The HOOP Project Maturity Level (PML) approach is aimed to support project developers, promoters, and investors to evaluate which parts of their portfolio are investment-ready and which projects need further development. At the same time, this tool will also contribute for the matchmaking between project developers/promoters and investors, contributing to assess and improve the maturity and bankability of Urban Circular Bioeconomy (UCBE) projects.
The purpose of the HOOP PML is:
to provide project developers, consultants, promoters, public and private entities with a standard tool suitable for guidance, evaluation and ranking of the maturity of UCBE projects;
to identify the maturity of the circular bioeconomy projects and, thus, facilitating their improvement to increase their bankability for funding and green financing of the projects;
to match with investors looking for UCBE projects that meet their requirements in PML score;
to provide investors, funders, and financial institutions with the information necessary to assess the maturity of an investment project in a simple, standard, and fast manner.
The Project Maturity Levels
The ranking consists of six maturity levels, with specific criteria for each level:
PML 1 - Potential project identified. Project or technology apparently suitable for intervention.
PML 2 - Project potential quantified (via audit, study, benchmarking, etc.).
PML 3 - Project investment estimated, and suitable business models identified.
PML 4 - Technical project and business case developed.
PML 5 - Investment-Ready. Business case and tender model confirmed.
PML 6 - Investment offer or tendering requirements created. Ready to sign or launch the tender.
To ensure that a specific project garners interest from potential investors and aligns with their expectations, it is imperative for cities and project developers to demonstrate specific characteristics. Drawing from insights in the financial industry, the following list elucidates key requirements and beneficial strategies:
1. Understanding the bio-based value chain: Analysing and assessing the entire value chain of the project is crucial. This may include the sourcing of renewable feedstocks, the conversion process, and the distribution of bio-based products. Each step should be assessed for efficiency, circularity, and sustainability (evaluating how the project contributes to sustainability goals).
2. Feasibility and Business Model: Present comprehensive reports detailing the project's technical, economic, and environmental viability, paired with a complete and sustainable business model. Carefully assess the project's business model, understanding how generates revenues, its market potential, and the scalability and replication of the model. Competitive landscape and potential local barriers may jeopardise the project.
3. Regulatory Compliance and Governance: Projects should not only adhere to all relevant regulations but also demonstrate transparent and ethical governance structures. A comprehensive evaluation of the project's ESG (environment, social and governance) metrics, encompassing its environmental footprint and long-term sustainability strategies, and EU taxonomy aliments is of paramount importance. Investigating the regulatory and policy framework that governs UCBE projects in the specific city or region where the project is located. Government incentives and policies can significantly impact the success of such projects.
4. Stakeholder and Community Engagement: Projects that engender robust support from communities and key stakeholders tend to face fewer hurdles and objections as they progress. Evaluating the project’s impact on the environment and local communities is fundamental in order to enhancing the positive social and environmental footprint of the project – only with this preventive and democratic approach is possible to gain public support and regulatory approval by the populations, social and political movements and public entities. Moreover, partnerships and collaborations with research institutions, universities, or industry leaders are another key to the success of the project, enhancing the project's credibility and innovation potential.
5. Financial Health and Risk Management: Investors look for projects with robust financial forecasts and a comprehensive risk assessment to gauge potential profitability and understand associated risks. Engaging in a rigorous due diligence process is recommended and the HOOP Due Diligence Standard Procedure is an excellent tool to support this achievement.
6. Standardisation: Using standard tools such as the HOOP PML Approach and HOOP Due Diligence Standard Procedure can reduce transaction costs and de-risk projects.
On the investment side, for decisions in the UCBE sector to be discerning, it is essential for investors to have an intimate understanding of the sector's specific traits. Based on industry best practices, below are pivotal guidelines, complemented by resources from the HOOP Project:
1. Ongoing Sectoral Education: Consistently participating in UCBE-centric seminars, workshops, and conferences is key. Events such as the HOOP Circular Investors Day cater precisely to this need. The motte is to start by gaining a comprehensive understanding of what the urban circular bioeconomy and its projects entail. This includes knowledge and raising awareness about bio-based materials, principles of circularity, waste management, among others. The state-of-art of technologies for the production of bioproducts from biowaste and wastewater, the HOOP Investment Package Manual and the HOOP Virtual Academy are an excellent support in this educational and raising awareness pathway.
With these guidelines, both city administrators and investors can better navigate the intricacies of the Urban Circular Bioeconomy sector, ensuring the alignment of projects with investor expectations and the broader sustainable development goals. Furthermore, “stay updated” is fundamental for investors, cities, project developers and promoters in the field of circular bioeconomy, because it is continually evolving with latest industry trends, innovations, and policy changes that may impact the UCBE sector and its projects and investments.
2. Engagement with Domain Experts: Forge connections with UCBE experts and industry professionals to gain in-depth insights and ensure a well-rounded understanding. HOOP project released a set do reports that can help to navigate on UCBE projects and their technologies and processes.
3. Practical Site Assessments: Conducting direct visits to UCBE initiatives (e.g., from the HOOP Lighthouses) offers an empirical perspective, enabling a better grasp of the real-world operational nuances and potential challenges.
4. Adherence to Regulatory Insights: Familiarise with the current regulatory frameworks governing the UCBE sector. Embracing EU taxonomy guidelines might serve as a pertinent starting point.
5. Prioritisation of ESG Metrics: Beyond financial potential, emphasise projects that robustly address Environmental, Social, and Governance criteria, ensuring alignment with broader sustainability objectives and best practices.
6. Long-Term Horizon and project’s changes: The circular bioeconomy projects often require a longer-term investment horizon, mainly when the project’s timeline includes an increasing of size through replication and/or upscaling (e.g., from pilot to full scale, or increasing the number of modules, etc.) or/and when the projects are coupled with other ones in the field of new waste services and bioproduct production/material valorisation processes. These projects may take time to establish and become profitable, mainly when the TRL is lower, or the technology is very recent. Moreover, the UCBE projects can change several times during design and development in accordance with the PDA, studies, regulations, among others.
Investing in urban circular bioeconomy projects can align with both environmental and financial objectives. However, thorough due diligence and a deep understanding of the project's specificities and their maturity levels are crucial for making sound investment decisions in this sector.
Go to the Project Maturity Level Tool