UPM BIOFUELS From wood to biofuels, biochemicals & biomaterials

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1 UPM BIOFUELS From wood to biofuels, biochemicals & biomaterials Maiju Helin Head of Sustainability and Market Development, UPM Biofuels Zero s fossil free plastics forum 3/2018 Oslo UPM

2 Roots run deep UPM

3 UPM today pulp, plantations, biofuels, timber BIOCHEMICALS BIOKOMPOSITES UPM SALES 10 BILLION PERSONNEL 19,300 SHAREHOLDERS 85,000 +

4 4 UPM The wood based product market is an economic mechanism that mitigates climate change, and sustains forests and forest carbon sink effect when done in a responsible way

5 UPM Kaukas, Lappeenranta, Finland Industrial UPM evolution Kaukas Mill of Integrate, the world s most versatile Lappeenranta forest industry integrate UPM KAUKAS 1. Main gate 2. Mutteri office 3. Research Center (NERC) 4. Biorefinery 5. Bio-power plant 6. Pulp mill 7. Sawmill 8. Paper mill 9. Effluent treatment plant UPM

6 UPM Lappeenranta Biorefinery Key facts Products: Renewable diesel & naphtha UPM investment: 179 M Capacity: 100,000 tonnes/a UPM patents and applications: 200 Employs 250 persons (incl. indirect) 6 UPM 25 November 2015

7 Raw material: Crude Tall Oil (CTO) a residue of pulp making process PRIMARY PRODUCT Pulp for paper making 50% RESIDUE Crude tall oil PULPING PROCESS 2% BIO- ENERGY Crude tall oil must be removed from the chemical cycle to secure pulping process functionality 48% 7 UPM 2017

8 UPM BioVerno renewable diesel and naphtha production process is based on hydrotreatment UPM 2017

9 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 UPM

10 UPM BioVerno - Verified sustainability WOOD SOURCING AND FORESTRY CTO FROM PULP PRODUCTION LAPPEENRANTA BIOREFINERY LOGISTICS AND STORAGE MARKETS Forest certification >80 %: FSC, PEFC Chain of custody 100 %: FSC CW, PEFC DD EU-RED certification 100 %: RSB EU RED, ISCC EU, FIN national RSB Global and ISCC PLUS compliance for bioproducts 10 UPM Sustainability is a key value driver for UPM: wood based sustainability certified biofuels and biomaterials are highly valued by customers Sustainability certification verifies sustainable operations, compliance and traceability throughout the chain Greenhouse gas emission reduction -80% in transport

11 UPM BioVerno renewable naphtha - Wood-based alternative for biomaterials production Circular economy Bio-based alternative for fossil feedstock Sustainable forestry No direct or indirect change in land use Wood-based feedstock 11 UPM

12 Elopak & Dow & UPM co-operation A showcase example of bioeconomy innovation to reduce the use of fossil raw materials in beverage packaging application UPM BioVerno naphtha production Dow s naphtha conversion to plastic PE Elopak s wood-based carton Sustainability certified value chain 1 ton of wood-based naphtha used = 1 ton of fossil resources saved 100% renewable and recyclable 12 UPM

13 UPM Biofore strategy - limitless bio-based opportunities

14 UPM Biofore in the shape of a car showcasing UPM s biomaterials UPM Formi Biocomposite Dash board Interior panels UPM Grada Thermoformable wood material Centre console Door panels Display panel cover Door panels Side skirts Passenger compartment floor Front mask UPM Raflatac Upholstery detailing Exterior/Interior Spare parts labeling UPM BioVerno Wood-based renewable diesel Emissions reduction up to 80% 14 UPM

15 Replacing fossil plastic by bio-based renewable materials the Biofore Concept car Weighs 150 kg less than similar-sized cars Lightweight = low fuel consumption Wood-based materials Joint venture between UPM and Helsinki Metropolia University of Applied Sciences 4 years, 50 students, 50,000 working hours 15 UPM

16 UPM s journey in Biochemicals - Evaluating to build wood-to-biochemicals biorefinery BIOREFINERY PROCESS 40% Sellulose STEP 1: SUGAR PULPING Wood into sugars, lignin and green energy STEP 2: CHEMICAL CONVERSION Sugars into targeted biochemicals Bio-Monoethylene glycol (MEG) 30% Hemicellulose BIOMASS 2 % SUGARS Bio-Monopropylene glycol (MPG) 25% Lignin Lignin GREEN ENERGY 19 UPM

17 Driving cleaner traffic UPM

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19 UPM studies the feasibility of possible new Biorefinery in Kotka, Finland Environmental impact assessment (EIA) for a possible biorefinery in Mussalo, Kotka, Finland has been started and takes approximately 1 year The proposed second UPM biorefinery would produce approximately 500,000 tonnes of advanced biofuels use several new sustainable feedstocks different from UPM Lappeenranta Biorefinery - e.g. solid wood biomass and Brassica carinata have partly different technology: conversion of solid biomass and hydrotreatment Biofuels regulation decisions to be made by Finland and EU will impact the future investment consideration Kotka, Mussalo, Finland the area of dismantled power plant formerly run by Pohjolan Voima 19 UPM