(Blog, Daan Peters, 28 June 2017) Since 2015, UPM produces renewable diesel in South-Eastern Finland, a premium biofuel that can be used in road and marine transport. The product is made from tall oil, which becomes available in small quantities when pulping wood. UPM asked Ecofys, a Navigant company, to assess the sustainability of tall oil, in particular focusing on displacement effects: can it be used for biofuels without displacing its existing use by the pine chemical industry? And can we be sure that no indirect land use change risks occur that could reduce its climate change mitigation potential?
Biofuels produced from agricultural crops have associated sustainability risks that need careful attention. Tall oil does not require agricultural land and has little to no direct associated sustainability risks. Still, UPM wanted to be sure that no negative indirect sustainability impacts occur. The background of UPM’s questions is the ongoing debate on biofuel sustainability. Different to wind and solar power, biofuels do not experience rapid cost reductions. Regulatory support remains necessary and policy makers will only support biofuels if they are convinced that biofuels are truly sustainable and benefit domestic security of supply and local economies.
So why do we need biofuels? After all, electric vehicles will surely dominate road transport soon? While this may be true, few renewable alternatives exist for long-distance trucks, aviation and shipping. Without biofuels replacing fossil fuels in trucks, planes and ships, it will be difficult to reduce greenhouse gas emissions enough to avoid dangerous levels of climate change.
Having assessed tall oil and its markets, we concluded that the material is a residue from the pulping process that can be traded internationally with no land use footprint of its own. And even though worldwide, only about 2.6 million tonnes of the material become available in the pulping process annually, a significant surplus exists that can be used for new uses. The use of tall oil for chemical products has decreased in recent years due to a drop in demand for tall oil based chemical products. This effect cannot be linked to higher feedstock prices because in fact tall oil prices are much lower today than three or five years ago. Of course theoretically, if three additional large tall oil biofuel plants would be built, the picture might look different, but today we can conclude that UPM produces tall oil based renewable diesel without negative market displacement effects or indirect land use change risks.
If in the future biofuels are especially needed in aviation and shipping, the world needs large quantities of advanced renewable diesel fuels. UPM’s product is a good example yet has very limited scale-up potential. UPM’s next challenge is therefore to develop a renewable diesel that is not just fully sustainable but also scalable.
Link to study: Ecofys - Crude tall oil low ILUC risk assessment report