OPPORTUNITIES TO INVEST IN INNOVATIVE ENVIRONMENTAL TECHNOLOGY

BIOENERGY AND ENERGY

CONSERVATION

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In global comparisons, Finland is a leading nation in bioenergy consumption and in the

development of combustion technologies and efficient fuel chains. Bioenergy consumption
equals almost seven million oil tonnes, or 25% of Finlands total energy consumption. The
business volume in the sector is around EUR 2.5 billion a year, and it employs some 26,000
people. Bioenergy consumption has nearly doubled since 1980, but biofuel reserves will
enable a further increase of more than 50% by 2010.
The Finnish energy cluster has special expertise in biomass-powered energy technologies,
combined heat and power production and power plant automation. These are key factors in
increasing the efficiency of energy production and reducing the use of fossil fuels.
In other EU countries the external trends influencing bioenergy generation also include
deregulation of the energy market, restriction of carbon dioxide emissions, increasing
utilisation of combustible waste material for energy and development of green taxation on
energy.
Energy cluster
The energy cluster consists of energy technology and the energy business. Energy technology
covers the machinery, equipment, systems and consultation relating to the production,
transfer, distribution and consumption of energy. The focus in energy technology is on
exports, and it is largely in the hands of multinational companies. This has contributed
positively to the sectors success opportunities. The total production volume in the sector is
EUR 4.9 billion, and its annual growth rate has been some 15%. Exports amount to some
EUR 3.2 billion.
The energy business includes the production, transfer and distribution of power and heat,
and further processing of energy and fuels. This sub-cluster operates mainly in the domestic
market, but the competitiveness of its products provides the Finnish export industry with a
significant competitive advantage. The total volume of the energy business is approx. EUR
6.3 billion, and its annual growth rate is some 2%. The share of foreign companies in the
Finnish energy business is increasing (E.ON, TXU, Vattenfall, etc.).
Co-operation between companies, research institutes, universities and the authorities
in Finland has created a highly functional system. The results of research and product
development have been successfully demonstrated and subsequently commercialised. The
development of fluidised bed and gasification technologies are good examples of this
process.
The Finnish electricity market was liberalised in 1996. A free energy market requires
an efficient and environmentally friendly heat and power generation. The success of many
bioenergy projects implemented over the past few years proves that bioenergy can maintain
a significant position in a free energy market as well.
Finnish energy policy
The objective of Finlands energy policy is to use financial incentives and market-economy
mechanisms to create conditions in which the availability of energy is secured, its price
is competitive and the resulting environmental discharges comply with the countrys
international obligations, thus supporting the countrys economic and employment policy.

Another objective is to speed up the development and commercialisation of technologies

which save energy and make use of renewable energy sources.
Policy goals and measures in line with the Finnish Energy Strategy include:
Shaping the energy production structure towards reduced carbon in the energy
balance sheet
Strengthening the energy market
Encouraging efficient energy consumption and energy conservation
Encouraging the use of biomass and other indigenous energy sources
Maintaining the high standard of energy technology
Ensuring a sufficiently versatile and affordable energy procurement capacity
Ensuring a sufficiently versatile and affordable energy procurement capacity
Maintaining the security of supply in the energy sector
Energy taxation
At the same time, Finland aims to maintain its leading position in the European Union
as regards the share of renewable energy sources in consumption, the efficiency of
energy production and consumption, the share of combined heat and power production,
utilisation of the latest energy technology and the safety of energy production. For many
years the Finnish government has granted investment and production subsidies for the
use of renewable energy sources in power production, fossil fuel taxation increases the
competitiveness of renewable energy sources, and research and development in the area has
received public funding. In 1990, Finland was the first European country to introduce tax
on carbon dioxide.
The National Climate Strategy from the year 2000 lays down the goals required for
compliance with the Kyoto Protocol. It states the 1990 level as the target for Finnish
greenhouse gas emissions for the period 2008-2012. Carbon dioxide emissions in 2001
exceeded the 1990 level, 54 million tonnes, by 11%. In addition to environmental grounds,
the need to stop the increase of carbon dioxide emissions is also based on improving
the reliability of energy supply coupled with reasons relating to employment and regional
policy.
The goal of the Action Plan for Renewable Energy Sources drafted by the Ministry
of Trade and Industry is to double the use of renewable energy sources by the year 2025
(12.3 Mtoe) compared to the 1995 level (6.1 Mtoe), when they accounted for 21% of total
energy consumption. By 2010, the share of renewable energy sources is to be increased by
3 Mtoe from the 1995 level. This will be a 50% rise in the use of renewable energy, biofuels
accounting for most of it (2.8 Mtoe).
Production and consumption of energy
Energy consumption per capita is high in Finland due to our geographical location, cold
climate, energy intensive industries, scattered population and long transport distances.
Industry accounts for 50% of the total energy consumed, 22% goes to heating and 16% to
transport fuels. The total energy consumption in Finland in 2000 was some 31.3 million

tonnes of oil equivalent (Mtoe).

