The Law and Economics of Regulation of Engineered Living Materials in the EU : Prospects for Investments and Innovation

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Purnhagen, Kai ; Wesseler, Justus:
The Law and Economics of Regulation of Engineered Living Materials in the EU : Prospects for Investments and Innovation.
Luxembourg , 2026
ISBN 978-92-9412-394
DOI: https://doi.org/10.2826/1273791

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Abstract

Over the past decade, national and international stakeholders have shown significant interest in developing
Engineered Living materials (ELMs). ELMs represent an emerging technology. They were recognized among the Top 10 Emerging Technologies of 2025 by the World Economic Forum and were included in the OECD’s forecasting as a foundational technological development that will reach maturity in the next 5-10 years. ELMs, while not having a strict legal definition in the EU, are used for a wide range of applications. The European Innovation Council (EIC) supports the development of ELMs via its Pathfinder Challenge, aiming “to seize the opportunity to position strategically Europe at the forefront of the ELMs field, which is still in its infancy.”
A debate has emerged in the literature and among regulators and stakeholders regarding how best to assess and regulate applications of engineered living materials (ELMs) in a way that ensures market access and fosters innovation, while simultaneously safeguarding human health and the environment. Critical decisions must be made concerning both the anticipated benefits and the potential safety implications of these technologies. Decision-making is further complicated by uncertainties surrounding future risks and benefits.
Many ELMs rely on genetically modified organisms (GMOs), often generated using new genomic techniques (NGTs), either as genetically modified microorganisms (GMMs) for the production of specific compounds or as integral components of the final ELM product.
The question has arisen as to the extent to which ELMs fall within the scope of EU regulations governing GMMs and GMOs, and what implications this may have for current and future investment in ELM technologies.
This report examines the existing EU legal framework for GMOs and GMMs, with a particular focus on the challenges associated with its application to ELMs. It assesses the extent to which these regulations apply to ELMs currently under development, drawing on an analysis of seven projects funded by the EIC. The report then introduces an economic framework designed to evaluate how the regulatory environment influences incentives to invest in ELMs. Finally, it discusses potential regulatory approaches for ELMs and links these to the economic assessment.