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Valio and St1 partner in Finnish biogas joint venture

In Finland, dairy and food major Valio Oy, and compatriot energy major St1 Oy have announced the setting up of a joint venture to produce biogas from dairy farm manure and other agricultural by-products that will be upgraded and used primarily as fuel for heavy-duty transport. The yet to be established company is targeting up to 1 TWh of biogas production by 2030, which is approximately one-third of the biogas needed for Finland’s fossil-free transport roadmap.

Valio Oy and St1 Oy have announced the setting up of a joint venture to produce biogas from dairy farm manure and other agricultural by-products that will be upgraded and used primarily as fuel for heavy-duty transport. The yet to be established company is targeting up to 1 TWh of biogas production by 2030, which is approximately one-third of the biogas needed for Finland’s fossil-free transport roadmap (photo courtesy Valio).

According to the Natural Resources Institute Finland (Luke) and VTT Technical Research Centre of Finland, approximately 15 million tonnes of manure is generated annually which could be used to produce as much as 3–5 TWh of biogas.

Valio, which is farmer-owned through regional cooperatives, has 4 300 dairy farmers as owners that combined, generate about 30 percent of the manure volume along with other outputs suitable for biogas production.

Valio aims to cut milk’s carbon footprint to zero by 2035. The use of manure as a transport fuel is one of the most important handprint actions in our climate programme. The intention is that dairy farms can take part in biogas production with a low threshold. It’s clear that production must be a profitable business also from the dairy farms’ perspective, said Annikka Hurme, CEO of Valio.

Focus on manure-derived biogas

The yet-to-be-named and formed joint venture aims to produce biogas mainly from dairy manure, although other agricultural and food industry by-products can also be used. Two strategic alternatives for producing the biogas have been identified both of which will be possible in the new JV.

One alternative is that the biogas will be produced at individual farms or at a few farms in a shared biogas plant. The other alternative is that the biogas will be produced in a larger biogas plant to which the manure would be transported from local farms.

St1 announced earlier this spring the start of its biogas business with the acquisition of E.ON Biofor in Sweden. In Finland, St1 will distribute the JV’s biogas mainly through its nationwide network of fuelling stations for heavy-duty vehicles (HDVs).

We have identified strategic focus areas, where we can best achieve our goal in creating a sustainable carbon cycle. By investing in renewable energy and in the transition of the energy sector while ensuring the necessary cash flow, we are solving global energy challenges. Entering the biogas business is a concrete step in the consistent and long-term implementation of our growth strategy. Domestic manure biogas can reduce the emissions from heavy-duty transport quickly and efficiently while simultaneously improving Finland’s fuel self-sufficiency. This is an opening from two Finnish players in bringing domestic manure biogas to the markets, said Mika Wiljanen, CEO of St1.

Valio and St1 intend to transition to the increased use of manure-derived biogas also in their own logistics. However, the prerequisite for creating a supply and demand that aligns with Finland’s biogas target is that the biogas-powered transport fleet becomes significantly more common in Finland.

Valio has already a number of compressed biogas (CBG) fueled delivery vehicles and was first in Finland with liquefied biogas fueled milk collection truck in 2019. As part of its newly announced biogas joint venture with St1, it plans to increase its biogas-fuelled heavy-duty vehicle (HDV) fleet (photo courtesy Valio).

The partners are aiming for a production capacity of up to one terawatt-hour (TWh) by 2030, assuming there is enough growth in the demand for biogas in the Finnish transportation sector. The detailed planning of the JV and first project proposals will begin imminently.

Reduce emissions and improve circularity

Producing biogas from manure decreases the methane emissions from the biological decomposition of manure. At best, milk’s carbon footprint could be decreased by one quarter, when both agricultural and transport emission reductions are taken into account.

The leftover digestate from biogas production can be used to make many valuable circular economy products including solid- and liquid biofertilizers with nutrient recycling, animal bedding to replace peat.

Liquids and dry materials left over from biogas production can be used as recycled fertilisers for fields, reducing the use of chemical fertilisers and nutrient run-off to waterways. The farmer saves money. The left over material can also be used to make bedding for animals or substrates for vegetables. This can replace the peat that is currently used, said Juha Nousiainen, SVP, Carbon-neutral Milk Chain.

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