Circular Economy Business Models in Agricultural Production and High-Value Products, Essays (high school) of Compilers

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Project co-funded by the European Regional Development Fund Project of the Interreg Baltic Sea Region Programme 2014‒2020 “Unlocking the Potential of Bio-based Value Chains in the Baltic Sea Region” Project Acronym: BalticBiomass4Value Project Number: #R095 Report on Good Practice Business Models and Example Small and Medium Scale Pilot Business Projects for Sustainable Bioenergy and Side Bio- products Production in the BSR Ants-Hannes Viira, Jüri Lillemets, Anne Põder, Jelena Ariva, Kersti Aro, Jüri Lehtsaar, Timur Kogabayev, Henrik Barth, Pia Ulvenblad, Per-Ola Ulvenblad, Sascha Hermus, Jannik Durchgraf 15 January 2021 Project co-funded by the European Regional Development Fund Preface This report is the Output 2.3 of the implementation of Work Package 2 Group of Activities 2.3 “Preparation of good practice business models and example small and medium scale pilot business projects for sustainable bioenergy and side bio-products production in the BSR” as specified in the latest approved version of the Application Form of the BalticBiomass4Value project. For the implementation of the BalticBiomass4Value project a subsidy is awarded from the European Regional Development Fund under the Interreg Baltic Sea Region Programme 2014‒2020. The sole responsibility for the content of this publication lies with the authors. The European Regional Development Fund is not responsible for any use that may be made of the information contained therein. Information about the authors and other contributors: Authors: Dr. Ants-Hannes Viira, Estonian University of Life Sciences Mr. Jüri Lillemets, Estonian University of Life Sciences Dr. Anne Põder, Estonian University of Life Sciences Ms. Jelena Ariva, Estonian University of Life Sciences Ms. Kersti Aro, Estonian University of Life Sciences Dr. Jüri Lehtsaar, Estonian University of Life Sciences Mr. Timur Kogabayev, Estonian University of Life Sciences Dr. Henrik Barth, Halmstad University Dr. Pia Ulvenblad, Halmstad University Mr. Per-Ola Ulvenblad, Halmstad University Mr. Sascha Hermus, 3N Lower Saxony Network for Renewable Resources and Bioeconomy Mr. Jannik Durchgraf, State Agency for Agriculture, Environment and Rural Areas of the German Federal State Schleswig-Holstein Data providers: LITHUANIA Vilija Aleknevičienė, Vytautas Magnus University Kestutis Navickas, Vytautas Magnus University Mindaugas Šilininkas, Forest and Land Owners Association of Lithuania Inga Matijošytė, Lithuanian Biotechnology Association Jokūbas Krutkevičius, Lithuanian Biotechnology Association LATVIA Krisjanis Veitners, Vidzeme Planning Region Arnis Lenerts, Latvia University of Life Sciences and Technologies Andris Ramons, Agrofirma Tērvete Pēteris Vilks, Egg Energy SIA ESTONIA Jelena Ariva, Estonian University of Life Sciences Kersti Aro, Estonian University of Life Sciences GERMANY Sascha Hermus, 3N Lower Saxony Network for Renewable Resources and Bioeconomy Jannik Durchgraf, State Agency for Agriculture, Environment and Rural Areas of the German Federal State Schleswig-Holstein Project co-funded by the European Regional Development Fund 5 Appendix 1. Summary of types of good practice BM by the nine categories used for selection criteria 72 Appendix 1.1. BM types by source of biomass 72 Appendix 1.2. BM types by outputs 73 Appendix 1.3. BM types by environmental benefits 74 Appendix 1.4. BM types by type of enterprise 75 Appendix 1.5. BM types by social and regional benefits 76 Appendix 1.6. BM types by policy aspects 77 Appendix 1.7. BM types by business goals 78 Appendix 1.8. BM types by transferability and novelty 79 Appendix 2. Narratives of the business cases 80 Heat and Fuel from Woody Biomass 80 Case: Ecopellet - environmentally friendly biofuels and pet products from sustainable raw materials ............................................................................................................................................................................ 80 Case: Quercus - production of solid biofuels for energy ............................................................................... 82 District Heating and Electricity from Various Biomass Sources 84 Case: Kurana - production of bioethanol, electricity and heat from renewable resources in a closed technological loop ............................................................................................................................................ 84 Case: 3B Bioenergie- energy production and special processing of digestate .................................... 86 Specialized Heat and Electricity Production and Services 87 Case: Przedsiębiorstwo Energetyki Cieplnej – energy efficient district heating system ................ 87 Innovation in Novel Fuels and Bio-chemicals 90 Case: SunPine - an entrepreneurial bio-refinery .............................................................................................. 90 Circular Bioeconomy in Agricultural Production 93 Case: Energifabriken – fossil fuel free circular economy .............................................................................. 93 Case: Ziedi JP - circular economy in a Latvian farm ....................................................................................... 95 Case: Wapnö Farm- sustainability and the circular economy example in a Swedish farm ........... 97 Sustainable Bio-based Products from Plant-based Biomass 100 Case: Aloja Starkelsen- organic starch and plant-based products for home and industrial application ...................................................................................................................................................................... 100 Case: Lilli Agro – organic straw pellets for animal bedding ..................................................................... 103 Sustainable and Novel Bio-based Products from Food Waste and Biomass for Replacing Plastic 105 Case: Kaffeeform - coffee cups made from coffee grounds ....................................................................... 105 Case: Spoontainable – edible ice cream spoons ............................................................................................. 107 Project co-funded by the European Regional Development Fund 6 High-value Products from Knowledge-based Processing 109 Case: Est-Agar – sustainable enhancement of the red algae Furcellaria lumbricalis..................... 109 Case: SatiMed- wellness and health products from the hemp plant..................................................... 111 Case: oceanBASIS - natural cosmetics and food from seaweed .............................................................. 112 High-value Products from Circular Bioeconomy 114 Case: Borregaard – production of sustainable and environmentally friendly alternatives to petrochemicals ............................................................................................................................................................. 114 Case: Emsland Group - sustainability through 'using nature to create' .............................................. 116 Utilization of Municipal Waste and Sewage 117 Case: Greve Biogass – biogas from agricultural and municipal waste and sewage ....................... 117 Case: Pageldynių plantacija - a full scale self-sustainable closed loop circular economy model for large cities’ nutrient rich waste ............................................................................................................................ 118 Project co-funded by the European Regional Development Fund 7 I. Introduction to the BalticBiomass4Value project and Output 2.3 The Baltic Sea Region (BSR) holds a great potential for circular bioeconomy development. Therefore, the project aims to enhance capacity of public and private actors within the BSR to produce bioenergy in more environmentally sustainable and economically viable way by utilizing new biomass sources (mainly, biological waste) for energy production, as well as possibilities to use bioenergy side streams for higher value bio-products. Biomass from different sources (agriculture, food and feed industry, forestry, wood industry, municipal waste and sewage sludge, fishery, algae), its logistics, various biomass conversion technologies and value chains were mapped to identify good practices of bioenergy generation and the potential of more efficient and sustainable deployment of biomass in the BSR. Seventeen partners from Lithuania, Latvia, Estonia, Germany, Poland, Sweden, Norway and the Russian Federation represent the producers of biomass and bio-based products, as well as relevant public authorities and policy stakeholders, and research organisations. Project coordinator: • Vytautas Magnus University (Lithuania) Project partners: • Ministry of Energy of the Republic of Lithuania (Lithuania) • Forest and Land Owners Association of Lithuania (Lithuania) • Lithuanian Biotechnology Association (Lithuania) • Vidzeme Planning Region (Latvia) • Latvia University of Life Sciences and Technologies (Latvia) • Ministry of Rural Affairs of the Republic of Estonia (Estonia) • Estonian Chamber of Agriculture and Commerce (Estonia) • Estonian University of Life Sciences (Estonia) • Agency for Renewable Resources (FNR) (Germany) • 3N Lower Saxony Network for Renewable Resources and Bioeconomy (Germany) • State Agency for Agriculture, Environment and Rural Areas of Schleswig-Holstein (Germany) • University of Warmia and Mazury in Olsztyn (Poland) • Halmstad University (Sweden) • Norwegian Institute of Bioeconomy Research (Norway) • Norwegian University of Life Sciences (Norway) • Municipal enterprise of the city of Pskov “Gorvodokanal” (Russian Federation) For more information, please visit project website: www.balticbiomass4value.eu The transition towards more circular economy that maximizes value of products, materials and resources and minimizes waste generation calls for a systemic change and rethinking of production, consumption and waste use (European Commission, 2015). The change requires not only new technologies, processes, but also new business models (BMs) that change the way the enterprises conduct their business. The aim of the activities in Work Package 2 was to collect information and share the knowledge and experience on the good practices that facilitate the development of circular BMs in the BSR. The present analysis in Output 2.3 adopted FAO’s (2013) definition that good practices are those practices that have been successfully proven to work and produce good results, and thus could be recommended as models for the adoption by others. The present report summarizes the results of three sets of activities: Project co-funded by the European Regional Development Fund 10 III. List of figures Figure 1. Research process Figure 2. Initially envisioned types of BCs by source of biomass and types of production Figure 3. Dendrogram of the cluster analysis Figure 4. Keyword ratings for enterprises in the BM type of Heat and Fuel from Woody Biomass Figure 5. Keyword ratings for enterprises in the BM type of Fuel and Electricity from Biogas Figure 6. Keyword ratings for enterprises in the BM type of District Heating and Electricity from Various Biomass Sources Figure 7. Keyword ratings for enterprises in the BM type of Specialized Heat and Electricity Production and Services Figure 8. Keyword ratings for enterprises in the BM type of Innovation in Novel Fuels and Bio-chemicals Figure 9. Keyword ratings for enterprises in the BM type of Circular Bioeconomy in Agricultural Production Figure 10. Keyword ratings for enterprises in the BM type of Bio-based Fertilizer for Increased Soil Quality Figure 11. Keyword ratings for enterprises in the BM type of Sustainable Bio-based Products from Plant- based Biomass Figure 12. Keyword ratings for enterprises in the BM type of Sustainable and Novel Bio-based Products from Waste and Biomass for Replacing Plastic Figure 13. Keyword ratings for enterprises in the BM type of High-value Products from Knowledge-based Processing Figure 14. Keyword ratings for enterprises in the BM type of High-value Products from Circular Bioeconomy Figure 15. Keyword ratings for enterprises in the BM type of Utilization of Municipal Waste and Sewage Figure 16. Income statement and profitability assessment in the Business Planning Tool Figure 17. Cash Flow Assessment in the Business Planning Tool Project co-funded by the European Regional Development Fund 11 IV. List of tables Table 1. Business Model Concept Hierarchy Table 2. Sustainable Business Model Archetypes Table 3. Components of Osterwalder & Pigneur’s (2010) business model canvas and their explanation Table 4. Categories and Keywords Table 5. Taxonomy of BM by the Source of Biomass and Type of Production Table 6. BMC for Heat and Fuel from Woody Biomass BM type Table 7. BMC for Fuel and Electricity from Biogas BM type Table 8. BMC for District Heating and Electricity from Various Biomass Sources BM type Table 9. BMC for Specialized Heat and Electricity Production and Services BM type Table 10. BMC for Innovation in Novel Fuels and Bio-chemicals BM type Table 11. BMC for Circular Bioeconomy in Agricultural Production BM type Table 12. BMC for Bio-based Fertilizer for Increased Soil Quality BM type Table13. BMC for Sustainable Bio-based Products from Plant-based Biomass BM type Table 14. BMC for Sustainable and Novel Bio-based Products from Waste and Biomass for Replacing Plastic BM type Table15. BMC for High-Value Products from Knowledge-based Processing BM type Table16. BMC for High-value Products from Circular Bioeconomy BM type Table17. BMC for Utilization of Municipal Waste and Sewage BM type Table 18. BM Archetypes Project co-funded by the European Regional Development Fund 12 1. Business Models and Business Cases 1.1. Definition of Business Models Business model (BM) is a topic that has risen to prominence in the last 25 years as a reaction to rapid development of ICT and digital technologies that have opened up new ways of doing business as well as with the integration of highly globalized and hypercompetitive markets (Nielsen et al., 2018). Growing body of research evidence indicates that BMs are seen as essential to company competitiveness, renewal, and growth (Chesbrough and Rosenbloom, 2002; Johnson, 2010; Teece, 2010; Lambert and Davidson, 2013; Campbell et al., 2013). Most of the research so far has been published since the 2000s and is heavily focused on ICT and on private businesses with limited attention to public organizations. BMs in bioeconomy have received considerably less attention (Bocken et al., 2014; D’Amato et al., 2020). In order to utilize the potential of bioeconomy in the EU and the BSR, and build competitive bioeconomy sector, however, innovation in technologies and resource use are not sufficient without addressing how enterprises can create and capture value from bioeconomy. BM can be defined as a simplified description and representation (Nielsen et al., 2018) of how the organization conducts its business and how it functions (Osterwalder et al., 2005). However, there is no uniform definition for BM as different researchers and practitioners have utilized different approaches, definitions and frameworks for studying them (Zott et al., 2011; Nielsen, et al., 2018). Typically, the common emphasis is that BM describes the business logic, the way value is created and captured for customers as well as for the enterprises involved (Heikkilä et al., 2016, p. 339). BM provides a systematic and holistic approach on how the focal enterprise conducts its business (Zott et al., 