Circular by nature: a policy agenda for bio-based materials in a circular economy

A circular economy for bio-based materials can unlock new revenue streams, drive innovation, and strengthen supply chain resilience.

Most bio-based materials are still produced and consumed within linear systems. A circular economycircular economyA systems solution framework that tackles global challenges like climate change, biodiversity loss, waste, and pollution. It is based on three principles, driven by design: eliminate waste and pollution, circulate products and materials (at their highest value), and regenerate nature. approach changes that by enabling regenerative sourcing, keeping materials in use, valorising by-products and residues, and building business models that decouple revenue from virgin resource extraction.

This approach can improve resource productivity, unlock new revenue streams, and strengthen supply chain resilience. For bio-based-material-producing countries, the opportunity is particularly significant. Shifting from commodity exports towards regenerative productionregenerative productionRegenerative production provides food and materials in ways that support positive outcomes for nature, which include but are not limited to: healthy and stable soils, improved local biodiversity, improved air and water quality., value-added manufacturing, and local recirculation systems can help capture greater economic value domestically, build more diversified and resilient industries, and create skilled jobs across the value chain, from regenerative agriculture and material innovation to repairrepairOperation by which a faulty or broken product or component is returned back to a usable state to fulfil its intended use., recycling, and biorefining.

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The policy gap restricting opportunities

Governments and companies have made significant strides in applying circular strategies to finite materials. Bio-based materials, however, have been largely overlooked, and with them, a major opportunity for economic resilience, climate action, and biodiversity recovery.

Policies for a circular economy tend to consider bio-based materials mostly as substitutes for non-renewable inputs. Meanwhile, policies for bio-based materials treat them as renewable commodities to extract, process, and convert into energy without taking advantage of the economic opportunities associated with repair, reuse, refurbishment and recycling.

As a result, significant economic and social value is lost, and progress on climate, biodiversity, and pollution is limited.

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A circular approach to bio-based materials value chains

Embedding circular economy principles into bio-based value chains is essential. Bio-based materials can be considered renewable if the ecosystems producing them have space and time to regenerate. A circular economy framework sets the conditions for that, defining what a well-functioning circular system looks like across industries.

In a circular economy, bio-based materials, components and products are:

Sourced regeneratively and from secondary stream feedstocks

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Sourced regeneratively and from secondary stream feedstocks

Land is given space and time to recover. Secondary feedstocks and agricultural by-products reduce pressure on primary extraction and support ecosystem health.

Designed without substances of concern

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Designed without substances of concern

Products and materials are safe for people and the environment. They are made without toxic inputs or substances of concern that hinder their safe return to the soil.

Designed for durability and value retention

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Designed for durability and value retention

Products and bio-based materials are designed for longevity, modularity, and ease of repair. Strategies such as rental, resale and product-as-a-service keep products in circulation for longer.

Designed for material reuse into secondary applications

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Designed for material reuse into secondary applications

Bio-based materials are kept in productive use for as long as possible, across multiple sequential uses, unlocking economic value from the same unit of biomass.

Designed for material and nutrient recovery

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Designed for material and nutrient recovery

After delivering as much economic and functional value as possible, bio-based materials are returned to the soil, closing biological cycles and restoring the natural capital.

Underpinned by fair and inclusive value chains

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Underpinned by fair and inclusive value chains

The transition must include communities with deep connections to the land and reflect the needs and realities of small-scale producers. Skills development, safe working conditions, and an equitable distribution of value ensure that workers seize the opportunities the circular economy creates.

Five policy pillars for a coherent transition

Aligning these two policy agendas is within reach. Five areas of action can accelerate progress:

Pillar 1

Design for circularity and regeneration

Adapt circular design standards for bio-based materials, embed regeneration as a core requirement, and mandate greater traceability and transparency across value chains.

Pillar 2

Enable safe and effective material circulation

Review waste classifications that miss value creation opportunities from circular economy strategies. Encourage bio-based materials reuse into secondary applications.

Pillar 3

Promote suitable financial and economic incentives

Redirect agricultural subsidies towards regenerative practices. Deploy eco-modulated extended producer responsibility schemes, reduce VAT on repair and secondary applications, and phase out incentives that entrench linear production.

Pillar 4

Invest in innovation, skills, and infrastructure

From regenerative growing techniques and fibre-to-fibre recycling to biorefineries and composting facilities, with skills development integrated across vocational, agricultural, and industrial training.

Pillar 5

Collaborate across institutions, sectors, and borders

Establish cross-ministerial task forces, strengthen mutual recognition of sustainability requirements, and align trade policy with climate and biodiversity objectives.