Finnish forest company UPM is constructing the world’s first bio- refinery for the production of wood-based biodiesel. The outlook for the business is promising, as demand for the quality of the end product and its environmental characteristics is strong.
The biorefinery is being built in Lappeenranta, in south-eastern Finland, and will produce biofuel from crude tall oil. The industrial-scale investment is the first of its kind in the world. The biorefinery, which will produce biofuels from raw materials unsuitable for food, is based on innovations developed by UPM.
The development work required gathering knowledge of hydrocarbon processing within a short period, technological breakthroughs and finding the right conditions for the production process, explains UPM VP for biofuels Petri Kukkonen.
UPM is investing about €150-million in the project. The process is based on tall oil as the main raw material. The crude tall oil is a residue generated in the production of cellulose. The wood raw material supply is based on the principles and rules of sustainable forestry, the wood chain of custody and forest certification.
The biorefinery will produce some 100 000 t/y of advanced second-genera- tion biodiesel, called UPM BioVern, for transport. It is reckoned that UPM BioVerno will decrease the gas emissions of transport by as much as 80%, compared with fossil fuels.
The end product is a high-quality, cost-competitive and truly emissions-reducing biofuel for transport and is highly suitable for vehicles and petrol stations that currently use both diesel and petrol, Kukkonen says.
Demand for biofuels is expected to grow in the European Union (EU) by about 7% a year this decade. The EU’s target is to increase the share of biofuels used in transport fuels to 10% by 2020. Finland’s target is set at 20%.
According to Kukkonen, UPM’s bio- fuels exceed both the EU’s and Finland’s current and tightening requirements for the sustainability of biofuels. The production covers about one-quarter of all Finland’s biofuel targets.
The market for biofuels already exists and is growing at a fast rate.
The growth potential for the business is excellent. Customers are showing great interest in the quality of the end product and its environmental characteristics, and this is a profitable investment, says Kukkonen.
“The Lappeenranta biorefinery invest- ment represents the first step on our way to becoming a significant producer of advanced biofuels and a key part in realising the group’s Biofore strategy. We will assess our other biorefinery plans after the EU’s grant decisions have been announced sometime in the second half of 2012. The long-term outlook for the overall price of wood raw material and its availability in the markets will also influence our investment decisions,” Kukkonen concludes.