2011; Tell et al., 2016). It is used to convey strategic choices, clarify how organizations develop, produce and capture value, and enable the identification of competitive sources by managing a dynamic network of interrelated activities (Lambert and Davidson, 2013; Zott et al., 2011). BMs are often viewed as tools used by managers to design, implement, manage, modify, and control their enterprises (Johnson, 2010; Wirtz et al., 2010). Osterwalder et al. (2005, p. 3) define BM as a conceptual tool containing a set of objects, concepts and their relationships with the objective to express the business logic of a specific firm. The tool seeks to identify the elements, concepts and relationships of the business in order to develop a simplified model representing value creation, delivery and capture by the business. BMs provide organizational blueprints (Baden-Fuller and Morgan, 2010). A good BM should clearly identify who are enterprise’s customers, what is the enterprise’s unique value proposition for them and how does the enterprise differ from others, how the value proposition is implemented, and revenues, expenses and risks managed, etc. (Sandberg, 2002). Generic descriptions of BM contain components such as customers, competitors, offering, activities and organization, resources (human, physical and organizational), and supply of factor and production inputs (Hedman and Kalling, 2003, pp. 52‒53). In more detailed models, elements such as the strategic choices (customers, value proposition, capabilities, revenues, competitors, strategy, differentiation, offering, mission, branding), value creation (resources, processes), value capture (costs, profit, finances) and value network (suppliers, relationships, information, product flows) are described (Shafer et al., 2005). Some BM concepts emphasize the concise description of the interrelated activities of the process and their content, as well as the various interrelated decision variables (e.g., strategy, architecture, and economics) to establish a sustainable competitive advantage for the organization (Magretta, 2002; Morris et al., 2005; Zott and Amit, 2010). Project co-funded by the European Regional Development Fund 15 Different authors have used different criteria for creating archetypes. Thus, in research literature, archetypes can refer to typologies or taxonomies of full BMs of specific enterprises, generic basic models or models based of specific element or aspect of BM (e.g., revenue model) (Fielt, 2014). 1.4. Sustainable business models Bioeconomy BMs have received less attention. Some examples of research on archetypes include sustainable BMs (Bocken et al., 2014; D’Amato et al., 2020), which are relevant also in the context of present project. Bocken et al. (2014) used systematic review of literature to categorize sustainable BMs into eight basic archetypes (Table 2) that are grouped by their type of business model innovation (BMI) (technological, social, organizational). Research on BM archetypes tends to be more specific and empirical, but it helps to improve understanding on the BM definition and more abstract conceptual frameworks as well as the relationships between the elements of BM (Fielt, 2014). Project co-funded by the European Regional Development Fund 16 Table 2. Sustainable business model archetypes (based on Bocken et al., 2014, pp. 48‒54) Business model innovation Archetype of business model Value proposition Value creation and delivery Value capture Technological Maximization of material and energy efficiency Products and services using fewer resources to reduce waste, emissions and pollution More efficient production processes using less resources and reducing waste Cost reduction from optimized use of resources, reduction of waste and environmental impact Creation of value from waste Eliminating waste by turning waste into input for other production Recycling of waste and closing of resource loops and making use of under-utilized capacities Cost reductions from reuse of materials, reduction of waste and virgin material use Substitution with renewables and natural processes Products based on renewables resources and natural processes Innovative production processes based on renewable resources and energy and natural systems Revenues from new products, reduction of environmental impact of use of non-renewable resources Social Delivery of functionality, rather than ownership Shift from selling physical products to consumers to providing services for users Redesign and delivery product/service offerings based on reuse, reparability and upgradability Revenue for provision of services and increased access for consumers Adoption of stewardship role Products and services for ensuring stakeholders long term well-being Production and supply systems that deliver the environmental and social benefits Revenues from the stewardship and benefits from the well-being of the stakeholders Encouragement of sufficiency Product and services aiming to reduce consumption and production Promotion of less consumption and less waste and more durable products Revenues from durable products and environmental and social benefits from reuse and less consumption Organizational Re-purpose of the business for society/environment Prioritization of social and environmental benefits over economic profit Development of products and services with participation and integration with local communities and stakeholders Environmental and social benefits from locally embedded enterprise Development of scale- up solutions Large scale delivery of sustainable solutions Development of channels and partnerships for scale-up solutions Revenues for scaling up (e.g., franchising, licensing fees) and benefits from partnerships Project co-funded by the European Regional Development Fund 17 1.5. Business Model Canvas A BM is represented by an interrelated set of elements that address the customer, value proposition, organizational architecture and economics dimensions (Fielt, 2014, p. 96). Different authors have presented different framework for studying the BM, but in the present analysis BM canvas developed by Osterwalder and Pigneur (2010) is used. Osterwalder (2004) focused on identifying basic constructs of BMs and developed an ontology that would explain the relationships between those in a structured format, as well as elaborated the BM canvas further in Osterwalder et al. (2005); Osterwalder and Pigneur (2010). Osterwalder and Pigneur’s (2010) business model canvas (BMC) consists of nine components (Table 3). Table 3. Components of Osterwalder & Pigneur’s (2010) business model canvas and their explanation Key partners The network the organization uses to operate its business model Key activities The main activities required for making the business work Value proposition Value offered to customers in mix of products and services Customer relationships Type of relationships the organisation has with customers Customer segments Specific groups of customers the organisation aims to reach and serve Key resources Most important tangible and intangible assets required for the business model Customer channels How organization reaches its customers Cost structure Most significant costs for operating the business model Revenue streams What kind of cash flows different customers create for the organization The nine blocks can be divided into four main areas: • Value proposition refers to products and services and complementary services provided by the enterprise to its customers to satisfy their needs and solve their problems (Osterwalder, 2004). Value proposition is the reason why customers choose to do business with the enterprise over another business. The products and services provided to the customers may be in form of new or innovative offerings or similar to existing products and services, but they offer the specific customer segments value in terms of pricing, design, customization, functionality, brand, cost or risk reduction, convenience, etc. (Osterwalder and Pigneur, 2010). • The infrastructure domain on the canvas contains the key partnerships, activities and resources the enterprise needs to create value for its customers. Key partners include enterprises’ suppliers, manufacturers and variety of other enterprises, governmental and non-governmental organizations, who help the enterprise to acquire resources, reduce risks, and who directly impact how the enterprises conducts its activities. Key activities refer to the most important activities the enterprise carries out to make its BM work (Osterwalder and Pigneur, 2010). For example, those may include production, design, marketing, customer management, network/platform developments, etc. Key resources are physical, intellectual, and financial and human resources the enterprise owns or acquires through partners in order to create and distribute its products and services, develop the customer relationships and earn revenue. • Customer interface contains description of customer segments and relationships, and distribution channels. Customer segments are the groups of customers the enterprise aims to reach. Enterprises divide customers into segments on the basis of common characteristics, needs, and behaviors. Customer relationships refer to links the enterprise establishes with Project co-funded by the European Regional Development Fund 20 2. Data and Methodology for Creating Business Model Taxonomy and Description of Cases 2.1. Conceptual Approach Good practices refer to successful experiences that have been tested and proven, could be replicated, and deserve to be recommended as models to be adopted and improved by others (FAO, 2013). There are also opportunities for evolvement and improvement of the practices, and thus “good practices” can be differentiated from the term “best practices” that can be associated with the proven best approach that does not need further improvement. The focus of the activities 2.3. of Work Package 2 was to collect data on successful BMs of biomass enterprises from the BSR and share this knowledge so that those BMs could be replicated and improved around the BSR. Present analysis utilized multiple case study approach and in descriptive and explanatory in its nature. The underlying idea behind the methodology was a bottom-up approach to create a taxonomy of BMs in bioeconomy and provide in-depth analysis of cases representing each BM (Figure 1). Figure 1. Research process The procedures for conducting case studies suggested by Eisenhardt (1989) and Yin (2009) were adapted for methodological approach. The research utilized the Osterwalder et al.’s (2005) conceptual model of BM (Table 1). The process started at conceptual level with specification of what is a BM and what are its elements drawing on Osterwalder and Pigneur’s (2010) approach. After setting criteria for the selection of BC, the analysis proceeded from bottom-up at the instance level: description of BC of real- life company → models of the BC → clustering of BCs into a taxonomy of good practice BMs → summarization of the good practice taxonomy into four archetypes. •Operalization of constructs •Criteria for selection •Collection of relevant BCs Business cases •Clustering of BCs based on quantified features •Qualitative interpretation of business clusters Taxonomy of good practice business models •Narrowing of BM types into archetypes •Qualitative interpretation of archetypes Archetypes of business models •Selection of BCs from each cluster • In-depth interviews and additional data collection •Development of narratives for the BCs Narratives of business cases Project co-funded by the European Regional Development Fund 21 The criteria for selection of business cases were: • inputs and outputs (e.g., source of biomass and products or other outputs); • type of enterprise (processing, service provision, distribution, cooperative, etc.); • sustainability (environmental, economic and social aspects); • feasibility from policy perspective (regulation and subsidy dependence); • transferability to SMEs in the BSR. Analysis of those features allow to summarize the main elements as well as the functioning of a BM (Chesbrough and Rosenbloom, 2002, pp. 533‒534) as described earlier. The similarities and differences between BC were examined, and translated into a taxonomy of a good practice BMs using cluster analysis (CA). The taxonomy is used to separate related BCs and the resulting clusters were analysed using BMC. The resulting BMs are also interpreted in terms of archetypes, e.g., similar to approach used by Bocken et al. (2014). The research process can thus be summarized as generalizing initially individual BCs into coherent BMs. An additional step was the development of narratives for SME BCs representing identified good practice BM. 2.2. Data and methodology The method for creating archetypes of business models can be summarized with following steps: 1. selection of BCs and collection of their data; 2. quantification of characteristics of BCs using keyword (“hashtag”) ratings; 3. dimensionality reduction of the keywords via principal component analysis; 4. CA of BCs according to principal components to create the taxonomy of BMs; 5. manual rearrangement of some BCs in clusters; 6. qualitative interpretation of the BMs of the clusters (taxonomy) 7. summarization the clusters into four archetypes Data for the analysis was collected by project partners from seven countries participating in the project, i.e., from Norway, Sweden, Estonia, Latvia, Lithuania, Poland and Germany. The list of potential cases was formed by using desk research, partner and outside expert feedback. The criteria of selection of BCs were set taking into account the objective of the project and FAO (2013) recommendations for selecting good practices, incl. transferability, feasibility, economic, social and environmental sustainability. As the focus of the project is on utilization of biomass, preferably biological waste, first criterion was the source of biomass from either agriculture and food industry, municipal waste and sewage, fisheries and algae or wood. The end output of the BC had to be either energy or various bio-based products. Thus, the envisioned types of BCs can be illustrated as a matrix where each row is a particular source of biomass and columns characterize types of production using these sources (Figure 2). Project co-funded by the European Regional Development Fund 22 Figure 2. Initially envisioned types of BCs by source of biomass and types of production Information on the type of enterprise was collected, but whether the business activity was production or provision of services related to biomass was not relevant for final selection. BCs had to demonstrate economic, environmental or social benefits. Selected cases had to be feasible and transferable to other countries of the BSR. While it was imperative that the BMs would be applicable to SMEs, some BCs included were larger enterprises with some specific novel approach to biomass utilization. The final number of included business cases was 59. Important aspect was to draw on the cases from different countries to better understand what kind of similarities the good practice BCs share and how this experience could be replicated elsewhere in the region. Each country from which the cases were collected was represented by 6‒12 cases. After the initial selection of cases, data on the enterprises and their activities was collected on each case by partners using desk research and interviews. The data was analysed and coded using initial selection criteria as categories for keywords and further specifying those so that more detailed categories could be developed (Table 4). Previously, Kuehl et al. (2015) and Engel et al. (2016) have used features from BMC (see section 1.5.) to quantify the characteristics of BCs. Our approach to quantifying BCs was more flexible and not strictly limited to the BMC framework. The codes/keywords were called “hashtags”. A total of 60 hashtags were divided into categories presented in Table 4. For each case, ratings were given to all hashtags to describe how well this certain aspect characterizes particular BC. Thus, for each BC and each hashtag partners had to answer the following question: “To what degree the following hashtags (keywords) characterise this BC?”