In Sweden, wind power major OX2 Sweden AB, and forest industry major Södra, together with the e-NG project development company Tree Energy Solutions B.V. (TES), have announced that they are advancing their development plans for an e-NG (electric natural gas) facility at the Värö peninsula in Varberg by entering the Pre-Front-End Engineering Design (Pre-FEED) phase. The decision follows the signing of a Letter of Intent (LoI) in January 2025 and the successful completion of an initial feasibility study assessing the technical and commercial viability of the concept.
Sweden imports significant quantities of fossil natural gas and biomethane aka renewable natural gas (RNG), to supply chemical and industrial companies that depend on gas in their processes, primarily via pipeline from Denmark, with fossil-based natural gas still representing the lion’s share of this energy mix.
The Värö e-NG project can materially support the Swedish energy transition, economy, energy security, and resilience.
Industrial-scale facility
The facility is designed to produce 1.2 TWh of e-NG (e-methane) annually. The e-NG is produced by capturing biogenic carbon dioxide (bioCO2) from Södra’s pulp mill at Värö and combining it with green hydrogen produced onsite using renewable electricity.
With 1.2 TWh of e-NG, the share of Swedish-produced fossil-free gas in the Swedish gas grid would increase significantly, representing more than a fourfold increase in domestic production of fossil-free gas.
The Pre-FEED phase, which will be carried out over one year, is partly supported by SEK 16.8 million (≈ EUR 1.6 million) in funding from the Industrial Leap (Industriklivet), the Swedish Energy Agency’s programme for industrial decarbonisation, which is part of the EU Recovery and Resilience Facility (RRF) and Next Generation EU.
The funding will form approximately 50 percent of the Pre-FEED and development costs.
During the Pre-FEED phase, the partnership will draw up technical designs, evaluate the potential for integration with Södra’s existing pulp mill operations, secure the necessary grid connections for electricity and gas distribution, advance permitting processes, and refine commercial agreements.
The Värö e-NG project is a unique opportunity to deliver large-scale Swedish production of renewable gas close to the existing distribution pipeline. Combining Sweden’s natural resources with a strong industrial know-how gives this project the potential to support the industry’s transition, cut emissions, and move Sweden closer to real energy self-sufficiency, said Emelie Zakrisson, Country Manager OX2 Sweden.
Complementary partnership
The partnership behind the project brings together complementary capabilities across the value chain.
Södra operates the pulp mill that generates bioCO2 as a by-product of its production processes.
This project represents a strategic opportunity to turn existing biogenic CO₂ into renewable gas at scale. By integrating our processes with emerging market needs, the project can strengthen long-term value creation, enhance the value of every tree, and support the industry’s shift away from fossil gas in Sweden and across Europe, said Johannes Bogren, Business Area President Södra Bioproducts.
OX2 develops large-scale renewable energy projects in the region, whereas TES specialises in e-NG production technology and contributes technical know-how and market insight gained from scaling up similar projects globally.
e-NG is a “fossil-free” chemically equivalent to fossil natural gas; from this vantage point, it serves as a drop-in fuel that can be used immediately in existing infrastructure without any modifications.
Potential applications include maritime fuel, chemical industry feedstock, and industrial processes.
The project entered into a Heads of Agreement with an undisclosed energy major to purchase the majority of the planned production volume.
Subject to the findings and subsequent investment decision by the partners, the facility should enter operation in the early 2030s, on time for the entry into force of sizeable EU Renewable Energy Directive (RED III) renewable fuels of non-biological origin (RFNBO) obligation.
Decisions on progressing to subsequent stages will be taken jointly by the partners based on the results of this phase.
With its abundant renewable power, access to biogenic CO2, and strong industrial base, Sweden has the foundations to pioneer large-scale e-NG production. Together with Södra and OX2, we are developing a project ready to meet the growing demand driven by RED III obligations across Europe, said Marco Alverà, Co-founder and CEO of TES.
