Think Tank BLOG: Closing the infrastructure gap - a catalyst for protein diversification
The blog highlights the infrastructure challenges in scaling the alternative protein sector, emphasising the need for increased manufacturing capacity, strategic partnerships, and public funding. Addressing these gaps is essential to achieve economies of scale, reduce costs, and meet the growing global demand for sustainable proteins.
How can alternative protein companies oovercome infrastructure and funding challenges to scale up production?
As research and innovation progress towards developing alternative proteins that are just as tasty as animal-based products, many businesses and startups face the next challenge of scaling up their production. While taste improvement remains a primary focus for the industry, infrastructure and scale will play a central role in addressing the price challenge. By increasing production capacity and streamlining operations, economies of scale can be achieved, leading to more affordable alternative proteins for consumers.
Yet, scaling also presents its unique set of challenges. More production capacity at various scales, including pilot, demonstration, and commercial, is needed for plant-based, fermentation-made, and cultivated proteins. But companies struggle to access the funding required to deploy the necessary infrastructure for their next growth stage, such as manufacturing plants and fit-for-purpose equipment.
The capacity challenge
The evidence clearly shows that there is not enough existing manufacturing capacity to keep up with the projected market demand for alternative proteins. This may lead to a capacity shortage if manufacturing expansion is not adequately planned. By 2030, capturing just 6% of the global meat market with plant-based meat would require about 800 large-scale extrusion plants and $27 billion investment, representing a sixfold increase in the present extrusion capacity (1). In addition, expanding food-grade biomanufacturing capacity will become crucial for the fermentation and cultivated meat sectors. For instance, for cultivated meat to meet 1% of the global meat market by 2030, global fermentation capacity must increase from 10-20 million litres to 220-440 million litres (2).
Closing this infrastructure gap is no easy task for several reasons:
Limited availability and mismatch of existing capacity: During the early stages of process development and product commercialisation, many alternative protein companies rely on contract manufacturing to produce their products. However, these facilities are often fully booked and already serving various sectors, leaving limited availability for alternative protein production. For the fermentation sector, while most companies now seek to operate at the lab and demo scale, only 4% of the existing capacity matches this scale (3). Faced with this limited availability, companies may have to compromise, impacting the quality or consistency of their offerings and their ability to meet consumer expectations and compete effectively in the market:
“For small producers of alternative protein products, at this stage many are forced to compromise. They may have to settle for products that are not what they would ideally put on the market, but are what their co-packers are willing to produce”.
Costs and risks of building own facilities: Not all companies, and in fact, very few of them, can afford to simply build their production facilities to address the availability issue outlined above. Establishing manufacturing plants requires substantial capital for infrastructure, equipment, and operational costs. Because there is inherent uncertainty in scaling up production processes from lab-scale to commercial-scale, this poses further risk to investors and companies alike. This risk aversion, coupled with the substantial upfront costs, creates barriers to building production facilities.
Public funding gap for bioeconomy infrastructure: Most EU and national funding programmes for bioeconomy prioritise early-stage innovations and R&D projects, and overlook the critical need for investment in manufacturing infrastructure and scale-up activities. While other countries around the world have already set up public infrastructure funding programmes for alternative proteins (5), European governments lack a comprehensive and continuous funding approach that extends beyond the R&D and pre-commercial stages (6).
As a result, many promising technologies and products either fail to reach the market, fall short of expectations in terms of taste, or are manufactured outside the EU. This poses a risk of limited return on investment for EU R&D funding, despite early-stage successes, thus hindering their ability to benefit the European economy.
Unlocking alternative protein infrastructure: best practices and ways forward
Addressing these challenges requires a holistic approach and robust collaboration between the public and private sectors. This can be achieved by implementing a range of effective measures and best practices that help to create and expand the alternative proteins infrastructure and offer a pathway towards scalability.
Foster strategic partnerships. Partnerships represent a cost-effective investment for alternative protein companies operating at intermediate scales. They are a force multiplier for companies, helping them to deploy capital more effectively and achieve important investment milestones, by leveraging external expertise and resources that may be lacking internally. However, finding suitable commercial partners, facilities, and equipment remains challenging. Encouraging new partnerships and supporting existing ones will be essential to enhance the availability and suitability of capacity and meet growing industry demands. One notable example is the open-access Bio-based Europe Pilot Plant, located in Ghent, Belgium, which was funded through a public-private partnership and serves as a shared facility for entrepreneurs to collaborate with experienced scientists and manufacturers. Operating on a non-profit model, the plant regularly supports alternative protein companies in scaling their processes. Industry-led initiatives further highlight the potential for collaboration within the ecosystem. For instance, 21st.BIO has recently announced plans to grant access to its precision fermentation technology platform to enable food and ingredient manufacturers to innovate and scale their production processes effectively (7).