. Ratings were given on a 5-point scale (0-not at all, 1-to a little extent … 5-to a great extent). After this process, the ratings assigned by different experts were revised by a group of researchers and analysts in meetings to achieve better consistency of the ratings. The ratings were used in CA for creating the taxonomy of BCs. Some additional data on each business was collected that was not used for creation of the taxonomy, but was analysed later during qualitative interpretation of the BMs. This included data of BMs for the further analysis using BMC, as well as specifying technology readiness level, enabling policies and economic factors. Project co-funded by the European Regional Development Fund 25 taxonomy was presented during the aforementioned meetings in Soltau and Rostock. The presentations were followed by discussions where opinions and suggestions were collected. Thus, the good practice BMs were also validated by project partners. On the basis of the main value propositions and goals related to circular bioeconomy adoption, the 12 BM types were narrowed into four archetypes. After the analysis of taxonomy of BMs, cases were selected from each type for a more detailed narrative of the business case. 20 cases were selected to represent different countries as well as BM types. Additional interviews were conducted with the enterprises. As the project aims to make use of already existing knowledge and create synergy with other ongoing EU projects, the project team contacted and coordinated their data collection with presently ongoing Horizon 2020 project RUBIZMO (2020)1 that works on identifying BMs with high potential for empowering rural communities. Project team integrated the questions studied in RUBIZMO project to the interviews used for the narratives of business case. The narratives on business cases are presented in the Appendix 2. The narratives presented here summarize the background and development of the enterprise, their main activities related to bioeconomy, market and their innovative aspects. 1 https://rubizmo.eu/ Project co-funded by the European Regional Development Fund 26 3. Taxonomy of Good Practices Business Models The BM describes the logic of a business in a strategic view – what is offered to whom and how. The BMC of Osterwalder and Pigneur (2010) was used as a framework to compare the types formed in the CA. At first, data from each BC for particular type of good practice BM was used to fill the BMC. In the following steps, the data was examined, grouped and main features of particular BMC block were identified and interpreted in the abstraction process. The 12 types forming the taxonomy and their biomass inputs and outputs are presented in Table 5. Table 5. Taxonomy of BM by the Source of Biomass and Type of Production Source of biomass Type of production A g ri cu lt u re a n d f o o d in d u st ry M u n ic ip al w as te a n d se w ag e F is h er y a n d a lg ae W o o d E n er g y p ro d u ct io n C ir cu la r b io ec o n o m y d ev el o p m en t P ro d u ct io n o f n o n -e n er g y h ig h v al u e- ad d ed p ro d u ct s 1. Heat and Fuel from Woody Biomass x x x 2. Fuel and Electricity from Biogas x x x 3. District Heating and Electricity from Various Biomass Sources x x x 4. Specialized Heat and Electricity Production and Services x x x 5. Innovation in Novel Fuels and Bio-chemicals x x x x 6. Circular Bioeconomy in Agricultural Production x x x 7. Bio-based Fertilizer for Increased Soil Quality x x x x x 8. Sustainable Bio-based Products from Plant-based Biomass x x x x x 9. Sustainable and Novel Bio-based Products from Food waste and Biomass x x x x 10. High-value Products from Knowledge-based Processing x x x 11. High-value Products from Circular Bioeconomy x x x x x 12. Utilization of Municipal Waste and Sewage x x x The names of BM types aimed to capture their main value proposition. Besides the BMC, the analysis of BMs presented below includes visualisation of ratings given to each BC in the BM type to illustrate how particular hashtags relate to the BM type and differentiate it from others. Additionally, word clouds are presented to quickly summarize the most distinctive traits of particular BM type. Socio-economic and novelty aspects of particular type briefly summarize the ratings presented in the more detailed charts according to the categories studied in Appendixes 1.1.–1.8. Project co-funded by the European Regional Development Fund 27 3.1. Heat and Fuel from Woody Biomass This BM type was formed by processing companies using woody biomass aiming to substitute fossil- based energy resources. More specifically, it represented two types of enterprises: companies that produce solid fuels from herbaceous biomass from forests and fields and/or companies that produce heat and fuel from this biomass with some of those involved in both activities of producing pellets and using those in their heating plants. Value Proposition The main value proposition is the replacement of fossil fuels in heat and thermal energy production with environmentally friendly biomass (wood, wood waste, sawdust, straw, dry grass, hay, reed) (Table 6). The fuel (wood chips, pales, pellets) is completely natural and sustainable, and in some cases, e.g., heat production from hay and reed, it is also cheaper compared to using fossil fuels. Biomass is collected from local fields and forests and used for local heating. Infrastructure The key partnerships are with biomass suppliers (farmers and local forest owners, wood industry). Cooperation with public authorities, such as the municipal owners of the heating infrastructure as well as end user of heating and fuel in municipal buildings, is required.. Policy-makers setting renewable energy targets and influencing access to investment supports have considerably affected the development of this field. Technology partners (suppliers of parts for the operation and maintenance of equipment), financial providers (e.g., banks, investors, environmental subsidies etc.) were mentioned as crucial relationships for running those companies. Key activities for solid fuel and heat producers are somewhat different. The main activities of fuel producers are collection of biomass (two companies) and/or searching for places/companies for biomass acquisition, incl. participation in tenders for the purchase of biomass, storage, quality control and processing, organization of logistics of deliveries to final recipients. The main activities of heat producers are procurement and storage of heating material, energy conversion, and distribution. Some companies produce the fuel themselves and in the next step use it for their heating plants. The necessary key resources are biomass (wood, wood waste, sawdust, straw, dry grass, hay, reed, wood chips, pales, pellets), equipment and technology for biomass production (incl. for logistics processing and packaging the product), heating plants and storage facilities (biomass warehouses and yards), distribution network (functioning district heating network). A competent staff are essential. Intangible resources are necessary know-how for production and on local markets. Project co-funded by the European Regional Development Fund 30 of biomass to the recipient, access to and the maintenance of heating distribution networks. Additional potential costs can be contractual penalties for failing in biomass supplies and amounts. Revenue comes mainly from sales of heat or sales of pellets, wood ships and some cash-flow from selling by-products. In the cases of commercial power engineering and large heating plants, the value of the contract depends on the quality of biomass, most often expressed in the biomass energy value. For smaller installations, the contract value is the amount of biomass and the unit price. In addition, revenue stream includes services provided with own equipment. The revenue of district/local heating systems and municipal heat energy comes mainly from heat sales, but also from a connecting fee and a rental fee for hot-water pipes. Some of the companies provided logistics services for other biomass processors. Socio-economic aspects and novelty As described in the Output 2.2. of the project, pellet production is particularly important in the region as the countries of BSR include the largest pellets producers in the EU, and for three Baltic States and Poland, pellets are important export items (Stolarski et al., 2020). The companies representing the BM valorise local knowledge and resources, thus serve local communities. The companies provide economic and regional benefits to the local population by providing stable employment. The use of biomass from local sources, incl. private forests and farms, supports regional economies more broadly. The companies in this type are typically specialised to one (e.g., pellet, wood chip production) or two activities (e.g., pellet production and heating). The policy dependency lies in access to investment supports that have been used for establishing the plants. The EU renewable energy targets have considerably facilitated the expansion of pellet production in the BSR in the last two decades. The BM is easily transferable. The novelty of this BM and of companies is relatively low. There are examples of incremental product innovations, e.g., the case of Ecopellet presented in Appendix 2. The company has broadened the production from heating pellets to grilling pellets and bio-pellets for pets. The other BC presented is of Quercus Sp, a wood chip producer from Poland. 3.2. Fuel and Electricity from Biogas The type is formed by processing companies aiming to replace fossil energy, but what sets it apart from the previous type that used woody biomass for solid fuels, is different biomass inputs and output of gaseous fuels as this type was formed on the basis of companies producing biogas from agricultural wastes such as slurry, manure and silage and using it for electricity, heat and selling compressed natural gas (CNG) for industrial and private customers. Three out of four companies in this type were established during the period from 2007 to 2016, illustrating more than threefold increase in the production of biomass based biogas in the BSR (Trømborg and Jåstad, 2019). Value proportion The main value proposition is to produce biogas for fuel and electricity from slurry, manure and silage collected from farms. The biomass is sustainable and renewable, production helps to address slurry and manure management in farms and provide consumers with lower priced energy. Digestate leftovers from fuel, heat and electricity production replace mineral fertilizers in agriculture. Project co-funded by the European Regional Development Fund 31 Figure 5. Keyword ratings for enterprises in the BM type of Fuel and Electricity from Biogas Infrastructure The upstream key partnerships include cooperation with farmers who are main biomass providers. In several cases, the farms providing the biomass were related companies. Relationships with operators of gas stations, owners of electricity infrastructure and district heating providers is required. Other partners include substrate and technology suppliers, financial capital providers. Municipal authorities setting requirements for construction of facilities, biogas use have considerable impact on the planning, infrastructure development and access. Key activities are processing activities, starting with acquisition of cattle manure and maize silage from own production and other farmers, supply and storage of own and purchased/collected substrates, and preparation of slurry, silage and manure, production of biogas, heat and electricity. Main activities also Project co-funded by the European Regional Development Fund 32 include distributing heat and electricity, cleaning raw biogas into biomethane and compression of biomethane and transportation to gas stations and industrial consumers. The tangible key resources are raw material (slurry, silage and manure), biogas and biomethane production plants, equipment and technology, incl. collection container, compressing technology, cleaning device, fermenter, gas storage, combined heat and power (CHP) production equipment, digestate storage, equipment and vehicles for storage and transportation. Intangible key resources include staff and the technical and innovation know-how. Table 7. BMC for Fuel and Electricity from Biogas BM type Key partners Farmers Gas filling stations Electric grid owners Technology suppliers Municipal authorities Financial capital and services providers Key activities Collection and preparation of slurry, silage and manure Procurement of biomass Production of biogas Distribution Marketing and sales of biogas Value propositions Biogas from agricultural wastes for fuel and electricity Digestate as biofertilizer for farming Customer relationships Automated self- service stations Personal direct sales Customer segments B2B, B2C Biogas Industry Regional public transportation companies Electricity and heating companies Users of CNG vehicles Local residents using heating and electricity Digestate Farmers Key resources Raw material (slurry, manure, silage) Biogas production plant Distribution network Equipment and technology Staff Know-how Channels Own filling stations CNG filling stations of other intermediaries Natural gas pipelines Local heating infrastructure Local electricity infrastructure Cost structure Investment into biogas plant Equipment and technology costs Production costs Maintenance costs Distribution costs Labour costs Environmental taxes Revenue streams Biomethane sales Government subsidies Sales of digestate as biofertilizer Cost reduction from waste utilization Customer interface The enterprises established their customer relationships via operators of gas stations, electricity energy suppliers and industrial consumers. Gas stations are automated self-service stations. Personal direct sales are used for certain industrial customers and for selling digestate. The customer segments included electricity and heating companies that provide respective infrastructure and energy suppliers. Other customers include industry and transportation companies. The end users of the products are persons using biogas powered vehicles, local residents buying directly their electricity and heating in some cases, industrial consumers that use biomethane to replace natural gas, and agricultural producers using digestate. The distribution channels depend on connection with existing electricity grid, heating network and fuel stations. Enterprises use their own filling stations and sell through channels owned by other actors. Project co-funded by the European Regional Development Fund 35 Customer interface The enterprises establish their customer relationships by direct contacts, by sales force establishing mostly long-term contractual B2B relationships. The customer segments included local settlements (heat and electricity for local districts), farms and national electricity distribution network. Farmers are customers for the digestate from the biogas production. For customer channels, the national distribution