necessary critical mass was created. The independent status gave IMEC the opportunity to use its sophisticated business models and work in a business-like manner (Technopolis Group 2011).

IMEC contributes to solutions for societal challenges. As micro-/nanoelectronics is an enabling technology, developments contribute to sustainable transport, living and energy supply. Furthermore, microelectronics are expected to contribute to solutions with regard to health care and ageing. IMEC also plays an important role in the broader convergence of nanotechnology, biotechnology, information technology and cognitive science (ibid).

Over time, IMEC has strengthened its position as one of the world’s leading centres of excellence. It has a strong scientific performance demonstrated by its high publication output and high citation impact, its state-of-the-art research facilities, many EU projects and an impressive list of collaboration partners from industry and SMEs. IMEC has contributed to strengthening the industrial landscape in Flanders by attracting several foreign companies to the Flanders region. A strong cluster has emerged around IMEC, which created a critical mass for the micro- and nanoelectronics sector and for the application domains. There are 28 spin-offs from IMEC110. It has further professionalised its approach to spin-off creation with a funnelling approach (ibid).

The total employment (direct, indirect and derived) created by IMEC has been increasing significantly, thus contributing to the challenge of shortages in human resources in science and technology, and employment in the region. This labour force includes many excellent researchers and a significant numbers of PhD students. The impact of IMEC’s spin-offs is also considerable in terms of job creation and added value. (ibid).

Today IMEC demonstrates a positive effect on the reputation of Flanders, in and beyond the domain of micro-/nanoelectronics. It is well-known abroad and Flemish players perceive it as a strong brand which reflects positively on them as well. It is actively involved in international roadmap exercises, European Strategic Research Agendas and EU initiatives and in regional communities, platforms and networks.

Win-win loan111 scheme

One of the successful policy measures that is also potentially replicable in many regions is the win-win loan scheme.

Start-up companies normally need only limited amounts of money that are too small for VC providers and too risky for normal banks, because these start-ups have no track records. Financing is in general provided by friends and family. By giving these private capitals providers as fiscal incentive and a limited guarantee the Flemish government tries to increase the availability of capitals for start-ups.

109 http://www2.imec.be/be_en/about-imec/history.html 110 http://www2.imec.be/be_nl/imec/spin-offs.html 111 http://www.agentschapondernemen.be/maatregel/winwinlening


A win-win loan is offered by the Flemish Government in the form of venture capital (including subordinated loans) and tax incentives (including reduction of social charges). In order to increase the availability of private capital for start-up enterprises the Flemish Government intends to provide fiscal incentives for business angels who want to invest in start-ups. The investor gets a tax deduction of 2.5% on the outstanding capital of the loan. The win-win loan is a subordinated loan with a maximum value of €50,000, running for eight years. The loan must be repaid in one instalment. If the loan is not repaid the investor receives an additional fiscal reduction of 30% of the loan.

Only start-ups (SMEs) can apply. The creditor must be a neutral person, not employed by the start-up company and not the spouse of the entrepreneur. The overall budget in 2008 was €2m.

The win-win loan policy was introduced in 2006 to act as a spark to economic recovery. Initially aimed at start-ups but later extended to cover all small businesses, it allows business owners to raise risk capital from family and friends, who then receive a tax benefit for the amount they lend up to €100,000.

In Flanders this measure has achieved considerable success, particularly amongst the family circles of business owners. Since 2006 this loan scheme has assisted over 3000 SMEs with a total over €100m.

In 2015, in Wallonia, both opposition parties, the Greens and Mouvement réformateur (MR), have proposed two distinct draft decrees, known respectively as “prêt proxi” and “prêt WalWin", to adapt the Flemish mechanism to the Wallonia region.

