Finland. UPM-Kymmene Oyj

The loan has been provided to UPM-Kymmene Corporation for the construction of a biorefinery in Lappeenranta, Finland, producing advanced biofuels from crude tall oil. It is the first industrial-scale plant of its type in the world and it will be located next to UPM’s Kaukas mill site. Construction began in the summer of 2012 and will be completed in 2014.

The biorefinery will produce approximately 100,000 tonnes of renewable diesel annually for the transportation sector. UPM’s advanced biofuels are expected to cut greenhouse gas emissions from transportation by up to 80%, compared to fossil fuels. The main raw material to be used is crude tall oil, which is a residue of chemical pulp production. UPM expects a significant part of the raw material to come from its own pulp mills in Finland.

UPM is a leading producer of graphic paper, but produces also pulp, labels, timber and sawn materials. Besides pulp and paper, the company owns energy assets accounting for roughly 10% of Finland’s entire energy production. Although UPM is diversifying its operations, paper still accounted for 67% of total external sales in 2012. Paper is mostly sold on the European market. UPM has 22,000 employees, of which 40% are located in Finland. Production is concentrated mainly in Finland, Germany, China and Uruguay.

The investment diversifies UPM-Kymmene’s product range. The facility is a commercialisation of outcomes from the company’s R&D activities related to its so-called Biofore strategy. The commercialisation and the ongoing R&D activities contribute to the development of transferable knowledge in the renewable energy sector in the member countries and it will add value to local renewable resources.

Biofuels are strongly supported by the European Union due to the EU 2020 strategy targets (a 20% decrease in energy usage, 20% of energy supply from renewable sources, and 10% usage of biofuels in transportation). This project will help to reach these targets.

Tall oil is a residue of pulp mills. No separate logging is needed to produce tall oil, and thus the effects on land use and biodiversity are less significant in this case when compared to other biofuel sources.

Tall oil is hydrotreated, which means that natural gas is used as a source of hydrogen in the production process. This hydrotreatment is the main source of the fossil CO₂ emissions of the end product. When comparing the environmental impact of the different commercially available fuels, the most advanced bio-based fuels—such as UPM’s product—have an advantage over fossil fuels when it comes to clean combustion (e.g. low emissions of particles, NOX, etc.) and lower greenhouse gas emissions.

Based on the Environmental Impact Assessment, the negative environmental impact of the project is estimated to be limited. The project area is located within UPM’s industrial park containing a pulp mill, a paper mill, a wastewater treatment facility, wood storage areas and the Kaukaa power plant. No protected areas, such as NATURA areas, are located within the vicinity of the project site.

The project, including the construction phase, will follow the ISO 14001 standard. The project organisation has persons responsible for health, safety and environmental issues during the entire project life cycle. The environmental permit was issued in December 2011, and construction permits were received in July and August 2012.