grid is used for selling electricity, while heat is sold to the customers by local heat distribution piping. Digestates and fertilizers are delivered by mobile transport. Contacts with customers are created by enterprises’ sales force as well as by intermediaries. Financial viability The cost included investment in land, harvesting and processing the biomass, raw materials costs, establishment of biogas plant, technology and equipment, maintenance and transportation costs as well as costs related to dealing with sludge, digestate and biomass ashes, and labour costs. The revenue stream comes from the sale of products (electricity, heat, digestates and fertilizers). Table 8. BMC for District Heating and Electricity from Various Biomass Sources BM type Key partners Landowners Farmers Biogas and wastewater treatment plants Technology suppliers Municipal authorities Electric and heat grid owners Key activities Establishment of biomass plantations Collection of biomass Procurement of biowaste and biomass Production of heat, electricity, biogas Sales of heat and electricity Sales of digestate Value propositions Heat, electricity and biofuels for local area from various sources of biowaste and biomass with utilization of marginal lands Digestate and biofertilizers for local farming Customer relationships Personal direct sales Customer segments B2B, B2C Heat and electricity Electricity and heating companies Local residents Bioethanol Industry Digestate Farmers Key resources Marginal or infertile land for biomass plantation Raw material (variety of biomass and biowaste) Biogas production plant Equipment and technology Staff Know-how Channels Sales force Intermediaries Delivery District heating grid National electric grid Cost structure Land costs Biomass plantation establishment costs Raw material costs Equipment and technology costs Harvesting costs Production costs Maintenance costs Distribution costs Costs of spreading sludge, digestate and biomass ashes Labour costs Revenue streams Sales of heat Sales of electricity Sales of bioethanol Sales of digestate Cost reduction from waste management Project co-funded by the European Regional Development Fund 36 Socio-economic aspects and novelty The social benefits of those companies include creation of new jobs in rural areas and development of regional supply chains for heat and electricity, and strengthening rural areas by promoting decentralized bioenergy production plants. The environmental benefits relate to reduction of air and water pollution and waste reduction, development of circular production. The BM itself is transferable. The regulation dependence lies in the local and national regulation and policies for heat and electricity grid access, prices and bioenergy targets. The novelty of companies is at an average level. The novelty lies in incremental changes in production technology and processes. This is illustrated by the BC described in Appendix 2. The BC of UAB Kurana demonstrates a company that was the first company inside EU to connect manufacturing of bioethanol, electricity and thermal energy from renewable energy sources into one closed technological loop. This technological loop produces zero waste plus valuable organic fertilizers that are becoming more and more popular in contemporary farming. The BC of 3B Bioenergie represents biogas producer utilizing novel technological solution for processing digestate. 3.4. Specialized Heat and Electricity Production and Services This type was formed by seven enterprises specializing in district heating. This type is set apart from the others as it is formed by larger heat and electricity service providers partially operating the grids and being major distributors. The companies also buy biomass based solid fuels for inputs from other types. Value proposition The main value proposition is providing residents with high quality and low-cost network bioenergy (thermal energy) in the form of hot water or steam. The sustainable biomass-based energy production replaces fossil fuel-based energy production. Ash from bioenergy production is used as a soil improver (amendment). Infrastructure The upstream key partnerships include companies involved in the production and supply of biomass for energy (wood industry). Important aspect is long-term contracts with woodchip suppliers to provide a stable supply for production inputs. Other key partnerships are formed with wood and biomass logistics companies, technological partners - suppliers of components for the construction and operation of technical elements of the heating system and heating nodes, financial providers (e.g., investors, national funds specializing in environmental protection and water management projects, subsidy providers etc.) and municipal authorities regulating the field and tariffs. Key activities are purchase of biomass (wood chips, waste and residues), biomass supply, storage and handling for heat and/or biogas production, selling/distribution of electricity and heat, heat network arrangement and selling the digestates and fertilizer, attracting new customers for heat and other products. The tangible key resources are raw material (biomass, waste and residues), equipment (for heat production, CHP and condensing economizer), and infrastructure (storage area for biomass, distribution network), the plants. Intangible resources are staff, their technical know-how on operating the plant, experience and know how on the biomass market and knowledge of their customers and arrangements on the tariff for power production. Project co-funded by the European Regional Development Fund 37 Figure 7. Keyword ratings for enterprises in the BM type of Specialized Heat and Electricity Production and Services Customer interface The enterprises establish their customer relationships through personal direct sales in online or physical locations and contracts with customers are multiannual agreements. The customer segments are very wide: local private customers (B2C), but also public bodies (incl. B2G) in the area. Municipal and private housing sector (housing associations, multi-family buildings, single-family houses), public institutions e.g., (hospitals, colleges, schools) and private organization Project co-funded by the European Regional Development Fund 40 Figure 8. Keyword ratings for enterprises in the BM type of Innovation in Novel Fuels and Bio- chemicals Customer interface At present, the customer relationships are based on direct personal contact, but product development also is based on co-creation as the R&D process requires cooperation from wood and fuel industry and other actors. The main focus was on B2B sales and customer segments included variety of customers on the world market (from biodiesel to perfume): fuel companies, food industry, and cosmetic industry. For customer channels, enterprises use their own sales force to create contacts with variety of food, fuel and other industry actors, who will be the intermediaries for the end consumers (private persons). Project co-funded by the European Regional Development Fund 41 Table 10. BMC for Innovation in Novel Fuels and Bio-chemicals BM type Key partners Wood industry Other biomass suppliers R&D organisations Fuel industry Technology providers Financial capital and services providers Key activities R&D Scaling up Technology development Production Marketing and sales Value propositions Wood and plant biomass based novel fuel and biochemical products for fuel, food and cosmetic industry Customer relationships Personal direct sales Co-creation Customer segments B2B Fuel industry Food industry Cosmetics industry Key resources Research knowledge Technical know-how Market knowledge Channels Sales force Intermediaries Cost structure R&D cost Equipment and technology costs Investment in the processing plant Production costs Maintenance costs Labour costs Revenue streams Sales of products R&D grants Financial viability The costs are related to the development of innovative production process and technology, building plants and production and labour costs. For some of those enterprises, in the current phase the main difficulty is achieving profitability and demonstrating the business potential and scalability of the BM. Revenue will come from the sales of the products, but also from R&D grants from variety of sources that help to cover the cost of product development. Socio-economic aspects and novelty The regional and community impact of the companies is relatively small. The companies employ relatively small number of highly-paid knowledge workers for high-value added product development. The transferability of BM will depend on the access to knowledge resources and labour as the competitive advantage of the companies lies in the combination of specific in-house knowledge and external knowledge and capital network relations that may be hard to replicate. The regulation dependence is low in comparison with other types. The renewable energy policies encourage the R&D, but typically companies in this type are not subject to investment or operation subsidies, although companies benefit from public research funding opportunities. The novelty of the companies in the cluster is very high with high potential for creating radical product and process innovations. The BC of SunPine, a Swedish bio-refinery, represents this BM type in Appendix 2. Project co-funded by the European Regional Development Fund 42 3.6. Circular Bioeconomy in Agricultural Production The type is formed by seven agricultural producers that apply principles of circular production in their resource and waste use in their own production facilities. Enterprises in this group are primary producers themselves and this sets this type apart from other types in case of which enterprises used the biomass as inputs, but did not produce it themselves. Value proposition The main value proposition is producing food, fertiliser and energy by circular bioeconomy methods/approaches in agricultural production. It means sustainably and environmentally friendly produced agricultural and food products, fertilizer and bioenergy (biogas, heat and electricity). Enterprises in this group produce milk, meat, grain, fish, and feedstuff sustainably and are reusing their waste and biomass for bioenergy and fertiliser production. Infrastructure The key partnerships the enterprises depend on are companies involved in the production and supply of machinery and means of production and financial providers (e.g., banks, subsidies). Cooperation with knowledge organisations such as universities and their extension services for development of projects and changing the BM by adding the side activities for circular production was also mentioned. For those selling their bioenergy, the access to electric and local heating grid is required. Key activities are quite different and depends on the profile of the enterprise and area in which the circular economy is developed. The enterprises are characterised by diversified activities in order to develop a circular economy. Those includes plant and animal husbandry, production of food products, production of biogas from manure or silage, production of heat and electricity from biogas, distributing and biofuel, utilizing the digestate by producing organic fertilizer. For those activities, production from harvesting, storage, transport, and marketing and delivery activities are carried out. Several companies integrated their production with services, incl. agricultural services and non-agricultural services (tourism, catering, and shops). The tangible key resources are agricultural land, raw material (own produced manure, silage), farm buildings, equipment and machinery for agricultural production, reception of waste, biogas plants and storage facilities for the product in various stages of production. Intangible key resources include the technical and innovation competence and knowledge and educated staff with leadership qualities to manage this kind of operations and side activities. Customer interface The enterprise established their customer relationships through direct sales in internet and physical store as well as sales via intermediary stores. As the enterprises produced different produce, processing some onsite, very different relationships and marketing and sales activities were mixed (direct selling some of products, raw material inputs for others). The main focus was on B2B and B2C sales in both local area and outside, and customer segments included private individuals, wholesalers and retailers (farmers, florists, and nurseries), truck and other logistic companies as biogas customers, food and cosmetics industries for raw materials, electricity and gas industry. B2G sales were mentioned in connection with selling energy to municipal buyers. The channels through which customers are reached are mixed as both direct and enterprise owned channels (direct personal sales, farm shops, online selling) were mixed with distribution through partner Project co-funded by the European Regional Development Fund 45 activities. The BC presented in Appendix 2 include Energifabriken, a biofuel processor that operates the value chain from fossil-fuel free production of raw material at farm to processing and sales of the biofuels. BC of Ziedi JP demonstrates integration of agricultural production with biogas and fish production in order to utilize each activity and minimize waste. The BC of Wapnö Farm provides an example of diversified sustainable BM that integrates dairy and crop production, forestry, processing, sales and marketing activities while focusing on sustainable production, animal welfare, openness to consumers and reduction of energy consumption. 