2.6!Possible future orientations and opportunities •! Improve conditions for the translation of R&D inputs into innovation

outputs

Flanders’ weak performance in maximising the commercial benefits of R&D would profit from a reduction in administrative barriers and, more generally, measures to unchain entrepreneurship and unleash greater business dynamism. With this aim in mind, Flemish authorities are advised to introduce major policies to facilitate this change. For instance, public innovation support can be further streamlined and made more targeted (COM 2015/85). Overall, Flanders has considerable scope to expand its competitiveness via improved conditions for entrepreneurship. The low start-up rate can be related to several factors discouraging company expansion, including high labour costs. To soften the burden for start-ups, social security contributions were already lowered for the hiring of the first three employees. This federal reduction was further increased as well as expanded to the first five employees. Company expansion beyond this level nevertheless remains hampered, which might necessitate further action and points again to the general need to shift taxes away from labour. Certain non-labour taxes also come across as very counterproductive for entrepreneurship. Therefore, there is a need to soften a number of smaller taxes on capital goods levied at the local level, e.g. on propulsion. Another area for intervention is the revision of the minimum paid-in capital level for starting a business. Furthermore, a timely and resolute approach to addressing infrastructure bottlenecks would also help the country’s overall productivity. Some support measures related to mentoring, raising awareness, setting up business platforms and giving business awards have already been implemented. Although they cover aspects such as improving educational skills or boosting entrepreneurship for specific groups, the measures should be implemented in a more coordinated way.

•! Systematic efforts and creation of a supporting framework for higher R&D investment and reaching EU 2020 objectives

As the innovation system of the region largely depends on investments made by foreign business units, it is essential to assure a smooth continuation of this inflow of foreign capital and to attract new foreign R&D investments. In a general sense this


could be realised by offering enterprises long-term investment perspectives. Several policy suggestions might be helpful in achieving this goal: R&D investments could be made less risky by improving the return on investment through fiscal measures; the presence of an extensive pool of highly skilled labour in science and engineering is an absolute necessity for making the internal market attractive to foreign high-tech companies; the creation of opportunities to transform R&D results in tangible products and services should be highly supported. This could be achieved in practice by the establishment of private-public partnerships between companies and universities/public research centres and the development of marketing strategies for testing consumer responsiveness to new products and prototypes (Belspo 2013). It was also recommended to streamline incentive schemes and reduce administrative barriers faced by companies and SMEs in accessing public subsidies for R&D, as well as improve complementarities of subsidy based instruments with fiscal incentives for companies (COM 2015/85 final).

•! Addressing labour market mismatches via interregional and international mobility

In general, the problem of a lack of highly skilled workers suited for knowledge-based organisations and industries persists across a number of regions and countries and Flanders is not alone in this challenge. Many policy measures have already been put in place to promote brain gain in Flemish R&I organisations. As discussed above, this policy support package manages to address the problem partially. A lack of combined business and research skills, as well as low remuneration and language restrictions are additional factors in the overall problem. In addressing this problem, a combination of measures need to be implemented. On one hand, mobility programmes focused on brain gain could be expanded by setting more incentives. Information about the vacancies should be passed through international channels. Interregional collaboration within and outside could also contribute to addressing researcher market mismatches by strengthening the links between research organisation and universities, as well as science and industrial experts network organisations. Furthermore, high labour taxes in Belgium are seen as another discouraging factor, both for employees and also for employers. The experience of other countries such as the Netherlands and Denmark in creating the fiscal incentives for highly skilled foreign workers and researchers can be taken as an example to look into.


Appendix A!Bibliography

1.! Aerts, K. and Czarnitzki, D. (2002) The impact of public R&D-funding in Flanders, IWT studies N54. Available at: http://www.iwt.be/sites/default/files/publicaties/iwt_studie54.pdf

2.! Belgian Foreign Trade Agency (BeFTA 2014) Belgian Biotechnology.

3.! BERST (2015) Good Practices in selected bioeconomy sector clusters; a comparative analysis, Public Deliverable D3.1 of the project “BioEconomy Regional Strategy Toolkit" (BERST), Imperial College London (eds); JAMK & Region of Central Finland; BioCampus StraubingGmbH & FNR; Wageningen University, Gemeente Westland & Biobased Delta, 8/6/2015. Available at: http://www3.lei.wur.nl/BerstPublications/D3.1%20GoodPracticesInSelectedBioeconomySectors_8June15.pdf.

