A new Ecofys study on crude tall oil (CTO) markets and availability, commissioned by UPM Biofuels has concluded that there is sufficient supply of CTO for advanced biofuels, biomaterials and energy usage.
Commissioned by UPM Biofuels, a business division within the Finland-headed forest industry major UPM, the study was carried out by leading international energy and climate consultancy Ecofys – A Navigant Company. Entitled “Crude tall oil low ILUC risk assessment: comparing global supply and demand“, the study looked into crude tall oil (CTO) availability, current usage, whether the feedstock creates an additional demand for land, and whether the use of CTO in advanced biofuels can cause distortive effects in the markets.
CTO is a process residue from the pulping process. Amongst its findings, the recently conducted study concludes that “the CTO market is not overly tight and potential surplus of about 850 000 tonnes of CTO is still available that could be tapped into”.
The report pegs the total potential CTO supply to around 2.6 million tonnes whereas current actual CTO demand is approximately 1.75 million tonnes, of which about 1.4 million tonnes is used by distillers and roughly 230 000 tonnes for biofuels.
Ecofys also concludes that “CTO use for biofuels did not cause displacement effects elsewhere, and hence CTO, a non-land using process residue, is a low ILUC (Indirect Land Use Change) risk material.”
Verify UPM’s CTO market impact
According to a statement, UPM considered it necessary to investigate the impact of its market entry, and to verify whether the production of its renewable diesel “UPM BioVerno” may have had a negative impact on the CTO market.
The current debate relating to the EU’s Renewable Energy Directive puts raw material and feedstock availability into focus as most materials tend to have alternative uses. The study brings necessary information into the debate concerning raw material availability for various end-uses such as advanced biofuels and biomaterials.
It is important to UPM that we can showcase that our entry into the markets has had limited impacts on the overall market, while it has enabled UPM to become the key producer of wood-based biofuels and products for the biochemical industry. We believe there is tremendous innovation potential in advanced biofuels, said Marko Janhunen, Vice President, Stakeholder Relations from UPM Biorefining.
This research was a follow-up to an earlier study from 2013 that looked into the same issues but this was before UPM began production of renewable diesel from CTO. In 2013, the study concluded that “sufficient quantities of CTO are available for biodiesel production without the risk to cause Indirect Land Use Change (ILUC) and that CTO should be regarded as residue”.
The new Ecofys study has proved that the assumptions made in the earlier report were correct and that UPM has created a new value chain parallel to existing ones. In addition, UPM Biofuels is the only biofuel producer that apart from national certification has both Roundtable on Sustainable Biomaterials (RSB) and International Sustainability and Carbon Certification (ISCC) certifications.
UPM entered the advanced biofuels business in 2015 and became the world’s first producer of renewable diesel on a commercial scale from wood by tapping into our own pulp mill residue, Crude Tall Oil. Our entry has been a success, and we continue to investigate new technologies and feedstock, Janhunen concludes.