Pulp mill emitting CO2 against cloudy sky

Money in the sky – unlocking value in biogenic CO2

Are pulp mills shooting money in the sky?

In 2011, I partook in an excursion to a pulp mill as a freshman chemical engineering student. In the car park, as we exited the bus, a strong odour stopped me. "That is the smell of money", an older technology student educated me. While this phrase has been a frequently used joke during the beginning of the last decade, it might be a reality in the following decades. Why is that? Let’s delve deeper into the world of pulping and the opportunity its emissions hold.

The chemical pulp industry stands as one of the largest global sources of biogenic CO2 emissions. In 2023, around 160 Mt of chemical pulp were produced to further manufacture for example packaging materials and textiles.

Pulp is typically produced from wood which is not a uniform material – it is a composite, formed mainly of cellulose and lignin. In chemical pulping, wood needs to be fractionated back into its precursors; cellulose is used to make the main product, pulp. Other parts, predominantly dissolved lignin, are combusted to generate energy. Renewable energy is also generated from residual bark, either via combustion in a bark boiler or by utilising the gasified bark in the lime kiln. Hence, modern pulp mills are also huge energy generation facilities and therefore significant sources of biogenic CO2 – up to 3 kilograms of CO2 may be produced for every kilogram of pulp in a modern pulp mill.

So, despite pulp mills emitting substantial volumes of CO2, pulp mills are considered carbon neutral. Why is that? For the answer, we need to go back to the raw material source of pulp, the forest.

In the process of forest carbon sequestration, carbon dioxide is absorbed from the atmosphere by trees during photosynthesis, and accumulated in the soil beneath forests. As forests grow and develop, they continue to accumulate and store carbon, which can offset the emissions from pulp mills that use wood as a raw material in pulp production.

Sustainable forestry practices, such as replanting trees after harvesting and managing forests to prevent wildfires and deforestation, enhance the carbon sequestration capacity of forests overall. Sustainable practices ensure that the rate of harvesting is lower than the rate of forest regrowth, causing forests to continuously increase their carbon stores. This dynamism establishes a carbon-negative equilibrium within the pulp industry.

However, currently the pulp production facility itself is still carbon neutral at best. Is being carbon neutral the peak of human ingenuity? Can we aim higher – not just settle on being carbon neutral but creating carbon-negative pulp mills?

Option 1: Carbon Capture & Storage (CCS)

CCS involves capturing CO2 emissions from pulp mills and subsequently storing them underground or in geological formations to prevent their release into the atmosphere.

Estimated biogenic CO2 emissions of largest global pulp and paper companies in 2023

Market channels for CCS technologies vary, with potential revenue streams including carbon credits, government subsidies, and partnerships with industries seeking to offset their emissions.

​One example of pulp mill CCS is Njord Carbon, a partnership between Södra, Verdane and Equinor. Södra is Sweden’s largest forest-owner association and it owns three pulp mills in Sweden. Currently, the initiative has a feasibility assessment and preliminary projects underway to assess the potential for investing in bio-CCS facilities (BECCS), marking a significant step towards permanent carbon storage, and establishing a negative emissions marketplace.

Option 2: Carbon Capture & Utilisation (CCU)

CCU technologies offer an alternative approach by converting captured CO2 emissions into valuable products. The spectrum of potential end products is broad, ranging from chemicals and fuels to building materials and consumer goods.

​A pulp industry-specific example of this is the joint venture formed by The Navigator Company and P2XEurope called P2X-Portugal, which produces e-fuels by leveraging Portugal's renewable energy sources and Navigator's pulp mill. The venture integrates the entire process value chain and aims for carbon capture of up to 280,000 tonnes of biogenic CO2, with an e-fuels production capacity of 80,000 tonnes per year. The project could contribute to decarbonising aviation by producing sustainable aviation fuel (SAF), reducing life-cycle greenhouse gas emissions by 90 to 100% compared to conventional jet fuel.

Where is the Money?

As pulp mills announce new carbon capture partnerships and initiatives at an accelerating pace, one might ask: Is the future of carbon-negative pulp mills already knocking on the door? Or is something keeping the big words from being turned into a reality?

​As one might expect, converting CO2 into valuable products comes with a great set of challenges. The investment cost is one aspect – for an average scale pulp mill to capture the entirety of its carbon and convert it into valuable products, the investment cost has a jaw-dropping price tag of 550MEUR and higher, depending on the setup.

​Manufacturing e-fuels requires more than just CO2 – it requires electricity, and a lot of it. To be more precise, if a modern pulp producer in Finland, for example, would start converting CO2 into e-fuels using the entirety of its emissions, the mill would transform from one of the most significant electricity sales facilities nationally into one of the largest electricity buyers in the country. This does not only beg the question of whether enough electricity is available or whether the grid connection is close to the pulp mill sufficient but also adds electricity cost as an important driver to the equation of overall carbon-capture profitability.

​Significant CAPEX and OPEX limits the players from parking such carbon capture facilities inside the pulp mill fence, even before considering whether there is enough parking space available! Of course, if the point of the pricing is right, the bullish CAPEX and OPEX of carbon capture can be justified. While the price point required to overcome the legacy of fossil fuels is a moving target, it can be expected that the e-fuels price requires at least a factor of 3 over the fossil alternatives.

​But, for a moment, let’s assume that the paying capability and willingness is there. What then?

Enormous effort needed

A dead-simple profitability calculus resulting in an attractive outcome is not enough, the whole market entry requires enormous efforts from pulp industry players; it includes partnerships with new technology providers and multiple government agencies. It requires navigating a vast legislative jungle governing carbon emissions and incentives. More importantly, it requires foresight and wisdom for the producers to understand the value of their biogenic CO2 and the options at hand: Should the pulp mill go all-in and invest in a Power-to-X facility on its own and enter the fuels market? Should it collaborate and with whom? Should the facility continue its business as usual and leave the cash for an outsider with higher risk appetite to capture?

In conclusion, the pulp industry is among the greatest sources of biogenic CO2.

Before converting CO2 into a valuable resource, numerous obstacles need to be overcome. However, through the adoption of carbon capture and utilisation technologies, pulp mills can not only convert the mills to carbon negative but also generate revenue from previously untapped sources.

With careful planning and strategic partnerships, the monetisation of biogenic CO2 emissions represents a win-win opportunity for both the industry and the planet.

Written by Tomi Amberla, Roger Gottleben and Jack Lonsdale

Biogenic CO2 value creation routes
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Tomi Amberla - Director, AFRY Management Consulting

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Director, AFRY Management Consulting

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Jack Lonsdale - Senior Principal, AFRY Management Consulting

Jack Lonsdale

Senior Principal, AFRY Management Consulting

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