4.! BIO-TIC (2014) Industrial Biotech in Europe – Belgium profile. Available at: http://www.industrialbiotech-europe.eu/map/belgium/

5.! BIO-TIC (2015a) Overcoming hurdles for innovation in industrial biotechnology - Market Roadmap. Available at: http://www.industrialbiotech-europe.eu/get-involved/action-plan-for-ib/market/

6.! BIO-TIC (2015b) Overcoming hurdles for innovation in industrial biotechnology - Technological Roadmap. Available at: http://www.industrialbiotech-europe.eu/get-involved/action-plan-for-ib/tech-roadmap/

7.! BIO-TIC (2015c) Overcoming hurdles for innovation in industrial biotechnology - Non-technological Roadmap. Available at: http://www.industrialbiotech-europe.eu/get-involved/action-plan-for-ib/non-tech-roadmap/

8.! BioBase NWE (2015) Bioeconomy Factsheet – Belgium. The factsheet was produced through the Interreg IVB NWE Bio Base NWE project. Available at www.nnfcc.co.uk/publications/bioeconomy-factsheet-belgium

9.! CINBIOS (2015) Industriele Biotechnologie: een roadmap voor Vlaanderen – Industrial Biotechnology Roadmap for Flanders, prepared by the CINBIOS partners FISCH, Flandersbio en Ghent Bio-Economy Valley. Available at: cinbios.be/files/downloads/KET_Ind_Biotech_roadmap_Flanders_def.pdf

10.! Czarnitzki, D and Lopes-Bento, C. (2012) Value for money? New microeconometric evidence on public R&D grants in Flanders, IWT studies N75, May 2012. Available at: http://www.iwt.be/sites/default/files/english/files/IWT_studie75.pdf

11.! Drouilon M. (2011) Ghent Bio-energy Valley: A leading European bio-based industrial cluster, Presentation at easyFairs® INDUSTRIE & MILIEU, 30-31 March 2011. Available at: http://www.easyfairs.com/fileadmin/groups/6/INDUSTRIE%20MILIEU_BE_2010/learnShops/woensdag/LSP_Hal1_Woe_Ghent_BioEnergyValley.pdf.

12.! EC Bioeconomy Observatory (EBO 2014) National bioeconomy profile – Belgium. Available at: https://biobs.jrc.ec.europa.eu/country/belgium

13.! Enterprise Flanders (2014) The ‘Strategic framework for Smart Specialisation in Flanders, available at: www.agentschapondernemen.be/download/file/fid/33427

14.! European Commission (EC 2014a) Research and Innovation performance in Belgium: Country profiles 2014. SBN 978-92-79-40286-9, doi 10.2777/88882. Available at: https://rio.jrc.ec.europa.eu/en/library/belgium-research-and-innovation-performance


15.! European Commission (EC 2014b) 2014 Mall Business Act for Europe - SBA Factsheet – Belgium. Available at: ec.europa.eu/growth/smes/business-friendly-environment/performance-review/files/countries-sheets/2014/belgium_en.pdf

16.! European Commission staff working document (COM 2015/85) Country Report Belgium 2015: Including an In-Depth Review on the prevention and correction of macroeconomic imbalances. European Semester Country Report. Available at: https://rio.jrc.ec.europa.eu/en/library/belgium-european-semestre-country-report

17.! Flanders Investment & Trade (FIT 2013) The life sciences industry in Flanders. Available at: http://cinbios.be/files/downloads/LifeSciences.pdf

18.! Flemish government (2013) Sustainable use of and creation of value from renewable raw materials for biobased industrial production such as biomaterials and green chemicals in Flanders: Options and recommendations for an integrated economic and innovation policy, in coherence with other policy areas and EU regions. Summary of the study. Available at: https://biobs.jrc.ec.europa.eu/policy/biobased-uses-flanders

19.! Flemish government (2014a) Bioeconomy in Flanders - The vision and strategy of the Government of Flanders for a sustainable and competitive bioeconomy in 2030. Available at: http://www.vlaanderen.be/nl/publicaties/detail/bioeconomy-in-flanders

20.!Flemish government (2014b) STI in Flanders: science, technology and innovation. Policy and key figures 2014, publication of The Flemish government, Department Economy, Science and Innovation, D/2014/3241/340, Available at: http://www.vlaanderen.be/nl/publicaties/detail/sti-in-flanders-science-technology-and-innovation-policy-and-key-figures-2014-1

21.! Flemish government (2015) Flanders Outlook 2015. A benchmarking of Flanders amongst the European regions, January 2015. Available at: http://www4.vlaanderen.be/sites/svr/publicaties/Publicaties/webpublicaties/2015-01-26-flanders-outlook2015.pdf.