3.7. Bio-based Fertilizer for Increased Soil Quality This cluster is based on four enterprises that specialize in producing compost, biofertilizers, soil improvement products from waste as well as providing know-how, technology and infrastructure for this production. Value proposition The value offered to customers is biodegradable waste and fertilizers for improving soil quality and according to the requirements of the customers. Enterprises offer a mix of products (compost, fertilisers, and soil and crop care products) and related services in form of consultations, training, and technology. Products and services help to deliver more efficient, environmentally friendly and profitable ways for using bio-waste. Infrastructure The key partnerships are from private sector (raw material suppliers, waste collectors, farmers). Public sector regulates the waste use. Technology providers and international and local industrial partners as well as universities and research centres impact the product development and distribution. These partners, both from industry and academia are global players within recycling, waste processing, forestry and agriculture. Products are developed and evaluated in cooperation with research organisations. Key activities are producing and selling products (composts and fertilisers) and offering services (garden and park green mass waste collection, waste transport, landfill diversion, mobile brush chipping), consultancy and training. Knowledge development and network for sourcing and distribution are important also. The tangible key resources are raw material, equipment and technology for waste collection and production and skilled staff. Intangible key resources include the patents, market, and technical and innovation know-how, networks for biomass collection, R&D and marketing. Customer interface The enterprises established their customer relationships mostly through personal direct (contractual) sales. Production of products has to meet the needs of specific customers. Customers using the collection service might also use the products. The main focus was on B2C and B2B sales and customer segments included farmers, gardeners, florists, garden centres and public entities. The channels through which customers are reached were enterprise owned channels – sales force using both physical store as well as online sales. Financial viability The cost structure includes operating costs of the machinery, production costs, maintenance of infrastructure and distribution, personnel costs and R&D. Project co-funded by the European Regional Development Fund 46 The revenue stream comes from selling the different products to the various market segments – organic fertilizers, soil additives, as well as biorefinery packages etc., and waste utilization services and consultancy and training fees. Figure 10. Keyword ratings for enterprises in the BM type of Bio-based Fertilizer for Increased Soil Quality Project co-funded by the European Regional Development Fund 47 Table 12. BMC for Bio-based Fertilizer for Increased Soil Quality BM type Key partners Farmers Waste collectors Technology providers Industry R&D organizations Regulatory authorities Key activities Production of composts, fertilizers and other products Waste collection and transportation Consultancy and training activities R&D Distribution Sales of compost, fertilizers and other soil products Value propositions Provision of biodegradable waste and fertilizers from bio-waste Customer relationships Personal direct sales Customer segments B2C, B2B Farmers Tree nurseries Gardeners Florists Garden centers Key resources Raw material Equipment and technology Technical know-how Patents Networks Staff Channels Sales force Online selling Wholesale network Retail network Cost structure Production costs Equipment and technology costs Maintenance costs Distribution costs R&D costs Labor costs Revenue streams Sales of compost and fertilizers Sales of services (biomass collection, etc.), Training, consultancy fees Socio-economic aspects and novelty The activities of companies meet the demands of society for reducing waste and more environmentally friendly production. Utilization of biodegradable waste from landscaping and plant growing as a valuable local resource provides sustainable jobs for local community, additional income streams and cost savings from waste handling for local producers. Waste is collected from customers, who do not have the opportunity to recycle it themselves. Replacing mineral fertilizers with organic fertilizers has a positive effect on environment and health. Besides waste reduction, the environmental benefits include soil quality improvement, reduction of air and water pollution, higher biodiversity. The BM is transferable, but requires specific technical knowledge for replication. The novelty of companies is at an average level as this type included both companies that were research intensive actively developing new waste management and processing approaches and variety of soil amendment products as well as smaller companies focusing mainly on using waste for compost. Project co-funded by the European Regional Development Fund 50 Table13. BMC for Sustainable Bio-based Products from Plant-based Biomass BM type Key partners Forest owners Wood industry Other biomass suppliers R&D organisations Business and sectorial organisations Municipal authorities Regulatory authorities Key activities Collection of biomass Procurement of biomass Outsourcing of processing Production R&D Distribution Marketing and sales of bio-based products Additional agricultural services Sales of bioenergy Value propositions Plant and wood biomass based novel and natural products and ingredients for food and packaging Bioenergy and fertiliser production from waste and residues Customer relationships Personal direct sales Automated online sales Customer segments B2B B2C Bio-based products Farmers Gardeners Food industry Packaging industry Supermarkets Heat Municipal byers for heating Key resources Raw material Equipment and technology Processing plant Staff Technical know-how Market knowledge Networks Global trademarks Channels Sales force Online selling Intermediaries Retail network Trade fairs Cost structure Raw material costs R&D costs Investment in the processing plant Equipment and technology costs Production costs Distribution costs Marketing costs Labour costs Certification costs Revenue streams Sales of bio-based products Sales of bioenergy Sales of agricultural services Socio-economic aspects and novelty The activities of the companies support the economic development of rural areas by creating employment opportunities, utilization of local resources for variety of products, and strengthening the diversity of economy. Some of the companies demonstrated integrating social goals to their economic and environmental activities by engaging in a local community support program. Consumer and health trends (ingredients for vegan, gluten free food) were important driver for R&D. The companies presented a mix of specialised and diversified enterprises. The novelty of the companies in the cluster varies from company to company. Some enterprises represent the use of agricultural residues or wood for circular production and low value-added sustainable products (e.g., straw pellets). Some enterprises are working on high value-added product and processing innovations, e.g., offering in the market organic plant-based products for industrial application, development of new protein products for customers. The BCs presented in Appendix 2 include a Latvian company Aloja Starkelsen, a company producing a mix of plant-based products for food and industrial application. Another BC involves company Lilli Agro that uses agricultural residues to produce straw pellets in Estonia. Project co-funded by the European Regional Development Fund 51 3.9. Sustainable and Novel Bio-based Products from Food Waste and Biomass for Replacing Plastic The type was formed on the basis of five enterprises that use food waste, grass and aquatic biomass for developing and producing products for replacing plastic-based straws, cutlery and kitchen ware. Value proportion The main value proposition is sustainable biomass-based products that replaces plastic based products. The products included both reusable and for one-time use, incl. edible products. Additional value proposition lies in utilising and reducing food and biomass waste and in the development of circular bioeconomy. Infrastructure The upstream key partnerships include the raw material suppliers, e.g. grass, forestry and aquatic biomass harvesters, and the food industry partners that supply the food waste and side streams for processing. As some of the enterprises do not own the production facilities, but outsource the production, food industry partners are not only the source of inputs, but crucial network partners for processing also. The enterprises in this type are developing the novel products, thus cooperation with universities for R&D and mentors for business development were emphasized. As the use of food waste and biomass and the use of plastic products are subject to different regulations, work with different public regulatory authorities is required. Key activities are manufacturing activities, starting with the purchase of raw material (aquatic, grass, forestry and food waste biomass), processing it or outsourcing the processing (selection, cleaning, and cutting of certain biomass) and production of the end products. The products are novel, thus R&D development activities, incl. invention, product, machine and tool design, verification of process concepts and/or products, prototype development either in-house or in cooperation with external key partners (universities), are important. The enterprises carried out their marketing and sales activities. The tangible key resources are raw material (reed or straw, aquatic biomass), organic residue, and food waste, the production facilities and technology, and the staff. Intangible key resources include the technical and innovation competence and knowledge. Customer interface The enterprises established their customer relationships through direct personal sales (personal face- to-face meetings or online through e-mail, social media) as well as through automated online shops. The main focus was on B2B sales and customer segments included wholesalers and retailers, but also specifically the restaurants, cafeterias and other food establishments for whom the specific products (cutlery, kitchen wares) are intended. B2C direct sales were less important, but there were options for private individuals to buy through online shops. The channels through which customers are reached are mixed as both direct and enterprise owned channels (direct personal sales, online web shops) were mixed with distribution through partner owned retail and wholesale networks. Exhibitions for reaching out to business customers were separately mentioned as marketing channel. Project co-funded by the European Regional Development Fund 52 Figure 12. Keyword ratings for enterprises in the BM type of Sustainable and Novel Bio-based Products from Waste and Biomass for Replacing Plastic Financial viability The cost structure is that of manufacturing company with main costs such as costs for raw material, production, personnel costs (also for manual work). As the enterprises were developing novel products, R&D costs also occurred. The revenue stream comes mostly from the sales of products. Project co-funded by the European Regional Development Fund 55 Figure 13. Keyword ratings for enterprises in the BM type of High-value Products from Knowledge- based Processing Financial viability Most significant costs for operating this business model are R&D and development of product formulations; patent applications, investment into processing facilities and biomass refinement to intermediate material; marketing, personnel and raw material costs. The revenues come from the sale of intermediate and final products, services offered and potential grants and subsidies for R&D. Project co-funded by the European Regional Development Fund 56 Table 15. BMC for High-value Products from Knowledge-based Processing BM type Key partners Farmers Aquatic biomass (seaweed, algae) suppliers R&D organisations Regulatory authorities Key activities Collecting biomass Procurement of biomass Production R&D Marketing and sales Services for biochemical analysis Value propositions Processing of high- value novel and natural ingredients and products for cosmetics, pharmaceuticals, nutraceuticals, food and feed industry Customer relationships Personal sales Automated online sales Customer segments B2C, B2B Food industry Pharmaceutical industry Animal feed industry Cosmetics industry Private persons Key resources Raw material Equipment and machinery Processing plant Staff Technical know- how Market knowledge Patents Trademarks Channels Sales force Online selling Intermediaries Retail network Exhibitions Cost structure Raw material costs R&D costs Investment in the processing plant Production costs Patent applications Labor costs Marketing sales costs Revenue streams Sales of bio-based products Sales of intermediary products to industry Sales of services for biochemical analysis Grants and subsidies for R&D Socio-economic aspects and novelty The companies provide social and health benefits by developing new product for human well-being and by supporting production of healthy food and by exploring new uses of existing bioresources, e.g., aquatic resources. Companies stimulate local economies not only with employment, but with buying biomass from locals. The production can be the subject to specific regulations (e.g., volume of collection of aquatic biomass). In comparison with other types, the companies are less dependent policies, but also have more limited access to subsides in comparison with energy or agricultural producers. The novelty of the activities of companies is high. Companies represent both product and processing innovation as they work on finding new ingredients for food, feed, cosmetics, new recipes for food industry or developing novel biomass based products for treatments in integrative medicine. The BM depends heavily on the investment into knowledge workers and resources and in some cases a specific local biomass, thus the transferability is limited. The BC presented in the appendix include two cases – Est-Agar and oceanBASIS, which utilize algae and other aquatic biomass. The BC of SatiMed illustrates a Lithuanian biotechnology company developing hemp based products. Project co-funded by the European Regional Development Fund 57 3.11. High-value Products from Circular Bioeconomy This cluster is based on four very specialized enterprises working on highly innovative products, including aquaponic systems, biodegradable polymers, lignin-based products, fish sludge-based fertilizers and similar products. This type was formed by enterprises that did not fit to the more specific types specialising on plastic replacement, packaging, food and feed products. . Another element that sets it apart is the higher focus on invention and system design. Value proposition Value offered to customers is a mix of products. The value proposition is the invention and design of novel value-added products and solutions with practical application in different industries and markets. The products and services are different, ranging from individualized aquaponic systems as well as support in operating such systems, invention of biodegradable polymers, specific flakes and granules for food industry, proteins and fibres for waste water treatment-plants, the conditioned fish sludge, lignin-based products as binding and dispersing agents for a wide range of end-market applications ( construction materials, agrochemicals, batteries, etc.). Infrastructure The upstream key partnerships include farmers and different biomass providers, wastewater treatment plants as variety of biomass is used for diverse purposes. As the enterprises specialise in developing products and designing systems for variety of industrial partners, the cooperation with those is essential. Financial capital and services providers and public agencies regulate as well as are potential source of R&D financing. High R&D intensity makes cooperation with universities and other R&D organisations vital. Key activities that keep the business going are quite different: consultations, design and construction of industrial systems, high level R&D activities, combined with developing explorative business model and infrastructure solutions that are covering a large part of the value chain. In addition, the generic activities include the biomass processing and production, marketing and sales and other similar activities. The tangible key resources are biomass and processing facilities and technology. The most vital resources are the intangible ones, such as extensive knowledge and know-how with highly competent personnel, networks in key private and public bodies in home country and abroad, also market knowledge. Customer interface The enterprise established their customer relationships through co-creation based on long term strategic relationships with various stakeholders and networks. Some enterprises use personal direct sales for specific customers. The main focus was on B2B sales and customer segments targeting specific niche markets, retailers and industries. The main channels for reaching customers are enterprises’ own sales force, online presence and retailers. In some cases, the company was highly recognizable, and branding and visibility were facilitating creation of customer contacts. Project