Vapo to manufacture bio diesel raw material from peat

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Vapo, the "State Fuel Centre" co-owned by the Finnish State and the forestry industry group Metsäliitto, will start turning swamp peat and wood into raw material for bio diesel. Vapo presented its diesel plans on Monday, and the final investment decision will be made in a couple of years’ time.
      For Vapo the diesel plant is a large investment, as the facility comes with a price tag of around EUR 300 million. Vapo Group’s turnover in 2006 was EUR 600.9 million.
      Vapo director Mikko Kara refers to Finland’s self-sufficiency in justifying the peat diesel project. "The securing of supply is an important criterion. For example, in the United States the armed forces' aim is that the entire military machinery run on domestic fuel", Kara says.
     
The location for the crude oil factory is yet to be decided. In Finland, the vicinities of the cities of Joensuu, Jyväskylä, and Kemi, as well as the Kolari-Pajala region in Lapland have all so far made it to the shortlist.
      Other possible locations include central and southern Sweden and Estonia. The factory will create 200 new jobs.
      In choosing the location the decisive factors include the availability of natural resources, mainly wood and peat, and the distance to the nearest large consumption centre. A by-product of the oil manufacturing process is heat, which ideally should be sold to a large city or a substantial production facility such as a paper mill.
      The bio crude Vapo will then sell on to an oil refinery, where it will be converted into bio diesel for vehicular use. Should the facility be built in Finland, its likely client would be the State-run oil company Neste Oil. Vapo assumes that a separate market will emerge for the bio crude oil, in which case there would be other potential customers besides Neste.
     
Vapo has the technical capability to produce crude oil from peat alone, but for environmental reasons this will not be the case. The European Union still considers peat a form of fossil fuel, despite the fact that the Intergovernmental Panel for Climate Change (IPCC) has placed peat between biomass and fossil fuels in its ratings.
      Wood is used in the oil production because of the definition nit-picking within the EU. When half of the raw material is wood, the greenhouse gas emissions are said to be lower than with a product originating from fossil fuels alone. Hence the end product can be classified as bio diesel.
      Vapo would also be able to produce the crude from wood alone, but Finland’s forest reserves do not allow for this. "We would not want to put a stop to paper production", Vapo managing director Matti Hilli says.
      The opportunity for commercial exploitation of peat diesel presented itself when the EU announced that within 12 years ten per cent of all fuel used in traffic should be bio fuel.


Links:
  Vapo
  Peat in Finland (Wikipedia)

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