22.!Flemish government (2016) STI in Flanders: science, technology and innovation. Policy and key figures 2015, publication of The Flemish government, Department Economy, Science and Innovation, D/2016/3241/060, Available at: http://ebl.vlaanderen.be/publications/documents/84052

23.!KU Leuven Research and Development (KU LRD, 2015) KU Leuven, VIB and Performa Investimentos establish GlobalYeast to deliver superior industrial yeast strains for the production of bio-ethanol and green chemicals, LRD News, 15 July, 2015, Available at: https://lrd.kuleuven.be/en/news/ku-leuven-vib-and-performa-investimentos-establish-globalyeast-to-deliver-superior-industrial-yeast-strains-for-the-production-of-bio-ethanol-and-green-chemicals

24.!Mizuho Corporate Bank (MCB 2013) Life Sciences and Biotechnology Industry Clusters in Europe - Building Bridges between Science and Industry. Mizuho Industry Focus Vol. 122. Available at: www.mizuhobank.com/fin_info/industry/pdf/mif_122.pdf

25.!OECD (2015) Employment and Skills Strategies in Flanders, Belgium - Policy context for employment and skills in Flanders, Belgium, DOI:10.1787/9789264228740-5-en

26.!PwC (2011) Regional Biotechnology: Establishing a methodology and performance indicators for assessing bioclusters and bioregions relevant to the KBBE area. Final Report, 03 February, 2011. Available at: ec.europa.eu/research/bioeconomy/pdf/regional-biotech-report.pdf

27.!Regional Innovation Monitor (RIM 2012) Regional Innovation Report: Flanders. To the European Commission. Author: Jon van Til, Available at:


https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/report/innovation/regional-innovation-report-flanders

28.!Regional Innovation Monitor (RIM 2014) Changes in Science and Innovation Policy in the Belgian region of Flanders. News article. Available at: https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/news/changes-science-and-innovation-policy-belgian-region-flanders

29.!Research and Innovation Observatory (RIO 2015) RIO Country Report 2014 - Belgium, available at https://rio.jrc.ec.europa.eu/en/library/rio-country-report-belgium-2014

30.!Seagers, J-P. (2011) Biotech in Belgium: Sustainable Growth or Strategic Takeover? Conference paper. International Council for Small Business World Conference, Stockholm. 06/2011. Available at: https://www.researchgate.net/publication/259885656_Biotech_in_Belgium_Sustainable_Growth_or_Strategic_Takeover

31.! Segers J-P. (2013) Strategic Partnerships and Open Innovation in the Biotechnology Industry in Belgium. Technology Innovation Management Review. April 2013

32.!Segers, J-P. (2015) The interplay between new technology based firms, strategic alliances and open innovation, within a regional systems of innovation context. The case of the biotechnology cluster in Belgium, Journal of Global Entrepreneurship Research (2015) 5:16 DOI 10.1186/s40497-015-0034-7

33.!Technopolis Group (2011) Meta-evaluation of IMEC, available on http://www.ewi-vlaanderen.be/sites/default/files/meta-evaluation_imec_2011_-_executive_summary.pdf

34.!VIB (2015) Annual report 2014, available at http://www.vib.be/en/about-vib/organization/Pages/Annual-reports.aspx

Appendix B!Stakeholders consulted

1.! Professor Wim Soetaert, InBio.be, Centre for Industrial Biotechnology and Biocatalysis, Faculty of Bioscience Engineering - Ghent University (date of interview 30 December 2015).

2.! Dr. Johan Cardoen, Managing Director of VIB and Board Member of FlandersBio (date of interview 4 January 2016).