Electricity consumption last year was approximately 82 TWh, and it is expected to increase
by the year 2010 to just over 92 terawatt hours. Biomass combustion currently accounts for
17% of the electricity produced.
Indigenous biofuels (wood, wood-based waste, peat and industrial waste sludge)
accounted for just over 25% of total energy consumption. Peat consumption has decreased
in the past few years due to increased tax and subsidies to wood combustion.
Wood-based fuels covered just over a fifth of the total energy consumption in 2000, i.e.
6.4 Mtoe, of which black liquor accounted for 52.8%, industrial wood waste for 30.4%
and other wood-based fuels for 16.8%. The consumption of solid wood fuels last year was
approximately 12 million solid cubic metres, of which bark accounted for 7 million m3 and
sawdust and shavings for some 2 million m3.
A total of 45,300 GWh of fuel energy was used for district heating and connected power
production in 2000, of which biofuels made up 26%. District heating is used for heating
about half of the real estate property in Finland, and 60% of houses and buildings are
connected to district heating networks. The majority of bioenergy in Finland is produced in
combined heat and power (CHP) plants using locally available fuels.
A total of approximately 375 power plants using solid wood-based fuels operated in
Finland in 2000. Indigenous fuels are currently used for power production in 103 power
plants with a total electric power of 3,415 MWe. The main fuel is indigenous in 87 of these
plants. By 2010, it is expected that some 100 new biomass-fired power plants will have been
built in Finland with a total electric power of nearly 3,000 MW. Some of these will replace
old facilities that will be withdrawn from use.
The pulp and paper industries produce over 40% of their heat and power demand by
incinerating the solid and liquid wood-based waste generated in their own processes. This
has created a solid foundation for bioenergy technology and new combustion technologies
for a variety of biomass and waste.
District heating is not a feasible option in the sparsely populated areas of Finland.
Nevertheless, it is profitable to link public premises such as schools, health centres
and nursing homes to a central heating system. This has resulted in innovative heating
enterprise projects, in which a private entrepreneur, a co-operative or a group of
individual companies operates and manages a boiler plant typically with an output below
1 MW combusting wood chips to supply facilities with heat. The plant may be owned by
the municipality, local electricity company or a private enterprise, and the fuel is supplied by
the plant owners or by a nearby sawmill or wood-processing facility. These facilities typically
employ advanced automation and telecontrol. Currently there are around a hundred heating
enterprise projects in Finland, and the number is rapidly increasing.
In rural areas, wood is still fairly often used for heating houses and farms. There are nearly
200,000 firewood-fuelled central heating boilers in Finland. Approximately 70% of these use
billets, 5,000 buildings are heated by woodchips and some 500 boilers burn pellets. The use
of pellets is increasing rapidly now that the availability of pellets and suitable technology has
improved. Nearly 90% of new houses are furnished with fireplaces or stoves for reserve or
additional heating. The estimated number of these is two million. Finnish households use

