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Biofuels and the future of the Finnish forest industries

It’s been a while since I last posted something original on the blog. Today I saw a news item (in Finnish) on the UPM Biofuels production in Lappeenranta, Finland. The specific interest for me was the announcement (which probably has been made before) that already during this year UPM’s biodiesel will be on offer at gas stations of ABC and ST1 in Finland. There will be a choice for either a mix of traditional diesel and biodiesel or purely biodiesel.

There are two interesting things here, at least. The first is that, in the words of Director of Sales and Marketing Sari Mannonen, the biodiesel does not compete with food production. In Sweden, there is a quite widespread use of bioethanol, but it is made of grain (and other biomass). So to some extent, stuff that could be used to feed either humans or animals is used for fuel production. Arguably this is more sustainable (especially in Sweden) that e.g. corn ethanol, but still. The innovation of UPM Biofuels is that it has succeeded in apparently mass-producing biofuels from pine oil, which is a waste product of pulp production. This means it does not (at all) compete with food production, and moves the pulp and paper industry a step closer to using waste products sensibly as well.

The second interesting part is that the product is very ready for the market. Biofuels are by itself not new but due to the scale of pulp production in Finland there should not be a shortage of raw materials for the biodiesel.

In my dissertation I pondered the developments of the pulp and paper industry in Finland. I graduated in 2012, and since then, there have been mostly positive developments – but only in specific areas! Paper production seems to lose out, but in particular pulp production has been a succesful business – even to the extent that Metsä Fibre will start building an 1.3 million t/a “bioproduct mill” (i.e. pulp and biofuels) in Äänekoski. Board is also still going quite well.

This is the speculation part: the pulp and paper industry is clearly a high tech industry. This means, that maybe, maybe, the development of biofuels will produce a fuel that is suitable for ships AND available in large quantities. My hope, and my belief, is that Finland in this way can become a global leader in environmentally friendly fuels. Finland would then overcome the “burden” of the Sulphur directive AND at the same time this directive will have achieved what it intended – banning a harmful substance and letting the private sector (with government R&D subsidies, probably) find an innovative solution. I wrote about this already in 2012, and as always, although there is a lot of noise about these things from various actors, the people in the industry do know where to put there money.

And think of it – money is virtually free to borrow from banks, even for firms. A company like UPM could make huge inroads in China with a network of biofuel mills. China’s environmental standards are bound to get tighter soon, so I wouldn’t waste time.