"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 realisation of our Biofore strategy", says UPM President and CEO Jussi Pesonen.
UPM's advanced biodiesel, UPM BioVerno, is an innovation which will decrease greenhouse gas emissions of transport up to 80% in comparison to fossil fuels. The product's characteristics correspond to those of the traditional oil-based fuels and highly complement today's vehicles and fuel distribution systems.
"Our biorefinery in Lappeenranta is the first significant investment in a new and innovative production facility in Finland during the ongoing transformation of forest industry", says Pesonen.
The construction of the biorefinery will offer work for nearly 200 people for approximately two years. When production commences, the biorefinery will directly employ nearly 50 people and indirectly about 150 people. UPM has not applied for a public investment grant for the project.
EU 2020 targets create demand for sustainable biofuels
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.
UPM's biofuels exceed the current and continuously tightening sustainability requirements set by both the EU and Finland.
The main raw material of UPM's hydrotreatment biorefinery in Lappeenranta is crude tall oil, which is a residue of chemical pulp production, mainly generated in the production of sulphate cellulose from softwood. 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.
"We utilise our own development work and sustainable wood-based raw materials. As a result we will have a cost-competitive high quality transport fuel that truly decreases emissions and is suitable for modern cars," states UPM's Vice President for Biofuels, Petri Kukkonen.
Next biorefinery in planning
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.