The Finnish pulp and paper producer UPM plans to spend $600 million to build a biorefinery in Leuna, Germany, that will convert wood into ethylene glycol, propylene glycol, industrial sugars, and lignin-based fillers. The plant, due to start up by 2023, will have an annual capacity of 220,000 metric tons.
It is one of the first major investments in chemical production by a paper company. Several major paper producers, including Stora Enso and Smurfit Kappa, have in recent years launched programs to develop wood-to-chemical processes in a bid to offset declining paper demand.
The Leuna facility will chip wood, extract lignin and sugars, and convert the sugars into chemicals. UPM expects its cost of production to be comparable with that of fossil-based alternatives. “The supply of biochemicals is very limited,” UPM CEO Jussi Pesonen says in a statement. “Due to this, high-quality sustainable alternatives are priced at a premium in the markets.”
UPM selected Leuna to take advantage of existing infrastructure at the sprawling complex, which is populated by several major multinational firms that use glycols.
“This is without doubt an interesting development, and its implications can be significant, as it offers more sustainable solutions to fossil-based products we use every day,” says Alejandro Mata, a director at the consulting firm Fastmarkets Risi.
But Mata does not expect other paper companies to follow suit at such a large scale in the near future. “The entry barriers are considerable,” he says, adding that UPM has had to invest significant R&D resources to reach the point where it can scale up the technology.