some 6 million solid cubic metres (=1.1 Mtoe) of firewood billets a year, a quarter of this in
sauna ovens.
Biofuels in Finland
The biomasses employed as fuel in Finland include wood, peat and industrial waste sludge,
as well as small amounts of sorted municipal waste and agricultural waste and crop biomasses
(reed-grass, straw, energy willow). Wood-based fuels include logging and thinning waste and
industrial wood waste (bark, waste wood, sawmill waste). The biomasses are used as solid,
liquid or gaseous fuel products. Chips are the most commonly used solid wood fuel, but
pellet use is growing rapidly.
The greatest potential for wood-based fuel production lies in the logging residue gathered
from regeneration felling sites, energy wood from first-time thinning sites and chipped wood
from sapling stand management and underproductive forest stands. In is important that the
forest chips are locally available, as the maximum lucrative transport distance of unprocessed
chips is less than 150 km.
Wood is a sulphur-free fuel, and when co-fired with peat or coal, its ash effectively
binds the sulphur released from the other fuel. Another reason for co-firing is the variable
quality of wood-based fuel - particularly that of logging residue - and its low thermal value,
necessitating the use of peat as an auxiliary fuel, especially in the winter season. The use of
peat reduces the accumulation of impurities and the risk of boiler corrosion.
The annual growth volume of Finnish forests is approximately 1% more than the annual
cut. This wood mass of over 20 million solid cubic metres corresponds to nearly 4 Mtoe
in thermal value, which equals some 60% of present wood-based energy consumption. In
addition, the forest industry generates each year some 30 million m3 of unutilised logging
residue, of which approximately a third would be technically and ecologically available for
use.
The most natural way to increase the energy use of logging residue is improved recovery
within the limits of ecological feasibility. There are regional differences in the availability
of wood fuels, and economic cycles affecting the forest industry have a direct impact on
the amount of by-products generated. The availability of peat is more evenly distributed
in Finland, which is further support for the combined use of both fuels in addition to the
technical benefits this provides. Less than 1% of Finnish peatland is currently used for energy
production.
The forest industry is Finlands main producer and consumer of wood-based energy. It
obtains the fuel in conjunction with raw material procurement or as a by-product of its
production processes. More than 83% of the wood-based energy is produced from industrial
waste wood or waste sludge. The solid by-products of the forest industry, i.e. bark, sawdust
and shavings, are already fully utilised in energy production and as raw materials. These
cover an annual fuel consumption of 21 TWh.
The share of wood-based fuels of energy production is higher in Finland than in any
other industrialised country. In Finland, wood-based energy is one of the most efficient ways
of reducing the emissions of greenhouse gases into the atmosphere. Since industrial wood
waste is already fully exploited as raw material or for energy production, the only way to
acquire new wood-based fuels is to increase the recovery of biomass from forests.

Crop biomasses have little significance in Finland. They are either combusted as solid
fuels or converted into liquid biofuels, such as ethanol and biodiesel. Tests have been
conducted on producing ethanol from plants with high starch and sugar content (grain,
potato, sugar beet) and biodiesel from oil plants, such as turnip rape. The cultivation of
energy willow has not proven competitive in Finland. Some 6,000 tonnes (27,000 MWh) of
straw and 10,000 MWh of reed-grass is combusted in boilers annually. Both fuels have a low
energy density compared to wood fuels.
Recycled waste fuel
The waste to energy models in Finland are based on co-firing recycled waste fuel (REF) in
the existing CHP boiler plants. Recycled waste currently accounts for less than 1% of primary
energy consumption, but its potential is 3-5% by the year 2005. The volume of combustible
waste generated in Finland is 4-6 million tonnes a year. The annual volume of waste actually
combusted, however, is only around 500,000 tonnes, co-fired with other fuels at some 50
boiler facilities (grate, circulating bed or bubbling fluidised bed combustion) and in one
circulating fluidised bed gasification plant in Lahti. The only 50,000-tonne recycled waste
combustion plant is located in Turku, and it produces 15 MW of district heat. Recycled
waste is also co-fired with other biofuels at small 1-10 MW district heating facilities (grate
combustion).
Biogas is gas resulting from the decomposition of organic waste in an oxygen-free space,
consisting mainly of methane and carbon dioxide. Biogas is a problem if released into the
environment, but under controlled conditions it is a useful local energy source. In Finland,
some 70 million m3 of biogas is produced annually from organic waste and sludge in reactors
or recovered from landfill sites. Landfill gases account for 64%, effluent treatment plants for
34% and reactor plants for 2% of the volume. The volume corresponds to 350 GWh of fuel
energy with potential for at least 2,000 GWh.
Finland has 16 biogas reactor plants in connection with water treatment plants, one
facility treating municipal biowaste in Vaasa, and four industrial sludge treatment plants. In
addition, there are four biogas reactors run by farms. Landfill sites currently operate a dozen
biogas reactors, and 15 more are under construction.
Agricultural waste has very little significance for energy production in Finland.
Competitiveness of indigenous fuels
The competitiveness of indigenous fuels and their utilisation rates have been influenced by
government support in the form of investment subsidies and tax policy. In heat production,
fuels have their own energy taxes based on carbon dioxide emissions. Wood fuels are tax-free,
which has significantly improved their competitiveness over the past years. Combustible peat
is also tax-free when the annual consumption remains below 15 GWh. In heat production,
peat is less expensive than imported fuels, even when taxed.
Power plants using wood fuels are paid a production subsidy of 0.42 cent/kWh for
the electricity supplied in the grid, which translates in fuel prices to 1.68 euro/MWh
for condensing power and to 1 euro/MWh for municipal heat. The investment subsidy,
calculated to cover the past 20 years, is approximately 0.50 euro/MWh in the price of solid