3.! Dr Willem Ghooge, Programme Manager/co-ordinator CINBIOS network (date of interview 7 January 2016)

Appendix C!Research labs at VIB addressing industrial biotechnology

Johan Thevelein Lab112 develops novel genetic technologies and their application for the generation of superior industrial yeast strains, which can be used, for example, in the production of bio-ethanol from cellulosic biomass, as well as in beer brewing,

112 http://www.vib.be/en/research/scientists/Pages/Johan-Thevelein-Lab.aspx


wine production, bakery applications, production of biochemical, etc. The group has also developed industrial yeast strains for cellulosic bioethanol production that combine efficient xylose fermentation with high inhibitor tolerance. These strains have shown high performance in lignocelluloses hydrolysates derived from different cellulosic waste materials and bioenergy crops. These superior strains are currently being further improved to boost their stress tolerance and versatility for use with many different types of hydrolysates. Based on the research developments of the Johan Thevelein Lab, a spinoff company, GlobalYeast, has been set up to develop and deliver superior industrial yeast strains for bioethanol and the green chemicals industry.

Kevin Verstrepen Lab113. Apart from basic biological research, this lab is also interested in using their expertise to optimise and improve industrial processes, with special emphasis on fermentation (e.g. in beer, wine, bread, chocolate, ethanol production). Using the technologies developed for basic research, the group is able to generate or evolve yeast strains that are better suited for industrial application, for example,. by increasing their flavour production, by tailoring their flocculation potential, by increasing their ability to ferment complex sugars, or by increasing the yeast’s stress tolerance (e.g. for high ethanol levels and extreme temperatures). The laboratory collaborates with companies and institutes interested in their expertise

Wout Boerjan Lab114 is also known as Bio-energy Group115. The main focus of this research group is to understand the biosynthesis of plant cell walls to provide the fundamental knowledge necessary to design plant cell walls that are easier to process into simple sugars that can then be further fermented to bio-ethanol or other bio-based products, such as bioplastics. Bio-energy Group studies the biosynthesis, polymerisation and structure of lignin. The group also works on improving plant cell walls by exploiting the available genetic resources and by genetic modification.116 The group has developed poplars with a modified wood composition that makes them more suitable for the production of bio-ethanol. This bio-ethanol is considered as a second-generation bio-fuel, as it is made from a ligno-cellulosic biomass: wood. The modified wood contains about 20% less lignin, and per gram of wood more cellulose. The major long-term goal of the Bio-energy group is to understand, through systems biology (involving metabolomics and transcriptomics), the biosynthesis, polymerization and structure of lignin, and how lignin biosynthesis integrates into plant metabolism and development. This will provide the fundamental knowledge that is necessary to breed for, or engineer, plant cell walls that are easier to convert to fermentable sugars. Arabidopsis, poplar and maize are used as model systems.

Appendix D!Important companies in the industrial biotechnology sector in Flanders

•! Alco Bio Fuel117 is one of Belgium's major biorefineries, processing grain such as corn and wheat into bio-ethanol, protein-rich feed, electricity, liquid CO2, and a number of other by-products (e.g. corn oil). It is a joint partnership between Alcogroup, the Brussels based ethanol production and trading company, Vanden Avenne Izegem, grain and derivatives trading and storage company, and AVEVE

113 www.vib.be/en/research/scientists/Pages/Kevin-Verstrepen-Lab.aspx 114 http://www.vib.be/en/research/scientists/Pages/Wout-Boerjan-Lab.aspx 115 http://www.psb.ugent.be/bio-energy 116 In the production of bio-ethanol, lignin is the main limiting factor because it limits the accessibility of

the cellulose microfibrils to enzymatic depolymerization. 117 http://www.alcobiofuel.com/


and Wal.Agri, Belgium's largest grain receiving group. It was started up in 2008 in the Rodenhuizedok, Biofuel cluster in the Port of Ghent.

•! Bioro118 is the only operation in Belgium that produces biodiesel from rapeseed on a single site. Bioro is one of the first biodiesel plants constructed in Belgium. The company was established in 2005 and is located in the port of Ghent. Construction was finalised at the end of 2007. The plant has a capacity to produce of 250,000 metric tonnes of biodiesel per year, using vegetable oils as raw material. This site is unique as the whole of the process from raw material to refined end product is completed on-site, without the need for any extra transportation. The whole operation has also created opportunities in many other areas, such as the valorisation of glycerin.