Successful scale-up of 3FBIO technology at Bio Base Europe Pilot Plant
The Bio Base Europe Pilot Plant successfully scaled-up, to 15m3 scale, the 3FBIO technology to convert starch into protein. The resulting data recently led to investments, including €17 million by the European Commission in the form of the PLENITUDE flagship, for the construction of first-of-its-kind integrated bio-based protein biorefinery at Alco Biofuel in the Ghent area of the NorthSeaPort. In this video, Paul Hudman, technical Director at 3FBIO, testifies about the successful collaboration with the Bio Base Europe Pilot Plant.
Encourage retrofitting of existing facilities and equipment from parallel industries. Retrofitting is an efficient and cost-effective solution to quickly scale capacity. When it comes to plant-based meat facilities, a GFI and Bright Green Partners study (8) estimates that retrofitting can be completed in a third of the time and with only a fifth of the capital expenditure needed for greenfield investment. This is particularly relevant for industries with similar supply chains and equipment, such as pet food, pasta, breakfast cereals, dry snacks, and meat processing facilities (9). A notable example is Vion, the parent company of ME-AT, which transformed its abattoir in Leeuwarden, the Netherlands into a dedicated production site for ME-AT's plant-based meat (10). Similarly, biomass fermentation can benefit from retrofitting, with parallel industries such as beer, wine, and ethanol production offering the greatest potential.
Increase government support for alternative protein infrastructure projects.
“[...] Public funding should be better used as a catalyst for private investments, notably for riskier, breakthrough sustainability projects, including their scaling up, and related manufacturing capacities in the EU. In particular, the European Investment Bank, the largest public bank in the world, should provide stronger support to strategic investments relevant for the twin transitions, such as raw materials, green tech, or biotechnology, especially for cutting-edge projects.”
According to the Global Innovation Need Assessment report, the development and commercial stage of alternative proteins requires an annual global public spending of $5.7 billion between 2021 and 2030 (12). A significant part of these investments is needed for infrastructure. In Europe, we’ve seen some positive developments with public funding instruments, such as grants, starting to address the infrastructure challenge for alternative proteins. For example, the European Innovation Council, under its Accelerator Challenge, recently announced a €50 million call to assist startups in scaling up the production of food from precision fermentation and algae (13). Additionally, the Finnish company Solar Foods secured €33.6 million from the Finnish government through the EU Recovery and Resilience Facility for a demonstration factory (14). While these developments are promising, there is a need for a more systematic approach and comprehensive set of financial instruments to encourage such initiatives further. With the European Commission recently committing to scale biotechnology and biomanufacturing in Europe (15), there is an opportunity for biorefineries to become integral components of our critical infrastructure. They will serve as essential hubs not only for traditional manufacturing but also for producing essentials like food, including alternative proteins. Drawing parallels with other sectors, such as renewable energy and electric vehicles, it is evident that public funding support will be paramount in de-risking investments for alternative protein infrastructure and helping the sector scale. Funding agencies and financial institutions, starting with the European Investment Bank (EIB), thus need to expand their role in financing alternative protein infrastructure. In this context, they should first and foremost prioritise offering debt financing to alternative protein companies, particularly for first-of-a-kind projects, which often face greater uncertainty and risk.
“Investment tax credits, loan guarantees, demonstration projects and other forms of financial support from governments have catalysed explosive growth in the renewable energy and electric vehicle sectors and can stimulate similar progress for sustainable protein infrastructure”
Conclusions
Infrastructure is the next challenge of the alternative protein sector. Capacity constraints and high investment costs are becoming a bottleneck for the industry, which needs to scale up to achieve economies of scale and price parity. Collaborative efforts and strategic investments will be the key to de-risking alternative protein infrastructure projects and attracting additional private investments. Policymakers must provide loan guarantees, incentives for minimum purchase contracts, and subsidies, while supporting the conversion of plants that are no longer used in other sectors for the protein transition. The road ahead requires a concerted focus on infrastructure solutions, paving the way for the alternative protein sector to establish its role as a viable and scalable solution to global food challenges.
Author: Pauline Grimmer, member of the EIT Food Protein Diversification Think Tank
This blog post is part of the series “Paving the way for expanded protein diversification”, an initiative from the EIT Food Protein Diversification Think Tank. The Think Tank convenes stakeholders and partners, combining the expertise of academics, research and technology organisations, companies, and NGOs. It fosters broad and inclusive participation and aims to create structured dialogue to overcome barriers to innovation in the field of protein diversification.
The content of this blog is drawn from the Think Tank Policy Brief on Accelerating Protein Diversification for Europe.
Led by the University of Deusto, PRECIOUS unites a transdisciplinary alliance of 20 organisations, including EIT Food, spanning 11 EU countries to address one of humanity’s most pressing challenges: food loss and waste (FLW).
