Today, the discussion on substituting fossil-based products with bio-based ones is growing attention. The trend to utilize crude tall oil (CTO) as a feedstock for biofuels has taken a foothold especially in Nordic countries. Most discussions concentrate on debating and identifying options to substitute fossil-based transportation fuels with other bio-based raw materials – a feature driven by the regulatory field, e.g., European RED II act, where EU governments on country level target to reduce their carbon footprint by enforcing various taxes and levies on fossil fuels or requiring certain content of bio-based raw material feedstock in the fuel mix.

Beyond the biofuel bio-based raw material feedstock discussion, forerunners are looking for value-add business opportunities. Therefore, they need to focus on finding other alternative fossil-based replacement opportunities for bio-based raw materials, for instance within the chemicals industry. Still today, most chemicals are fully petroleum-based, but what if there are other raw material alternatives already available?

Additional potential available

Crude tall oil has been used to produce bio-based pine chemicals since the 1980s, thus being one of the pioneer developments towards a sustainable bioeconomy, where the pine chemicals substitute fossil-based ones. Pine chemicals – tall oil fatty acids, tall oil rosins, and tall oil pitch – are being used as emulsifiers, adhesives, binders for various end uses including soaps, lubricants, paints, inks, tackifiers, cement, etc. The list of potential end uses is vast, and the substitution potential in fossil-based chemicals is even greater.

As of today, about 2.5 million tons per annum of CTO is extracted as a side product from pulping. This comprises about 60% of the total potential that could be extracted from wood. The payback for a CTO extraction investment at a 0.5 Mton pulp mill varies between 2–4 years, depending on size and location.

Common reasons for not reaching the full potential are outdated technology, not enough demand for CTO, and remote locations making it unfeasible to extract and ship elsewhere. Outdated technology can be solved through investments into modern extraction technologies, which are far better compared to the ones developed in the 1980’s and 1990’s. Current market trends predict that the CTO demand will surpass the existing CTO production capacity in the next years due to new utilization areas (biofuels). With increased demand and inelastic supply, the feasibility concerning extraction at remote locations will diminish.

Instead of asking why the pulping industry players are not capitalizing on this valued-added potential, one should ask when will they react? Some players are already moving forward with their plans, but when will the others follow?

Development paves the road for new opportunities

Recent developments in the field have shown that the pine chemicals can be further processed and refined to other value-added products and end uses, e.g., UPM’s bio-naphtha product, which is a side-stream product deriving from CTO-based biodiesel production, could be used as a substitute for fossils in plastics production. Bio-based plastics can be further utilized, i.e., as part of packaging and textile solutions, to answer sustainability demands.

Other alternative CTO utilization paths exist, which showcase that even though the value chains are different for the pine chemical derivative path and the biofuel path, their aim is still the same – to substitute fossil-based raw materials. Although the ongoing development is positive, further R&D including potential regulation-based incentives is still needed to guide companies towards grasping the full potential of CTO.

On the author: Rasmus Kiihamäki, Project Manager, is one of our experts with 5 years of experience in management consulting in the field of market evaluations, operational improvement assessments, conversion opportunity studies, and other technology-related assignments.

Vision Hunters provides strategic advisory services for the forest industry and energy sectors. We assist leadership teams in making the smartest strategic choices to improve the outcome of their company in the future. We are highly experienced and result-oriented and have advised many of the leading companies in our industry