A flexible bioeconomy – key factor to enabling investments in large-scale biorefineries

The transition to a fossil-free energy system requires large volumes of sustainable liquid and gaseous fuels in hard-to-electrify sectors. Despite this, investments in new biorefineries are progressing much more slowly than what is required to meet climate targets. This project investigated market risks associated with investments in large-scale production facilities for bio-based energy carriers, and analysed different flexibility strategies that could make investments in future biorefineries more attractive.

The results show that uncertainty regarding future markets, energy prices, and policy frameworks is at least as important as technological development. For investors, the key question is not only if a plant can become profitable in the long term, but also when it becomes rational to invest. High market volatility and uncertain policy conditions often lead to investments being postponed, even when they appear profitable on paper.

The project also demonstrates that flexibility can be an important tool for managing this uncertainty. This includes both technical flexibility, such as the possibility of combining biomass and electricity in fuel production, and strategic flexibility, such as expanding or electrifying facilities stepwise over time. Of particular interest is the partial electrification of biomass-based production systems, which often provides a favourable balance between climate benefits, resource efficiency, and economic performance. The results further show that existing facilities can, in some cases, be retrofitted in stages to enable future production of electrofuels and renewable fuels of non-biological origin (RFNBOs), thereby reducing the initial investment risk.

The knowledge generated by the project can be used both by companies to better understand the preconditions for investments in biorefineries, and by policymakers designing future support schemes and regulations. An important conclusion is that policy instruments aimed at promoting early investments need to be designed to reduce not only costs, but also the perceived uncertainty regarding future markets and revenue streams. In this way, more investments can be realised, contributing to the development of a competitive and robust Swedish bioeconomy.

Scientific Articles

Several articles have been published within the framework of the project:

• Electrification-enabled production of Fischer-Tropsch liquids – A process and economic perspective (2025)

• Risk, flexibility, and investment in Fischer–Tropsch fuels: Insights from real options analysis (2026)