WOOD-BASED BIOREFINERIES PAVE THE WAY TO SUCCESFUL BIOECONOMY. Marko Janhunen UPM Biorefining, Gothenburg,

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1 WOOD-BASED BIOREFINERIES PAVE THE WAY TO SUCCESFUL BIOECONOMY Marko Janhunen UPM Biorefining, Gothenburg,

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3 UPM today UPM BIOREFINING UPM ENERGY UPM RAFLATAC UPM SPECIALTY PAPERS UPM PAPER ENA UPM PLYWOOD UPM BIOCOMPOSITES Pulp Plantations Biofuels Sawmills Wood Sourcing and Forestry Hydro-, nuclearand condensing power (incl. shares in energy companies) Electricity production and trading Label materials for product and information labelling Fine and specialty papers in China and APAC Labelling material globally Magazine papers, newsprint and fine papers for various enduses Wisa Plywood and veneer products UPM Grada wood material UPM ProFi UPM Formi UPM BIOCHEMICALS Chemical building blocks Lignin products Biofibrils Biomedical products 3

4 Global businesses local presence 13% North America UPM s sales by market 2016 EUR 9,812 million 63% Europe 18% Asia 54 production plants in 12 countries 12,000 customers in 120 countries 85,000 shareholders in 40 countries 6% Rest of the world 19,300 employees in 45 countries 55,000 suppliers in 70 countries 4 UPM

5 Wood raw material is the basis of many different businesses at UPM Fibres to pulp Fibres to biocomposites Bark and branches to biofuels and energy Fibres to biofibrils Lignin to biochemicals Extractives to renewable diesel or biochemicals Cellulose or hemicellulose to biochemicals Logs for sawn goods and plywood 5

6 EU targets 40% reduction in GHG emissions by 2030 to keep global warming below two degrees Targets cannot be met without significant emission cuts in transport Decarbonizing European transport requires effective use of all energy and technology options Renewable drop-in fuels: a fast-lane solution 6 * Calculated based on Global EV sales outlook to 2040 by Bloomberg New Energy Finance * Assuming EV s represent 38% of new car sales in Europe by EV s are fully emission free ** Assuming annual energy efficiency improvement of 2% in light-duty, 0,5% in heavy-duty

7 What is driving advanced biofuels development? 7 UPM Regulation: ILUC implementation, RED2, ESR, national policies vs. EU policy Feedstock: Sustainable availability of feedstock & scalability Increasing sustainability criteria Consumer and civil society expectations Technology: Which technologies will emerge as winners? Markets: Single market for biofuels: National markets vs. EU 27(28)-market Sustainability Increasing sustainability requirements GHG reduction requirements

8 UPM Lappeenranta Biorefinery, Finland Key facts: Product: Renewable diesel UPM investment: 175 M Capacity: 100,000 tonnes/a UPM Patents & Applications: 200 Employment: 200 persons 8 UPM

9 Capturing synergies by full integration into UPM Kaukas mill site in Lappeenranta, Finland BIOREFINERY RESEARCH CENTRE BIOMASS POWER PLANT SAW MILL 2 PULP MILL PAPER MILL UPM

10 Crude Tall Oil (CTO) a residue of pulp making process as raw material PRIMARY PRODUCT Pulp for paper making 50% PULPING PROCESS 2% ENERGY 48% RECIDUE STREAM Crude tall oil Crude tall oil must be removed from the chemical cycle to secure pulping process functionality 10 UPM

11 UPM BioVerno Renewable diesel 11 UPM OXYGEN FREE HYDROCARBON 100% RENEWABLE FEEDSTOCK 100% CO 2 EMISSIONS (VS. FOSSIL FUEL) -80% IN FOOD CHAIN 0%

12 UPM Biofuels in existing and future end-use Fuel retail 12 Dedicated green fleets Marine/Aviation

13 UPM Lappeenranta biorefinery all streams add value Bio-based aroma chemical for fragrance industry Renewable fuel or applications in Chemical industry Reducing agent in pulp and chemical industry Renewable gasoline component in road transport Feedstock for bioplastics production or biochemical use Renewable drop-in diesel for road and marine use Turpentine Pitch Sodium bisulphate UPM BioVerno naphtha UPM BioVerno diesel Renewable wood-based chemicals Raw materials from UPM s own pulp production: Crude tall oil Biorefinery processes 13 UPM

14 Feedstock is available in Europe Wasted: Europe s Untapped Resource Member States have more than enough resources sustainably available to meet 0.5% advanced biofuel target 16% of EU road transport fuel demand could be reached by converting sustainably available wastes & residues If all sustainable waste from farms, forests, households & industry were used for transport fuels, by 2030 Displaces 37 million tonnes of oil annually Equal to 16% of road transport fuel demand Up to 300,000 direct jobs across Europe Up to 15 billion EUR additional revenues

15 Leaders of Sustainable Biofuels Member Companies Industry platform driving development of advanced biofuels in Europe Now is the time to bring advanced second-generation biofuels to the market. The industry is committed to delivering on its promise but we need stable long-term investment conditions which encourage investment while, at the same time, promoting true advanced biofuels.

16 Technology is ready Technology readiness levels between large cellulosic ethanol plants constructed Wood-based renewable diesel production on-stream New technologies developing at fast speed

17 REDII proposal sets the right signal for advanced biofuels The targets for advanced biofuels (Annex IXa) are ambitious and feasible Long-term stability is needed Keep Annex IX part A unchanged The review clause in 2025 should be deleted Include a provision that requires Member States to determine penalties Overall renewable energy in transport stagnating at best

18 Opportunities in Advanced Biofuels 18 UPM

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