Finland has seen the rise of a sizeable biofuel cluster, which was born partly from the need of the forest industry to renew and create new business in the sector.
“We have an abundance of bio-based raw material readily available. In my opinion, the results of research and development work in both privately held companies and in long-term collaboration projects with the government have proven extremely successful,” Marko Janhunen, Vice President, Stakeholder Relations, UPM Biorefining, underlines the prerequisites for success.
The demand for biofuels is based on legislation connected to the EU’s climate and energy policy. The goal of the legislation is to cut greenhouse gas emissions by reducing the use of fossil fuels. At the moment, approximately 95 per cent of traffic emissions are from fossil fuels.
In addition, Finland has a national target of reaching a 20 per cent usage of biofuels by 2020. This fact has laid a solid foundation for biofuel investments.
Aiming for uniform European regulation
Janhunen remarks that large investments cannot be undertaken based on domestic demand alone. The market has to be responsive throughout Europe as well.
“In order to attain success with second generation biofuels, we need to have a uniform European regulation by which companies can develop their products and invest in production plants. Biofuels still face some obstacles in the internal market, and EU legislation contains some uncertain factors. This means that there is yet a large amount of work left in the sector. Fortunately, the opportunities offered by advanced biofuels are stirring interest once again.”
Vehicles can be powered 100% by biofuel
The clearest advantage of advanced biofuels is the fact that the current vehicle pool can use them up to a content of 100 per cent, and no changes are required for the current fuel distribution systems. Typically, biofuels are mixed with fossil fuels.
“Germany, for example, is introducing a model in which the focus is on the total reduction of traffic emissions instead of applying quotas for biofuels. This approach is extremely practical for products such as UPM BioVerno, which reduce carbon dioxide emissions significantly.”
According to ICCT (International Council on Clean Transportation) estimates, second generation biofuels could cover 16 per cent of European traffic fuels by 2030. This amount is equivalent to 37 million tonnes of oil per year.
Investments create jobs
Janhunen adds that in addition to climate policy, there are other strong grounds for the demand of biofuels. “In general, renewable fuels are made from domestic raw materials. This means that investments into them improve security of supply and balance of payments, as the import of energy and oil products is reduced. In addition, development in the sector creates new innovations and jobs in the member states.”
UPM Lappeenranta produces renewable diesel
The value of the UPM Lappeenranta biorefinery investment is EUR 175 million, with the plant employing approximately 200 people. If, for example, the Finnish national biofuel target of 20 per cent is reached and the export markets open up, 3200 new jobs could be created in the supply chain alone.
Lappeenranta produces approximately 100,000 tonnes of renewable diesel per year. This accounts for 20 per cent of the Finnish biofuel target. Annually around 10 million tonnes of crude oil is imported into Finland, and the total cost of the oil bill is around EUR 8 billion. However, a significant amount of this oil is refined and exported.