In September 2026, the European Commission adopted the European Innovation Act, which aims to strengthen the single market for innovation and help scientific breakthroughs transition more successfully into commercial products and services. This challenge is particularly relevant in the forest bioeconomy sector, where the introduction of new wood-based or biological resource-based innovations to the market requires significant investment in physical infrastructure, and the process involves high technological and market risks. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/, https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

Many promising forestry projects fail to overcome the so-called “valley of death” (valley of death) – the phase between initial research and commercial viability, due to a lack of public funding and the reluctance of private investors to take risks. To address these and other structural obstacles, the European Innovation Act offers two main solutions: [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

1.     A harmonised EU framework for research and development (R&D) procurement: This will allow public procurement to become a driver for innovation, creating legal certainty and a critical mass of investment to help new technologies reach the market faster and overcome cross-border barriers. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

2.     An EU-wide intellectual property (IP) valuation system: This will facilitate access to finance based on intellectual property and establish a single market for the commercialisation of IP assets. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

Studies by the EFI Bioregions organisation and the European Investment Bank confirm that forestry projects often face complex regulations, fragmented ownership structures, and limited access to finance. Successfully developing innovations requires an integrated approach that includes not only funding but also the use of open infrastructure, strategic partnerships, clear regulations, and the acquisition of new cross-sectoral skills. Furthermore, “green public procurement” plays a crucial role, where state and municipal institutions can use their purchasing power to create demand for bioeconomy products. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/, https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/, https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

Conclusions: What can Latvian forestry gain and utilise from this?

Latvia is a major forest nation with a strong traditional wood industry, but the development of higher value-added bioeconomy products is still in its infancy. The European Innovation Act provides specific tools that Latvia’s forest and forestry sector can use to its advantage:

·        Overcoming the innovation “valley of death” with state support:
For Latvian researchers and start-ups developing innovative bioeconomy products (e.g., wood-based chemicals, new packaging materials, or digital forestry solutions), the new EU R&D procurement framework will allow for the attraction of public funding at an early stage. The state and municipalities can become early adopters that test and purchase these products, thereby reducing risks for private investors. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        Converting intellectual property into capital:
Traditionally, banks in the forestry sector best understand material assets (forest land, timber, machinery). The new EU-wide intellectual property (IP) valuation system will give Latvian scientists and entrepreneurs the opportunity to use their patents and technological inventions as collateral for loans or investment. This will pave the way for securing funding without the need to pledge physical assets. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        Integration of green public procurement (GPP):
Latvian state institutions and municipalities can more actively use green procurement to purposefully favour local, sustainable, and bio-based solutions (e.g., the use of timber structures in public buildings or bio-based materials in road construction). As the experience of other European regions (such as Catalonia and Zeeland) shows, this not only helps achieve climate goals but also directly stimulates the regional economy. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/, https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        International cooperation and export markets:
As the Innovation Act harmonises rules across the EU, it will be easier for Latvian companies to scale their solutions and participate in public procurement in other EU countries. This will allow small Latvian innovators to enter the international market faster and find strategic partners in larger EU regions. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/, https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        The need for new cross-sectoral skills:
For Latvia to fully utilise these opportunities, the sector and educational institutions must invest in human capital. There is a need for specialists who are knowledgeable in forestry and biotechnology, as well as financial instruments, intellectual property rights, and modern procurement processes. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

Overall, the European Innovation Act offers the Latvian forest sector the legal and financial “backing” to transition from simple raw material exporting to a knowledge- and high-tech-based bioeconomy.

·        Examples of green procurement and how specifically the models from Catalonia or Zeeland could be adapted in Latvia?

·        More information on how intellectual property valuation will work under the new EU rules?

·        How does the concept of the “valley of death” currently manifest in Latvian forestry start-ups?

A detailed description of all three questions, analysing how the green procurement experience of Catalonia and Zeeland can be adapted in Latvia, how intellectual property valuation will function under the new EU rules, and how the innovation “valley of death” currently affects Latvian forestry start-ups.

1. Examples of green procurement: Adapting the experience of Catalonia and Zeeland to Latvia

An EFI Bioregions study on Catalonia (Spain) and Zeeland (the Netherlands) shows that state and municipal procurement can serve as a powerful catalyst for building a bioeconomy market before products become commercially self-sufficient. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        The Catalan model is focused on integrating local forest resources into the regional economy, particularly in public construction and energy (biomass). Their approach demonstrates how procurement criteria can mandate the use of a certain portion of locally sourced timber materials in the renovation or construction of municipal buildings, thereby directly supporting local foresters and sawmills.