co-funded by the European Regional Development Fund 60 3.12. Utilization of Municipal Waste and Sewage This type is based on four enterprises using municipal waste and wastewater for their bioenergy production. In comparison with the type of district heating and electricity from various biomass, enterprises in this type rely heavily on municipal waste and waste water, incl. using wastewater sediments, landfill gases for developing closed loop systems for biogas for transportation, heat and electricity, and using those for municipal heating or in greenhouses for agricultural production. Value proportion The main value proposition is provision of eco-services and environmentally friendly and relatively low-cost renewable energy (transportation fuel, etc.) from nutrient rich waste and wastewater. The key partnerships include service providers for nutrient recycling, incl. large scale agreements with waste and wastewater treatment plants, land owners, public authorities and environmental monitoring institutions, different grid owners. Key activities are production of biomethane from wastewater and purification the resulting gas to the necessary quality. Biomethane is delivered to customers via gas stations close to production plant or tank trucks. Some enterprises established their own biomass plantations, which can absorb nutrient rich waste (large area needed) and implement environmental monitoring. The tangible key resources are biomass (wastewater), substances for the fermentation process, the production facilities and technology (equipment for reception of waste, biogas reactor and storage facilities for the product in various stages of production, equipment for cleaning) and marginal or non- fertile land for dedicated biomass plantation establishment. Staff with technical and innovation competence and knowledge is also required. Customer interface The enterprises’ customer relationships with end users are mainly indirect as biogas is sold via gas, heating and electricity distributing companies. The relationships with the distributors are based on direct contacts. This type is mostly characterised by B2B sales and collaboration with municipal public authorities. The customer segments included already operating gas companies with existing infrastructure and gas stations, municipal waste water treatment plants, biomass boilers/power plants, regional public transportation or final consumers in transportation sectors. Distribution takes place via gas distributing companies or heat energy sold directly to district network or pump stations for regional public transportation. Intermediaries are used as the channels for reaching farmers, e.g., waste water treatment plants provide farmers with nutrient rich waste for re-usage through the intermediary, who provides service for environmental permits, consolidating farmers, arranging transportation services. Project co-funded by the European Regional Development Fund 61 Figure 15. Keyword ratings for enterprises in the BM type of Utilization of Municipal Waste and Sewage Financial viability The costs related to biomass acquisition and biogas processing, technology and equipment maintenance costs. Costs may also include costs for land, establishment of woody biomass plantation (mainly seeding costs), biomass harvesting, investment into the biogas plant, transportation costs for sludge, digestate and pellets, cost for spreading (fertilization) of sludge digestate and biomass ashes, biomass harvesting, labour costs. The revenue stream comes from the sale of products (biogas, heat energy, electricity) and reduced costs from waste management. Project co-funded by the European Regional Development Fund 62 Table17. BMC for Utilization of Municipal Waste and Sewage BM type Key partners Landowners Waste and wastewater processing plants Technology suppliers Municipal authorities Electric and heat grid owners Key activities Establishment of biomass plantations Collection of biomass Procurement of biomass Biogas production Sales of heat and electricity Sales of digestate Environmental monitoring Value propositions Ecosystem services and renewable energy from nutrient rich municipal waste and waste water and utilization of marginal lands Customer relationships Personal direct sales with distributing enterprises Indirect relationships with end consumers Customer segments B2B, B2G Biogas Gas companies Transportation enterprises Industrial enterprises Heat and electricity Municipal byers Electricity and heating companies Digestate Farmers Key resources Marginal or non-fertile land for biomass plantation Raw material (biowaste and wastewater) Biogas plant Equipment and technology Technical know-how Staff Channels Intermediaries Cost structure Land costs Biomass plantation establishment costs Raw material costs Investment into biogas plant Equipment and technology costs Harvesting costs Production costs Distribution costs Costs of spreading sludge and digestate Labour costs Revenue streams Sales of biogas Sales of heat Sale of electricity Sales of digestate Reduced costs for waste management Socio-economic aspects and novelty The companies create value for local population by more efficient local biowaste management for local municipalities, use of biomass from local farmers and developing a circular and closed loop production for environmentally friendly energy for local transportation, heating and electricity. Additional environmental benefits include reduction of air and water pollution. The companies in this type were very regulation and policy dependent as waste management policies, environmental goals and municipal interests facilitated setting up the companies, but also provided public subsidies for investment and continuing operation. The BM is dependent on cooperation from network of different actors from providing biowaste to access to energy grids. This is well illustrated in the BC of Lithuanian UAB Pageldynių plantacija (Appendix 2) that integrates variety of activities and actors into closed loop circular model to process wastewater. Another BC is Greve Biogass that specialises on biogas production from municipal waste and sewage. The novelty of the companies is relatively low and the BM in easily transferable. Project co-funded by the European Regional Development Fund 65 5. Business Planning Tools for Bioeconomy Business Models MS Excel-based tool was developed with modifiable parameters for business planning that allows to plan annual costs and revenues for seven years, and monthly costs and revenues for the first year of the project. The tool is submitted separately with this report. Figure 16 illustrates income and profitability assessment calculation using the tool. Figure 16. Income statement and profitability assessment in the Business Planning Tool The Business Planning Tool includes monthly cash flow projection for the first year (Figure 17). Project co-funded by the European Regional Development Fund 66 Figure 17. Cash Flow Assessment in the Business Planning Tool Based on the BM types and narratives of BCs, in the framework of project activity 4.1, an online library with filters will be developed that will simplify the search of information. Project co-funded by the European Regional Development Fund 67 6. Conclusions The analysis of BCs demonstrates the variety of enterprises making use of different biomass in the BSR. The BCs used for the development of BM types ranged from highly competitive global enterprises, some of which are the world leaders in their niche, to microenterprises smartly capitalizing on local market niches and utilizing local biomass. Analysis of the BMs and BCs provided an insight on the logic how bioeconomy enterprises in the BSR currently conduct their business and what kind of value is created from biomass. The enterprises analyzed in this report all use and process biomass and thus share common elements in their BMs. However, the use BMC and BC descriptions for the types provided an opportunity to create a more detailed overview of different bio-based business types. To summarize, the Appendix 1 provides also an overview on the BM types by the average scores given to the nine categories of keywords (source of biomass, outputs, environmental benefits, enterprise type, social benefits, policy aspects, business aim, transferability, novelty). In the report, a bottom-up approach is used to classify 59 BCs into a taxonomy of 12 types of bio-based BMs that are in turn divided into four BM archetypes: replacement of fossil fuels with bio-based fuels, waste recycling, novel uses of bio-based materials, and integration of complementary biomass production activities into circular production loop. The heat and electricity production mostly from biogas was either the main or side activity of production in case of six BM types out of 12 and representing the archetypes of replacement of fossil fuels, waste recycling, and complementing the circular production loop. Different good practice BM types were formed from the producers: larger specialized heat and electricity, service providers mostly using woody biomass; wood and plant-based pellet producers and users; biogas producers combining manure, agricultural residues, plant biomass; circular agricultural producers with bioenergy production as a side-stream for primary production; plant and aquatic biomass users utilizing biowaste for energy production, and municipal sewage and waste users. Typical customers for heat and electricity for biogas are local municipal and residential byers, thus respective BM depends on regulation and access to different grids often operated by other parties. Products of enterprises in types such as heat and fuel from woody biomass, utilization of municipal waste and sewage tend to be high volume low value-added requiring substantial amount of biomass inputs. The BMs are generally easily transferable, but depend on easy availability of biomass in the region. This impacts also the BMs whose outputs are biogas and related heat and electricity that also require substantial amount of biomass from close proximity as well as access to different grids. Those BMs are transferable, but are highly dependent on specific national policies in the BSR and availability of investment subsidies. The analysis of BMs demonstrated that the bioenergy BMI is strongly network driven. The BMs of bioenergy providers are very dependent on the key relationships with a variety of stakeholders, who mediate access to bioresources, technologies and knowledge resources, grids and other infrastructures, investments. In another six types, the main value creation lied in the development of novel and value-added products from biomass for specific purposes such as for novel fuels and biochemicals (replacement of fossil fuels archetype), biofertilizers and soil supplements (waste recycling archetype), substitution of plastic, ingredients for food and packaging that also created bioenergy production side stream in some cases, ingredients for cosmetics, pharmaceuticals and nutraceuticals, innovative system designs (archetype of novel uses of bio-based materials). All of those BMs are R&D intensive requiring cooperation with R&D institutions and knowledge workers. In comparison with other types, the BMs are not so easily transferred due to the intangible knowledge capital and value networks those enterprise have as their competitive advantage. 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Summary of types of good practice BMs by the nine categories used for selection criteria Appendix 1.1. BM types by source of biomass Project co-funded by the European Regional Development Fund Appendix 1.4. BM types by type of enterprise Project co-funded by the European Regional Development Fund Appendix 1.5. BM types by social and regional benefits Project co-funded by the European Regional Development Fund Appendix 1.6. BM types by policy aspects Project co-funded by the European Regional Development Fund Appendix 2. Narratives of the business cases The narratives below are presented using the same format as in the RUBIZMO project (2020)2 database. The case description covers the background, main activities, market and main challenges of the enterprise, as well as its funding and innovativeness. The information collected and used in the analysis has been shorted here for clarity. In case of some types, the enterprises were not willing to have their information publicised, thus not all types are illustrated with a business case. Heat and Fuel from Woody Biomass Case: Ecopellet - environmentally friendly biofuels and pet products from sustainable raw materials Name of the company: Ecopellet OÜ Country: Estonia Size of the business: 3 employees Website: http://www.ecopellet.ee/en/, www.greenfull.eu Background The idea for the production of wood pellets came up 10 years ago, when local business partners investigated whether and where wood pellets are produced and sold, and whether there is interest in wood pellets in the local market. As it turned out that there was interest, financial and reliability study was performed together with cost-benefit analysis for production. The calculations gave a positive result, and half a year later, from the birth of the production idea, at the end of 2010, a small wood pellet production company Ecopellet was established in Western Estonia. However, not everything went as originally planned and the first profit was made in the fifth year of operation. Two business partners were involved in setting up the company. Later, a third business partner was added. Main activities The company’s main and only activity is wood pellet production. Different types of wood pellets are produced: heating pellets, pet pellets and pellets for barbecue. Both coniferous and hardwood sawdust, planer chips, wood processing residues and chips made from debarked fine logs are used for the production of heating pellets. The main raw material for barbecue pellets is gray alder. Separately, bio granules are produced for cat litter, which consists of softwood sawdust and hay biomass. Compared to the early years of the company, the range of products has changed. In some years, straw pellets and hay pellets were also produced. As the market for straw and hay pellets gradually disappeared, the production of these pellets became uncompetitive and production ceased. The production of pet pellets and barbecue pellets replaced them. Heating pellets have remained the main product for many years. In the sector, the other pellet producers usually specialise on heating pellets, and 99% of their production is heating pellets. At Ecopellet, the share of heating pellets in production has decreased over the years. As of 2020, the share of heating pellets in production in different seasons is 35-45%. Despite its small size, Ecopellet has become the largest exporter of pet pellets in Estonia and the only producer of barbecue pellets in the Baltic region. The size of the company has also changed over time. With the introduction of modern technology, i.e., the automation of production, the number of employees in production has decreased compared to the earlier years. Ecopellet is the only small pellet producer in Estonia that has a full production cycle (raw 2 https://rubizmo.eu/ Project co-funded by the European Regional Development Fund material preparation and crushing, drying line, production line, packaging line). The company has received the necessary permits for its operations. Market The main customers of heating and pet pellets are wholesalers and retailers in Estonia and Finland. The largest customers in Estonia are a local retail chain and specialized pet stores. The sales partners of barbecue pellets in