The shiny cylindrical tanks and slant-roofed control panels shoved against a wall in C3 Biotech’s laboratory have essentially been turned into a multimillion-dollar graveyard of high-grade stainless steel equipment.

All of this state-of-the art gear was discarded during the company’s quest to discover a cheap way to convert agricultural waste like potato peels or sugar beet pulp into acrylic glass, a material widely used in manufacturing.

Nigel Scrutton, a co-founder of C3 Biotech in Stockport, England, makes a point of showing off these expensive failures before explaining that the eureka solution involved using discount plastic tubs — the kind you might find at Walmart.

What is equally surprising is that this British company’s breakthrough has been funded by an unusual grant from the German government, part of a novel effort to support shoot-the-moon innovation throughout Europe.

The pressure on Europe to better compete with Chinese and American technological and industrial advancements is peaking.

Europe has been trailing the world’s two largest economies for more than a decade on several measures of competitiveness, including investment, research and development, and productivity growth.

At stake is Europe’s “lead in many historic strongholds, including automotive, pharmaceuticals and machinery,” a report on competitiveness from McKinsey Global Institute concluded.

The region would have to spend nearly $1 trillion more in investment annually just to keep up, according to estimates.

Soaring energy costs, aggravated by wars, relatively high labor costs and the European Union’s trademark slow decision-making process are also blamed for blunting Europe’s competitive edge.

Amid the dire forecasts, Germany’s Federal Agency for Breakthrough Innovation — called SPRIND — offers a breath of optimism.

The office is determined to buck ingrained assumptions and prove that governments can fund ambitious, cutting-edge ventures quickly and across national borders.

SPRIND is hardly the first effort by the European Union or Britain aimed at jump-starting innovation and research. The European Union’s 95.5-billion-euro Horizon Europe program has been running since 2020, and a €175 billion budget had been proposed for the next phase, scheduled to commence in 2028.

Horizon’s track record has been mixed, with critics complaining about cumbersome applications, confusing rules and a preference for large corporations over disruptive enterprises.

SPRIND is much smaller, but it thinks big. Its goal is innovations that “solve a massive technological, social or environmental problem,” create “a completely new market” or change an existing one.

“SPRIND is completely different,” said Mr. Scrutton, who has applied for countless grants during nearly four decades of research at C3 Biotech and the University of Manchester, where he is a professor. Most have timelines that span several months or even years.

The average time between the filing of a grant application at SPRIND and the signing of a contract is 14 days, according to the agency.

A seminal report on the competitiveness crisis commissioned by the European Union and headed by Mario Draghi, a former prime minister of Italy, singled out SPRIND’s approach as a model for innovation.

One inspiration for SPRIND was the Defense Advanced Research Projects Agency in the United States, or DARPA, which laid the foundation for the internet and backed projects like the Saturn rocket, armed drones and biofeedback systems.

Public research funding often steers clear of projects that may have a big payoff but also a big possibility of failure and could take a long time to develop. Groundbreaking innovations frequently perish in what’s known as the “valley of death” because they can’t get money to finance the leap between early-stage research and commercial production.

Jano Costard, whose title at SPRIND is head of challenges, wants to give researchers the “freedom to really push the boundaries and do something that you wouldn’t get funding for probably through a conventional venture capital route.”

The strategy is to offer challenges to develop pioneering products and technologies, and then to invite teams of entrepreneurs, academics and researchers to compete. A jury of experts screens the proposals. SPRIND also offers grants, investment and financing for innovative start-ups outside its own sponsored challenges.

Since it started in early 2020, SPRIND has received 4,740 submissions and funded 376 teams. To obtain the next round of funding, a team must demonstrate measurable progress. Failures are expected.

The goal of C3 Biotech’s three-year biomanufacturing challenge was to create a way to cheaply convert waste streams into products that could ultimately be produced on an industrial scale.

Other challenges funded by SPRIND involved the application of artificial intelligence to health data, the use of microgravity for drug development and more.

One unusual feature of how SPRIND works is that while its funding comes from the German government, the organization is willing to spend it all over Europe, including the Manchester, England, suburb where C3 Biotech is located.

“We need to create breakthroughs, and these might not just come from Germany,” Mr. Costard said. After all, if a significant advance could, say, reduce energy prices in Germany, then it’s money well spent.

Last month, SPRIND awarded grants worth up to €26.5 million to 10 teams from five countries to develop frontier artificial intelligence systems. At the end of 2028, the agency plans to help three teams that emerge as winners to raise €1 billion each from public and private investors.

Vinnova, a Swedish government agency that similarly seeds innovative start-ups, is teaming up with SPRIND on a new technology challenge: how to destroy small drones while safeguarding civilians from fallout.

Darja Isaksson, Vinnova’s director general, said that “we were really surprised” to learn that SPRIND was funding teams outside Germany. That was “one of the things that really caught my attention.”

Other countries have taken notice. Last month, France announced plans to create its own breakthrough innovation agency that would work with SPRIND. The Netherlands, too, is eyeing proposals to set up its own version of the German incubator.

At C3 Biotech, the team is tending to SPRIND’s investment. In the lab are plastic vats filled with hungry, salt-loving bacteria that are feeding on starch left over from the manufacture of potato chips.

The biological compound that this fermentation produces can be processed into acrylic glass and used in a mold or 3-D printer to manufacture thousands of products, from automobile headlamps to children’s toys.

A scientist cradled prized prototypes in his hand: a tiny black toy brick, a translucent blue heart and a yellow Lego-like figurine, all made from Citrasyn, the new chemical produced in their lab.

Establishing a cheap process to make chemicals from waste streams “has been the holy grail of biomanufacturing for many, many years,” Mr. Scrutton said. This month, he and his team celebrated a landmark: 180 days of continuous production.

C3 Biotech is now talking to corporations that are interested in commercializing the discovery.

Companies like C3 Biotech could provide the kind of innovations that undergird Europe’s future prosperity.

“That is exactly kind of the background against which SPRIND was created,” Mr. Costard said. “Our job now is to make sure that we are able to create those new industries.”