|UPM biofuels process. Click to enlarge.|
Finland-based UPM, one of the world’s leading forest products groups, will build a hydrotreatment biorefinery producing biofuels from crude tall oil in Lappeenranta, Finland. The biorefinery will produce annually approximately 100,000 tonnes of advanced renewable fuels for transport. (Earlier post.)
Crude tall oil is a residue of chemical pulp production, mainly generated in the production of sulphate cellulose from softwood. (Earlier post.) A significant part of the raw material comes from UPM’s own pulp mills in Finland.
UPM’s wood sourcing is based on the principles of sustainable forest management, chain of custody and forest certification. By further processing crude tall oil UPM is able to utilise the wood it uses for its pulp production in a more efficient way without increasing wood harvesting. UPM does not use raw materials suitable for food.
Construction of the biorefinery will begin in the summer of 2012 at UPM’s Kaukas mill site and be completed in 2014. UPM’s total investment will amount to approximately €150 million (US$197 million). UPM has not applied for a public investment grant for the project.
The decision to construct a biorefinery in Lappeenranta does not affect UPM’s other existing biorefinery plans. UPM has planned to build another biorefinery either in Rauma, Finland, or in Strasbourg, France. This biorefinery would use energy wood as raw material and different technology to that of the Lappeenranta biorefinery.
UPM will assess its other biorefinery plans after the EU has decided on its investment grants. The EU is expected to decide on the NER300 grants in the second half of 2012. In addition to an investment grant, the investment decision will be significantly impacted by the long-term outlook for wood price and availability in the market.
The biofuels business has excellent growth potential. The quality of our end product and its environmental characteristics has gained significant interest among a wide range of customers, and the investment is profitable. Lappeenranta is the first step on UPM’s way in becoming a significant producer of advanced second generation biofuels. This is also a focal part in the realization of our Biofore strategy.—UPM President and CEO Jussi Pesonen
UPM says its drop-in renewable fuels, under the brand name BioVerno, can decrease greenhouse gas emissions of transport by up to 80% in comparison to fossil fuels.
The demand for biofuels is expected to grow by approximately 7% a year in the EU. The target of the EU is to increase the share of biofuels in transport fuels to 10% by the year 2020. In Finland, the corresponding target is even more challenging with an increase of 20%. The annual production of UPM’s biorefinery will contribute approximately one fourth of Finland’s biofuel target.