Estonia are a large specialised retailer for barbecue supplies and other sellers of barbecue pellets. The company’s products can also be found in the retail chains of neighbouring countries distributed through wholesalers. Over the years, various marketing channels have been used to reach new customers: teleshopping, web marketing, participation in exhibitions, fairs, etc. There are two internet channels. The company has an internationally registered trademark Greenfull, which has a separate website, and the other is the website of Ecopellet, which is more aimed at the Estonian local market. Using sales representatives in specific countries have proven to be the most effective marketing channel. In retail chains, the nomenclature of products is decided by the heads of particular product group, and once they have chosen their favourites, it can be quite difficult, if not impossible, to make changes in the selection of products. Thus, the relationships determine a lot in retail market access and further expansion plans. Challenges and solutions One of the biggest challenges in the near future is to increase the market share of grilling pellets in Europe. The use of grilling pellets is very common in the USA, but the barbecue pellets are a relatively new phenomenon in Europe, and 90% of barbecue pellets sold in Europe today come from the North America. It is estimated that the annual need for barbecue pellets in Europe is about 8-9 thousand tons. Ecopellet, as a niche manufacturer, would be able to cover about 10% of this need. To meet this challenge, Ecopellet has begun looking for a strategic partner to increase the market share of its products in Europe. Gaining trust in the market without a suitable partner is a very long and complicated process. The company is well positioned to increase the market share of barbeque pellets in Europe. The company improves the quality of products, develops the competence and experience of its employees in the production of barbecue pellets. In Estonia, there is sufficient amount of biomass for production of barbeque pellets and expansion of the market. Funding When establishing the company, public sector support was used, more precisely, the start-up capital was received from the Enterprise Estonia that is a national foundation for enterprise support. That start-up capital was vital for establishing the production until income was earned for starting to cover the running costs. The required start-up capital was calculated during the preparation of the business plan and included all costs, including investments. The start-up capital was supplemented by owners own capital investments and external loans and leases from different lenders. The minimum investment for starting a small-scale production of wood pellets is about 0.5 million euros. The objects of investment are primarily production technology, equipment and buildings. What makes this case innovative? Ecopellet is one of the few companies in Estonia that makes pellets from different types of wood and biomass. The wood species preferred by large producers are mainly spruce and pine, but Ecopellet also produces hardwood and hay pellets. The production of hardwood pellets requires more skills and technology adaptation than the production of softwood pellets. In addition, bio granules are produced for litter cats and other small animals. Bio granules are a good substitute for cat litter made of clay, because the used bio granules can be composted in the garden. All Ecopellet granules are made without additives and are a pure natural product. Project co-funded by the European Regional Development Fund Case: Quercus - production of solid biofuels for energy Name of the company: Quercus Sp. z o.o. Country: Poland Size of the business: 86 employees Website: https://quercus.org.pl/ Background The Quercus company was founded in 1992 in Jedwabno, within the area of the Regional Directorate of State Forests in Olsztyn. At the beginning of its activity, it dealt with the production of wood chips for chipboard and fibreboard production. In 2005, on the initiative of the President of the Management Board the enterprise was transformed into a limited liability company, eventually adopting the name Quercus Sp. z o.o. (Quercus Ltd.). The driving force to start and develop the company’s activity was the growing need to direct the domestic energy sector (heat and co-generation CHP plants) towards an increase in the share of renewable energy sources in the fuel structure. In addition, logging residues, which were burned at the place of harvest at that time, have gained the possibility of more effective use. Main activities The main source of revenue for Quercus Sp. z o.o. is the sale of solid woody biomass for energy purposes. In addition, the company provides chippers maintenance and repair services, varnishing services in own paint shop and transport services (including logistics of rail deliveries with the use of its own reloading terminal). This makes the company the largest producer of biomass in Poland with a well-functioning logistics network. Compared to the early years, the company’s main product (wood chips) is the same but is currently produced using the most modern machinery and equipment, making the production process itself more efficient. The main changes include the construction of transhipment terminals with their own railway sidings (two locations: Pasym and Spychowo), the creation of a paint shop and a technical department enabling the service of machine park and the introduction of bulk load transport service. All the above mentioned products and services have been introduced successively, along with the company’s growth, to meet its own needs (e.g., machinery service) and to diversify operations to reduce risk. Market The clients of Quercus Sp. z o.o. are mainly large heating and co-generation plants, small local heating plants as well as pulp and chipboard industry companies. Due to the B2B relationship model, the acquisition of new customers is primarily based on participating in tenders for the supply of chips or other services. This in turn means that with the current model, the number of potential customers is limited and there are not so many feasible measures to increase customer availability. The present B2B relationship limits the need to use marketing channels, but the main forms of marketing are enterprise website, leaflets, participation in industry conferences and fairs, and a good market opinion (‘word of mouth’ marketing). Challenges and solutions The company plans to develop further the main area of its business activity, while developing ancillary activities that diversify the portfolio of revenue sources. However, currently, due to the lack of market stability, it is difficult to identify specific actions and investments. The main limitation is the large share of biomass imported from outside Poland and the emergence of local competitors using an aggressive pricing policy. The main problems for business development have also been the instability of the renewable energy support system and policy in this area as it has caused fluctuations in demand for biomass for energy purposes. Project co-funded by the European Regional Development Fund UAB “Kurana is the first company inside the EU which connected manufacturing of bioethanol for biofuels, electricity and thermal energy from renewable energy sources (biogas produced by mesocphilic process) into one closed technological loop. This technological loop produces zero waste plus valuable organic fertilizers that are becoming more and more popular in contemporary farming. When building this factory, the company used the newest technologies and facilities bought from the EU countries (Germany, Denmark, Sweden and the Great Britain) and the USA. Project co-funded by the European Regional Development Fund Case: 3B Bioenergie- energy production and special processing of digestate Name of the company: 3B Bioenergie Country: Germany Size of the business: 9 employees Background The enterprise was originally engaged in dairy farming. In 1998, a small biogas plant was developed to complement agricultural activities. The aim was to process the farm's own slurry in a biogas plant and to produce digestate from manure to improve the nutrient supply of grasslands. The enterprise started with a small biogas plant as a dairy farmer, today they are primarily a biogas owner with a few cows. Main activities The main activities are energy production (electricity and heat) and fertilizer production. The side activity is agriculture. The outputs from the main activity are heat, electricity, ammonia-sulphate- solution and digestate (dried, solid, raw and liquid). Market The company is a big energy supplier for regional stakeholders (spa clinic, indoor tennis centre, public building, and indoor swimming pool). Farmers are the customers for the digestate. The main channels for reaching the clients are through direct communication or via the internet. Challenges and solutions The enterprise is interested in new fields like insects, algae and mushroom production. The challenge is in utilizing the insects or hydrogen for biological methanisation with feed. There is a potential in the expansion of organic fertilizer processing from fermentation residues and in the expansion of utilization of farm manure with the help of algae or fish. The limits are set by required nutrients that have to be transported and by the availability of substrates in the region and their costs. The biggest challenges are connected with the laws and the legal frameworks, as the requirements for the safe handling of nutrients are increasing and thus its costs are increasing, while the income from the activities has stayed the same. The ending of Germany’s energy transformation policy Energiewende after 20 years is a big problem for the company. Partners are still being sought for the planned expansion. Funding The biogas plant, established in 1998, was developed and expanded with Energiewende funding and financing by banks. By selling electricity and heat for a fix price, the company was able to invest in new processes. Without these subsidies no further invest would be possible. What makes this case innovative? The 3B Bioenergie plant produces 1.7 mWh electric energy plus heat for local distance heating public houses (library, public bathhouse, etc.). The processing of the produced digestate is also of particular interest due to technological solution. The digestate gets separated by screw presses and dried. The liquid phase after the screw presses runs through a stripping and scrubbing process producing ammonium sulphate solution. The remaining phosphorus after this process is tried to get recovered by producing CAP and MAP (Struvite) precipitation. Project co-funded by the European Regional Development Fund Specialized Heat and Electricity Production and Services Case: Przedsiębiorstwo Energetyki Cieplnej – energy efficient district heating system Name of the company: Przedsiębiorstwo Energetyki Cieplnej Sp. z o.o. Country: Poland Size of the business: 266 employees Website: http://www.pecpisz.pl/ Background Miejskie Przedsiębiorstwo Energetyki Cieplnej (MPEC) is a heating plant and networks operator owned by Olsztyn Municipality. The company has a long history starting with the establishment of Olsztyńskie Przedsiębiorstwo Energetyki Cieplnej SP. z o.o. (OPEC) in 1968. Its statutory task was the coordination of all heating activities in the city of Olsztyn. At first, OPEC’s main task was the development of technical documentation for the heating network supplied back then by a tyre factory. In 1973, the company was transformed into Wojewódzkie Przedsiębiorstwo Energetyki Cieplnej (WPEC) and started operating regionally as its operating range extended to the entire Olsztyn Voiovodship. The company took over heating plants in eight major cities, thus becoming part of the nationwide centralization trend. The first major investment of the new organisation was the transport and fuel base. In 1975, a unit of Zakład Energetyki Cieplnej in Olsztyn was separated from the overall structure of WPEC. Due to the dynamic development of the city, the decision was made to establish new coal based heating plants and transition to a more centralised heating system with three central heating plants in place of 200 local boiler houses. A new heating plant and heat transmission networks were commissioned and finished by 1979 to cover the thermal needs of city of Olsztyn. In 1987, regional authorities of the Olsztyn Voivode decided to put the WPEC into liquidation and power plants operating outside Olsztyn became independent entities. A year later in 1988, Miejskie Przedsiębiorstwo Energetyki Cieplnej (MPEC) was established. One of the company’s tasks at the time was to take over about 200 local boiler houses from the military administration, health care and education, in order to cover the city of Olsztyn with one heating network. In 1991, MPEC – the former property of the Treasury – became the municipal property of Olsztyn. The year 1997 brought the long-awaited transformation of the company into a sole proprietorship of the municipality with the city of Olsztyn holding 100% shares. Recently, MPEC has completed the construction of the Kortowo BIO biomass heating plant. The newly built biomass boiler is part of the strategy for reconstructing the entire heat generation system in Olsztyn and shift from coal based system to more environmentally friendly systems. Before the decision was made to build a “BIO” heating plant based on renewable fuel (wood chips), a multi-variant concept was developed to specify the legal and technical possibilities of building such a facility. One of the main elements of the concept was to examine the availability of fuel. Determining the anticipated investment outlays and meeting the environmental conditions allowed MPEC to make the decision to start the investment. The challenge for the next few years was taken on to obtain the status of an energy-efficient heating system referred to in the energy law. The qualifying requirement is the provision of non-conventional sources working for the needs of the municipal heating network. The lack of energy-efficient heating system status makes it virtually impossible to obtain financing for investments from EU funds. Another reason for making this effort is the desire to improve the condition of the natural environment by reducing CO2 emissions by over 60,000 Mg / year. The scope of the investment planned was mainly influenced by two factors, i.e., the need to diversify the streams of fuels used in heat generation and minimizing the impact on the natural environment. The construction of renewable energy installations Project co-funded by the European Regional Development Fund Innovation in Novel Fuels and Bio-chemicals Case: SunPine - an entrepreneurial bio-refinery Name of the company: SunPine Country: Sweden Size of the business: 70 employees Website: https://www.sunpine.se/en/ Background The company was founded by innovator and serial entrepreneur Lars Stigsson, who had MSc degree in Chemical Engineering. The entrepreneur had an idea to use plant sterols in pine oil (tall oil) to produce cholesterol lowering food products and started a cooperation with Valeri Naydenov, a PhD student from Bulgaria specialising in analytical chemistry. The entrepreneurs started to cooperate in working on fatty acids and the separation process of plant sterols. The ongoing discussion in media and science regarding biodiesel at the time motivated the entrepreneurs to try to develop biodiesel and work on ideas on other products after biodiesel. Equity in the company