Biokraft receives funding for biogas project at Norske Skog

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Biokraft receives funding for biogas project at Norske Skog

June 11, 2014 - 19:45
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BRUSSELS, June 6, 2014 (RISI) - Biokraft has received some NOK 82 million ($14 million) in funding from the state-owned enterprise Enova for the construction of a biogas production facility. The plant will be located in the Fiborgtangen industrial area close to Norske Skog's 600,000 tonne/yr Skogn newsprint mill near Trondheim, central Norway. However, the firm still wants to find a buyer for around half of the biogas it will produce before making a final investment decision and starting construction work.

The idea has been for the municipality-owned bus company in Trondheim to use the biogas for its buses, but the local authorities are still trying to secure some funding for this from the central government. As a result, Biokraft managing director Håvard Wollan said the firm has started to look for other potential buyers of the biogas within public transport in Norway and Sweden as well. The aim is to start construction during the second half of this year. If the project is realized, the facility should be operational in late 2015 or early 2016.

Biokraft's facility would produce some 80 GWh of biogas from protein-rich dead or ill fish from breeding facilities off the coast of Norway and some 20 GWh of biogas from carbon-rich sludge from the paper production at the Skogn mill. A modification from the previous plans means that the unit which will use the paper plant byproducts will become an integrated part of the mill's water purification process, instead of an independent facility. In total, the biogas could replace some 10 million liters of diesel for land-based transport.

The project will cost a total of some NOK 350 million. Enova's support is divided between the two units, with the one using fish receiving some NOK 60 million and the sludge unit getting the remaining NOK 22 million. Some years ago, the project already received NOK 37.4 million, but as it developed, Biokraft decided to cancel this application and file a new one. The remainder of the financing will be a mix of the firm's own capital, external investment and bank loans. Biokraft's largest owner is the energy company TrønderEnergi.

Plans to use wood at later stage: Further in the future, Biokraft's ambition is to also use wood and forest residues for the production of biofuel. "At our current location, I would estimate there is a possibility of producing five times as much [biogas] as we will produce [in stage one]," Wollan said.

Wollan hopes that there will be more indirect public support for biofuel going forward. "The public authorities can play an important part in accelerating a healthy business development by demanding more biofuel [for example in public transport]. I am sure that we, Statkraft and others would answer by increasing our capacity," he said. "If we want to achieve our climate targets, we need much more biofuel for land-based transport and we welcome all new actors," Wollan added, with reference to Statkraft and Södra's recently announced project.

Norske Skog sees potential in biomass: Wollan stressed the importance of the co-operation with Norske Skog, because since the facility will be built near the Skogn mill, it can use the plant's wastewater and will also benefit from logistic advantages including road, rail and harbor access. A Norske Skog spokesperson said the company was also "very positive" toward the initiative due to the synergies.

Norske Skog is not worried about the increased use of wood for energy or other non pulp and paper related products. "In Norway, the forest growth is almost three times bigger than what is harvested every year. We are not worried about this development so far," the spokesperson said, adding: "The moment harvest exceeds growth, there will be competition for timber and prices are likely to rise. As long as there is enough wood and free harvest machinery capacity, the price development will remain moderate."

Apart from the Biokraft scheme, Norske Skog is also involved in two biomass projects in Australia and New Zealand, however, bio energy "is not a strategic choice for us now," the spokesperson added.

In New Zealand, Norske Skog is involved in the Ministry for Primary Industries' "stump to pump" primary growth partnership program, together with the fuel supplier Z Energy. The 14-month program, which started in July last year, aims to investigate how to generate more value from forestry waste by converting it to liquid biofuels. At the moment, the parties are evaluating how to integrate a test plant at Norske Skog's Kawerau newsprint mill as well as the synergies and cost efficiencies that could arise from this.

In Australia, Norske Skog is partnering with Licella, a company that has developed a process to convert biomass into bio-crude oil, which could be refined into a number of fuels. For example, one intention is to blend the bio-crude oil with traditional crude oil to produce road and marine transportation fuels or to use the technology to produce a feedstock that can be refined into a "drop in" aviation fuel. Other project participants include Virgin Airlines and Air New Zealand.