·        The Zeeland model focuses more on higher value-added bio-based materials and the circular economy, where public procurement (e.g., in road infrastructure or urban landscaping) prioritises materials that replace fossil-based resources (e.g., bio-composites or bio-based asphalt).

How to adapt this to Latvia?

Latvia has a well-developed Green Public Procurement (GPP) system, but it is still dominated by simplified criteria, such as energy efficiency or LED bulbs. To adapt the experience of both regions, Latvia should:

1.     Introduce mandatory quotas for timber structures and bio-materials in public buildings. In the construction of municipal kindergartens, schools, or offices, the procurement terms should specify a minimum proportion of timber in load-bearing structures or interior finishing.

2.     Transition from “lowest price” to “life-cycle cost” (LCC) calculations. This would allow innovative local timber products, which may be initially more expensive but have a smaller carbon footprint and a longer service life, to win in procurement.

3.     Use centralised state procurement as an innovation platform. For example, VAS “Latvijas valsts meži” or state road maintenance services could conduct pilot procurements for new, locally developed bio-composites for fencing, road sign posts, or timber-based anti-skid materials.

2. Intellectual property (IP) valuation under the new EU rules

One of the biggest problems for forest bioeconomy start-ups is that the traditional financial sector (banks) does not know how to value intangible assets. If a start-up has a unique wood chemistry patent but lacks its own factory or forest land, banks consider it a too high-risk client and do not grant credit.

The European Innovation Act introduces a harmonised EU-wide intellectual property valuation system, which will change this situation according to a few basic principles: [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        Standardised IP valuation criteria: Unified, legally recognised rules will be created for determining the financial value of patents, trademarks, and technological processes across the EU. This means that Latvian banks or investment funds will be able to rely on a standardised methodology to calculate how much a company’s invention is worth.

·        IP-backed finance (IP-backed finance): The rules will allow patents and technologies to be used as official collateral for bank loans. State guarantee funds (e.g., Altum in Latvia) will be able to provide guarantees based on this intellectual property valuation. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

·        A unified EU-wide IP marketplace: A digital platform will be created where companies can easily sell, license, or rent their intellectual property assets to manufacturers in other EU countries. Latvian scientists who have developed a new method for cellulose processing will be able to safely and transparently license it to a large Scandinavian or German packaging manufacturer. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

3. The innovation “valley of death” in Latvian forestry start-ups

The “valley of death” (valley of death) is a critical stage in the life of a start-up, when the scientific discovery has already been made in the laboratory (early research), but the product is not yet profitable, and scaling it requires huge investments in physical infrastructure (factories, equipment). In the forest bioeconomy, this problem is much more severe than in the IT sector, for example, because an IT start-up only needs a computer and a server, whereas a bioeconomy company needs actual factories and equipment to process tons of wood. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

How does the “valley of death” manifest in Latvia?

·        A funding “gap” between grants and commerce: Latvian scientists and start-ups are very successful in attracting state or EU research grants (e.g., LIAA or Horizon Europe) to develop prototypes at the laboratory level. The problem begins the moment the grant ends. To build the first pilot plant, several million euros are needed. Venture capital funds in Latvia often avoid such “deep-tech” (deep-tech) projects because the payback period is long (5-10 years) and the technological risks are high.

·        Lack of infrastructure and testing laboratories: Latvia lacks open-access pilot-scale (pilot-scale) processing nodes where start-ups could produce experimental batches of their product (e.g., a few hundred kilograms of a new wood composite) to show to potential buyers in Europe. Currently, companies have to buy expensive equipment themselves or try to rent laboratories abroad.

·        Fragmented ecosystem: Forest owners, traditional woodworkers, and high-tech start-ups in Latvia often operate in isolation. The traditional wood industry, which earns good profits from the export of sawn timber or pellets, is cautious about investing in untested, high-risk bio-chemistry projects, which makes local capital inaccessible to start-ups.

The solution offered by the new approach: The European Innovation Act and EFI Bioregions recommendations emphasise that the state must actively support these open-access scaling facilities (open-access scaling facilities) and use public R&D procurement to guarantee the first batch of orders for companies in the middle of the “valley of death”, making them more attractive to private investors. [https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/]

1. https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/
2. https://bioregions.efi.int/what-can-the-forest-bioeconomy-learn-from-the-european-innovation-act/