SunPine was sold to three major industrial investors in order to build a full-scale plant in Piteå, Sweden, where the development climate was good, and there were possibilities to rent tanks in the area. Piteå has also a harbour with sufficient capacity. Additional part of the company was sold in 2014. The owner consortium of SunPine represent the entire processing chain from forest raw material to processing, marketing and distribution of renewable diesel fuel and resin. History in summary: • 2005 Concept development. • 2006 Identification of location and tanks for storage. • 2007 The first employees including appointed CEO. • 2008 The environmental permit was approved. • 2009 Construction of a new plant. • 2010 Production of pine diesel began in May 2010. • 2010 The first deliveries to Preem were made in October 2010. • 2011 Improvement of the vacuum system. Problems in production, clogging and cleaning. • 2012 Complementary improvement investments. • 2013 During the years up until March 2013, efforts largely concerned the removal of bottlenecks and achieving a stable production. The plant reached its planned capacity in 2013, which was also the first year the company made a profit. In all, the initial investment amounted to around 35 MEUR. • 2014 Stable production, increased feed and improved process. Handling sludge. The company Lawter, owned by Harima Chemicals in Japan, became a new shareholder and partner. • 2014 The upgrade the plant for the manufacture of a new product – rosin that is an existing product on the global market, but is not dependent on political decisions. • 2015 The new production plant became operational. The investment for upgrading the plant and to enable the manufacture of rosin totalled around 21 M EUR. • 2016 First delivery of rosin, a start-up year for working on recurring production stoppages and a number of supplementary actions and succeeding in creating stable production with good reliability by the end of year. • 2017 Achieving smooth and stable production, achievement of set goals and records in delivery and results. Project co-funded by the European Regional Development Fund • 2018 Continued stability and good production. The EU decides to open up for SunPine’s pine diesel. Decision to invest 25 MEUR in a new factory. Production capacity will be raised by 50 %. • 2019 In the fall of 2019, a new laboratory and a new office were inaugurated to make room for a new larger SunPine. • 2020 Production started in new factory during the fall of 2020. • 2021 Production in 2021 is estimated to be more than 150 000 m3 of raw tall diesel. Main activities SunPine seeks to extract renewable products through sustainable forestry by processing and seeking to make best use of a tree’s essential components for the manufacture of renewable products. SunPine’s bio-refinery supplies innovative and sustainable products that are based on pine oil, a residual product from Kraft pulp mills. The products reach the world market in everything from the Nordic Swan eco- labelled diesel to fragrant perfumes. The main products are: • Pine diesel - SunPine produces over 100 million litres of pine diesel with plans to expand. In terms of positive climate impact, today’s production reduces fossil CO2 emissions by 250 000 tonnes per year, or in simpler terms, equivalent to the emissions from 157 672 vehicles every year. • Rosin is produced from pine oil and SunPine customers process it into adhesives, ink, tape, paint and road markings and other things. SunPine has an annual rosin production capacity of 24,000 tonnes. • Heating Bio-oil - SunPine’s bio-oil is certified sustainable by the Swedish Energy Agency – a green fuel oil.It is a good renewable alternative to fossil fuel oils for industry. Bio-oil has more potential development possibilities such as for petrol or lubricating oils, development of cholesterol reducing foodstuffs or medications. SunPine produces around 50 000 tonnes of fuel oil per year. • Turpentine for customers in the perfume industry. SunPine produces around 2 000 tonnes of sulphate turpentine per year. • Surplus heat used for district heating in the city of Piteå. SunPine supplies around 1 500 000 kWh of district heating annually. Market Pine oil is transported from pulp mills in Scandinavia to the factory in Piteå but also by boat from the USA. After processing mixed with diesel from ordinary crude oil, it is sold as the Swan-labeled Preem Evolution Diesel to consumers at tank stations all over Sweden. Rosin, heating bio-oil and turpentine are sold to mix of international and Swedish industrial clients. District heating market is the local area of the city of Piteå. Challenges and solutions Pine diesel only represents 2% of the total diesel consumption in Sweden. However, an important barrier to expansion is the supply of pine diesel. Several pulp mills in Scandinavia are expanding, meaning that the porudction volumes of pine oil will be increasing. Estimates on pine diesel indicate that pine diesel will constitute 5% of the diesel consumption in Sweden in the future. Research is going on concerning different processes for producing gasoline or diesel from other residues in the forest industry, e.g., converting lignin into fuel. SunPine collaborates with Luleå Technical University in technical research and development. One important factor is the policy in Sweden and the EU. The industry is dependent on long-term regulation and cost-neutral energy politics. Companies are able and willing to invest if the rules are stable for many years, however, the political climate has been unstable with rules changing annually. Backing of national ambitious policies arguing for the importance of use of biomass for different purposes and taxation to increase the competitiveness of renewable fuels are required. The BM of Project co-funded by the European Regional Development Fund SunPine ought to be replicable on a general level in other regions of Europe. A combination of new applied technology and access to suitable forms of biomass could lead to new types of sustainable bio- fuels. Challenges are also related to finance and access to the specific value chain, both regarding supply and demand. SunPine has overcome these two challenges, by taking in new owners in the company. These owners have brought economic capital and access to the value chain from both supply and demand perspectives. Funding SunPine has not received any financial support or grants from public authorities. The initial development was financed by entrepreneur Lars Stigsson. Further financing was received from three investors each buying initially 20% share in company and each of them investing around 10 MEUR and later buying additional 5% share each. In 2014, the remaining 25% was sold told to the Dutch company Lawter, owned by Harima Chemicals in Japan. The investors were particularly important as they represented actors along the value chain: • Södra is Sweden’s largest forest-owner association and a leading global producer of paper pulp. • Sveaskog is Sweden’s largest forest owner and a leading supplier of saw logs, pulpwood and biofuel. • Preem is Sweden’s largest fuel company, with over 600 fuel stations for private and commercial traffic. Preem has two refineries in Sweden: Preemraff Lysekil and Preemraff Göteborg. • Lawter is a Dutch company owned by Harima Chemicals (Japan) with a strong position in terms of chemical products extracted from pine oil. In 2018 SunPine decided to invest SEK 25 MEUR in a new production plant close to the old plant as the market for sustainable pine diesel fuel is growing and company wants to assume responsibility for the Swedish shift to renewable fuels. The production capacity will be raised by 50% and in the right conditions, SunPine could meet 14% of all renewable diesel requirements in Sweden by 2030. What makes this case innovative? Today it is a world-leading bio-refinery with 100 M EUR sales that continues to develop and invest in new technology and R&D. Project co-funded by the European Regional Development Fund Case: Ziedi JP - circular economy in a Latvian farm Name of the company: AS Ziedi JP Country: Latvia Size of the business: 100 employees Website: https://skatskat.lv/virtuala-ture/lauku-seta/lv/kopskats/lauku-seta.html (virtual tour) Background The farm Ziedi is a family business. The farm was established in 1991 with family growing vegetables and flowers on 0.25 ha. In 1993, the management was taken over by another family member and in the following years, the area of agricultural land was expanded and the company’s operations were supplemented with new activities such as cereals, oilseeds, dairy farming and later biogas and fish production. Expansion was financed by commercial bank loans that were attracted for the development of the farm. The farm has been reorganized several times, adding other interconnected enterprises and changing its legal status. From 2018, it is a family-owned joint stock company Ziedi JP and the business is run by owners’ son and daughter. The family has been very energetic and active in gaining experience from around the world (especially from the EU countries, the USA and the New Zealand), supporting the entry of a new generation into the farm and developing more circular production. Funding opportunities after the EU accession have also played an important role in the development process. Main activities The main activities are agricultural activities (growing cereals and oilseeds, dairy farming), biogas production from slurry that is used for heat and electricity and for fish production. Fish farming mainly grows sturgeon, eel and caviar. Digestate, a by-product of biogas production, is used for own consumption. In addition, agricultural services are provided. Market As the farm is engaged in many activities, the target groups of the products are also different. Cereals and rapeseeds are sold to the cooperatives or processing companies, milk to the processing companies, electricity to the state -owned energy enterprises, and the fish products to the catering companies. Customers are reached in the traditional way, i.e., through direct contacts, negotiations and contracts. Challenges and solutions The biggest problems for the business development have been the short- and long-term financing. By using existing facilities, it is possible to increase milk production, as well as the production of fish products, but future plans depend on the ability to attract funding for investments. Future innovation lies in enhancing zero waste process and maximizing existing business results. The goals are to increase digestate drying and granulation for export and reach the intended capacity of 20 tons daily, and to intensify milk production and processing. There is a potential in using the excessive heat for new production opportunities to be set up nearby, i.e., greenhouses, to achieve more circular production. Funding The company has obtained bank loans for the development and used EU funds (European Agricultural Fund for Rural Development, European Maritime and Fisheries Fund) for variety of projects. In addition, annual agricultural direct payments and national livestock subsidies are used. The initial investment for establishing the circular production and biogas facilities has been more than 10 mil. EUR. What makes this case innovative? Unique aspect in this case is that the principles of circular economy are well presented in one farm as all the activities and branches on the farm are strongly interconnected and complement each other. Agricultural land is the beginning of production and also the end because the digestate returns to the soil Project co-funded by the European Regional Development Fund as a fertilizer. One of the products of each industry is the beginning of the production of another branch, thus all raw materials are used in the production process without waste. Project co-funded by the European Regional Development Fund Case: Wapnö Farm- sustainability and the circular economy example in a Swedish farm Name of the company: Wapnö Farm Country: Sweden Size of the business: 85 employees Website: https://www.wapno.se/gaarden/english/ Background Wapnö Gård is an estate with an old history dating back to the 14th century. The current owner’s family has owned Wapnö since 1741. Today, Wapnö is organized as a limited company with one owner. Lennart Bengtsson, the CEO, started to work at Wapnö in 1991, having previously worked at the Swedish Agricultural University, and with the owners diversified Wapnö’s BM by expanding from regular milk production and from the being the primary producer at the onset of the agri-food value chain into processing and advancing in the agri-food value chain and getting closer to the end consumer. The milk production was integrated with the wide variety of activities in the farm. The farm opened its dairy in 1998 and further developed processing and activities onsite with farm shop, brewery, restaurant, greenhouses etc. The farm has added biogas production for more circular production and in 2020, Wapnö is building a slaughterhouse at the farm. Wapnö has also applied for a permit to produce methyl esterbased on animal fat. Farm opened its production to public through series of events and festivals such cow release day in May, Christmas market etc. Wapnö is an open farm and has around 60 000 visitors every year. The visitors are welcome year-round to get a closer look at the animals, barns and dairy. Wapnö’s claim that it wants to be a place that restores the relationship between agriculture and the consumer's plate. The Wapnö focuses on animal welfare, taste experience and sustainable development with prioritization of reasonable use of natural resources and environmental responsibility. Over the years, Wapnö has received several awards, including the Taste Developer of the Year in the food industry and the Environmental Award of the Year. An important challenge for Wapnö is to continue to develop the farm's own production cycle in order to provide a more sustainable food production and at the same time make the food taste more and better. Wapnö claims that this strive makes Wapnö not only an interesting place, but also one of the most important ones. Main activities Wapnö is developing a circular economy with a diversified sustainable BM that included dairy and crop production, forestry, processing, sales and marketing. The farm has its own dairy, charcuterie, brewery, greenhouse and restaurant that refines everything that the farm provides. Wapnö has about 2 500 hectares of farming land that provides food for both the farm's animals and people. Wapnö’s assortment of cereals contains e.g., wheat and malt. For the last 25 years, Wapnö has not added sludge to the fields in order to avoid risk of heavy metals, remains from medicines etc. Instead, the biogas plant additionally provides fertilization, which improves the fertility and value of the farmland. Wapnö also has 450 hectares of forest. Wapnö Farm has grown from 90 to 1 400 milk cows over the years that are kept free range and grazing outside during summer. The animals feed is produced in the farm. To achieve a sustainable production of meat and milk, Wapnö has four different breeds. Wapnö applies rotation on the fields and maintain the fertility of the fields, minimizes diseases and keep the landscape open. The animals contribute to biological diversity. Since Wapnö farm is a large farm in comparison with ordinary farms in Sweden, Wapnö has been able to create a sustainable small-scale and artisanal food production for consumers. The dairy is an important activity at Wapnö Farm. Wapnö is producing milk, cream, cheese and other milk-based products. The