•! Tereos Syral119 has more than 140 years of experience in cereal processing. Located by the Dender River in East Flanders, the Tereos Starch & Sweeteners plant in Aalst employs 400 people. The production site consists of a wheat starch plant, a combined heat power plant and, since 2008, a bioethanol facility. Wheat starch is processed in Aalst into a wide range of refined glucose syrups (dextrose, maltose, fructose, maltodextrins) or dried into native and modified starch. Depending on the customer’s needs, basic syrups are mixed at the blending station and become a final syrup. Dextrose syrup is processed by crystallisation and dried to crystalline dextrose. Finally, solubles are transformed into bioethanol after fermentation and distillation. The objective of the Aalst plant is to meet current and future needs of the food, animal nutrition, paper and corrugated board industries.

•! Among the traditional biotech companies Citrique Belge120 is quite prominent. It is one of the oldest citric acid producers in Europe, formally opened in 1929.Today Citrique Belge‘s production facility is the largest in Europe with around 100,000 tonnes of citric acid produced annually, and it is among only three European producers of this product. The process of citric acid production is based on indusial fermentation. The company has been investing in improving the process of fermentation by researching new yeast strains and improving their resistance. The company is a supplier of citric acid to industries such as food and beverages, pharmaceuticals, cosmetics, industrial and cleaning appliances. Besides citric acid, the company produces sodium citrates that are also used in food, medical industries, and sometimes in concrete production, and several co-products that are all sold for technical, agricultural and feed applications.

•! Cargill121 is another company with a long tradition in industrial biotech in Flanders. The company was established in Belgium as Cargill NV via a grain importing office in Antwerp in 1953. The company has a number of different and diverse operations in the country, including the production of industrial chocolate, sweeteners, starches, and malt, as well as speciality texturising ingredients. It also does grain and oilseed crushing, refining, bottling, hardening and sales. Cargill’s European Headquarters for its food businesses, as well as the Cargill's R&D Centre for Europe, Middle East and Africa are also located in Belgium. Cargill Belgium now has over 1,000 employees in eight locations in Antwerp, Izegem, Gent, Herent, Vilvoorde, Mechelen and Mouscron.

•! De Saedeleir Textile Platform122 is the first company in Europe to introduce fibres, carpets and nonwovens from renewable resources, namely from polylactide

118 http://www.bioro.be 119 http://www.tereos-starchsweeteners.com/en/contact/our-sites/aalst 120 http://www.citriquebelge.com/ 121 http://www.cargill.be/en/about/index.jsp 122 http://www.dstextileplatform.com


polymer, which is a compostable material made from plants. The company uses a unique technology in the processing of natural plant sugars to create the proprietary polylactide polymer. The company is currently leading the market in biodegradable carpets, which are used mainly at trade fairs and other short events. The company’s innovation also extends to agriculture. It uses biopolymers derived from agricultural crops to create biodegradable products that protect against weeds, erosion and similar problems.

•! Ecover123 is one of the largest producers of ecological washing and cleaning products in Europe. Founded over 35 years ago in Malle, Belgium, Ecover has developed washing and cleaning products with plant-based and mineral ingredients. It developed the world’s first ‘Eco-Surfactant’ using an energy efficient and entirely biochemical production process powered by yeast. Surfactants, the active ingredient in the majority of household cleaners, are produced largely from petrochemical substances using high temperature and pressure processes. An Ecosurfactant is produced through natural fermentation at a temperature of 30 degrees Celsius and at atmospheric pressure

•! Du Pont Industrial Biosciences124 is the industrial biotechnology section of DuPont that develops and delivers innovative products into the consumer, industrial and agri-processing markets. Integrating the former Genencor division of Danisco A/S in 2011 and combining it with its own activities in the field of biotechnology, it has a proven track record of success in the industrial biotechnology market. Genencor International BVBA in Bruges is one of the organisation’s main manufacturing plants for the production of its industrial enzymes.

123 http://be.ecover.com 124 http://biosciences.dupont.com/

technopolis |group| Belgium Avenue de Tervuren 188a B-1150 Brussels Belgium T +32 2 737 74 40 F +32 2 727 74 49 E [email protected] www.technopolis-group.com

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