Biorefinery – Long Term Knowledge Creation and Calculated Risk Taking
Mr. Prime Minister, Ladies and Gentlemen
First I’d like to congratulate Chempolis and especially Mr. Rousu for a remarkable step in a long and challenging voyage from a vision to a practical execution.
The investment, we are celebrating here today, is a fantastic example of trust, long term commitment, calculated risk taking, world class technological, managerial and marketing knowhow, advanced social skills to build networks and international cooperation, and ability to raise funding – all the features needed to establish and run a new international business successfully.
To make it visible how significant I consider this achievement, I’ll try to make an overview of the opportunities and challenges concerning biorefinery today and in the near history.
Today we can clearly see the reasons to invest in biorefinery.
There are demand and growing markets for new biomass products like biofuels, biochemicals and other renewable products. The drivers are climate change, rising price of oil and security of energy supply
There are biomass raw materials available, especially wood wastes from forestry, non-wood and non-food biomass, and waste or side streams of industrial and agricultural processes.
It can be seen that integrated production creates cost advantage for example in integrated production of forest and energy industries but also new biorefineries with new value chains – integrated production of fiber, chemicals, ethanol and biodiesel – may give huge business and environmental opportunities.
The journey from knowledge creation, especially gasification technology and biomass flash-pyrolysis, to new biofuel products and business has not been as clear and simple as it feels today. The opportunities coming up from the recognition of clime change were clearly in the air already in nineteen eighties, but companies did not see any remarkable business opportunities in a near future and they were not willing to invest in long term knowledge creation. First industrial applications of gasification – like Kemira’s peat gasification – were done, but real demonstrations by energy companies on second generation biofuel production will be executed 25 years later. So there were public actors, like VTT and funding agencies, who had to bear the responsibility of future needs in knowledge creation for biofuel production without any support from companies.
There were luckily some companies like Chempolis, Neste and ST1, who were a bit ahead of others.
A breakthrough point was in 2005, when several companies changed their strategies and started to develop biodiesel processes. There were several reasons to rethink strategies: preparation of the EU directive on the promotion of the use of biofuels, the challenging scenarios of our forest industry, hints of potential change in future incentives by the government, and a general change of citizen’s attitude concerning climate change. The last one could also be seen in companies R&D. For example last year 40 % of Tekes funding was directed to projects with energy or environment related targets. This was partly a strategic choice and partly a consequence of the change of customer’s attitudes and demand, and this covered all the industrial sectors.
Today enthusiasm for biofuels can be seen in many ways: in companies’ strategies, in research programs of the Forest Cluster Ltd, in the Biorefine program of Tekes and so on. In a near future we will see several demonstrations of second generation biofuel plants. It seems that Finland is ahead of other countries about one year – this advantage should be kept by all possible means including governmental incentives.
Chemoplis took a way of it’s one. The roots of the technology are already in KCL’s projects in nineteen eighties when formic acid and hydrogen peroxide cooking processes were developed for pulping. Kemira linked up with the development and started a pilot plant of its own. It was focused on wood biomass. Mr. Rousu was strongly involved already in this phase. He saw the opportunities of the technology to utilize non wood and non food biomass: Chempolis was founded and agro biomass project started.
The path was rocky and multi-phased. I’m not able to tell all of it but there can be seen many cornerstones which Chempolis people was able to build – cornerstones which are typical for all innovative, internationalizing growth start ups. They started creating international cooperation in a very early phase. They were able to raise venture capital funds. They developed an earning model and business concept which gave them cash flow to step by step continue their development work. This includes consulting, licensing, system delivery and turn key projects. They were able to get remarkable results in international assessments concerning the quality of their products and processes.
Chempolis is also a good example of demand based innovation. Today it is very popular to speak about user and customer driven innovation and to understand it totally wrong. You can’t ask the customers or users what they want because they do not know what they could want – they can’t realize the opportunities of new technologies. It would be better to talk about demand based or demand driven innovation. Demand based innovation means what Chempolis’ people have done: they had a vision on future demand, understanding of their technology to answer the demand, strong will to create the demand and ability to combine customers in their innovation process. This means co-creating value with customers and tapping knowledge from users. Technology is an enabler of innovation.
Ladies and gentlemen, Chempolis is a forerunner in utilizing non wood and non food biomass to produce pulp, ethanol and chemicals with a low environmental footprint. It may be that – as an opinion of an uninitiated civil engineer with poor knowledge of chemistry – Chempolis in the future also will have opportunities to integrate gasification in their process to produce biodiesel. It depends on many factors but the fact is that there is much more agro biomass than wood biomass available, the price of wood is higher than the price of agro biomass, and the most difficult challenge in producing wood based biodiesel is to purify the gas. We do not know jet the price of the purification. Chempolis has not the same challenge concerning the purity.
Mr. Rousu and all the employees of Chempolis, I warmly congratulate you for a remarkable step in your journey from a vision to a practical solution – inauguration of 3rd generation bioethanol production line, and wish all the luck for your future success on global markets.