Good News from Thu, 24 May, 2012:

Green fuel grows on trees

The world’s first biorefinery for the production of wood-based biodiesel is expected to be completed in Lappeenranta in 2014. The world’s first biorefinery for the production of wood-based biodiesel is expected to be completed in Lappeenranta in 2014.

The forest industry company UPM is constructing the world’s first biorefinery 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 of time, technological breakthroughs and finding the right conditions for the production process, explains UPM’s Vice President for Biofuels, Petri Kukkonen.

Emissions will decrease

UPM is investing approximately EUR 150 million in the project. The process is based on tall-oil hydrotreatment, which uses crude 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, wood chain of custody and forest certification.

The biorefinery will produce annually some 100 000 tonnes of advanced second generation biodiesel, called UPM BioVerno, for transport. UPM BioVerno will decrease the greenhouse gas emissions of transport by as much as 80 per cent compared to fossil fuels.

The end product is a high-quality, cost-competitive and truly emissions-reducing biofuel for transport and is highly suitable as is for vehicles and petrol stations that currently use both diesel and gasoline, Kukkonen sums up.

Bright outlook

Demand for biofuels is expected to grow in the EU approximately seven per cent annually this decade. The EU’s target is to increase the share of biofuels used in transport fuels to 10 per cent by 2020. Finland’s target is set at 20 per cent.

According to Kukkonen, UPM’s biofuels exceed both the EU’s and Finland’s current and tightening requirements set for the sustainability of biofuels. The production covers some one fourth of all of 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 investment 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 some time 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.

www.upm.com

SO

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