indigenous fuel. The average investment subsidy is 10-15% of the power plant investment.
Research and development grants and support have also improved the competitiveness of
indigenous fuels in the early stages of the biofuel chain.
Biomass combustion technologies
Finland has invested heavily in the utilisation of the forest industry wood waste. Massive
wood-combusting plants are typically connected to a paper or pulp mill or a sawmill. Most
of bioenergy is produced in combined heat and power (CHP) plants using locally acquired
fuels. CHP plants produce more than 30% of Finnish electricity. Large-scale combustion is
conducted primarily in fluidised bed boilers, but technology has also been adjusted to suit
smaller boilers with an output of 5-10 MWe. The total output of all existing fluidised bed
boilers is 1,900 MWe.
The fluidised bed combustion technology (FBC) was developed in Finland in the 1970s,
and it is particularly well suited for firing wet biomasses, such as bark and sludge. Grate
combustion is generally used at plants with an output below 5 MWe. Bioenergy has gained
a strong status in Finland, partly due to research and development investments in the
following areas of combustion technology:
Research and modelling of biofuel conversion techniques, such as direct combustion,
gasification and pyrolysis, with results available for plants in operation after pilot studies
Investments in developing the combustion and heating technology in applications
ranging from family
housing to district heating; and designing industrial applications
ranging from district heating to industrial
and municipal thermal power plants
Expertise in all power plant processes and their integration with the industrial process or
the district
heating network, which influences the choice of combustion process
Pulverised dust firing continues to be the primary method of combusting solid fuel
worldwide. It is used in coal and peat combustion. The conversion of old pulverised dust
firing boilers to suit biofuel combustion extends the choice of fuels and flexibility in energy
production. Finnish boiler suppliers have modernised nearly 60 old boiler plants into
fluidised bed boilers that combust biofuels.
Co-firing various biofuels with fossil fuels in large boilers has increased rapidly. Fluidised
bed combustion is a suitable method for this because of the flexibility of fuel choice
that it offers. Combined heat and power production will increase the profitability of smallscale power plants and make them a financially attractive alternative in power production,
particularly once the new EU directive on power production using recycled municipal waste
enters into force. Finlands decentralised energy production favours the use of biofuels. Local
fuel production creates new jobs and slows down migration, thus keeping rural areas alive.
The combustion techniques developed in Finland include:
Fluidised bed combustion: The primary air blown through a grate causes the bed material
(sand) and the inserted fuel to float. The mass of the bed material, which exceeds the mass of
the fuel, stabilises the combustion process and increases the efficiency of heat and material

Production of biofuels
In Finland, biofuels and their mixtures are produced from biomasses retrieved from forest,
peatlands and fields. Increasing use of biofuels means that the power plants can no longer
rely on the availability of woodmass from the vicinity. Consequently, a fuel procurement
strategy calls for not only long-term supply contracts but also skilled spot market operations
and preparation for potential supply problems, for instance, in the event of unusual weather
conditions. This sets specific requirements not just on the combustion technology but also
on the production, treatment and storage of fuels.
The production of biofuels is divided into two business sectors: the actual fuel production
and the manufacture of the technical equipment required for fuel processing and treatment.
The equipment manufacturers have close ties with the manufacturers of forest machinery,
transport vehicles and log-handling equipment. Logistics and information technology can
also contribute to the cost efficiency of the fuel production.
Research and development efforts have focused on lowering fuel production and transport
costs by developing logistics and applying the opportunities afforded by IT solutions
throughout the fuel chain. Combining the industrial raw material procurement and woodbased fuel procurement chains can lead to savings in transport and general costs. Almost half
of the price of the wood fuel comes from the collection and transport of logging residue from
logging sites.
In order to minimise costs, Finnish companies also invest in new technology in logistics.
Logging residue is traditionally transported to the power plant for chipping or crushing
without prior treatment. But by compressing the logging residue into compact bundles
(400-600 kg/m3) also known as slash logs, using a technology developed in Finland,
normal transport vehicles can be used both in the forest and in road transport. The logging
residue can also be chipped at roadside terminals or on site directly into a transport container
and then be delivered to a power plant as ready-to-use fuel.
Co-operation between industrial facilities and municipal power plants is a common
phenomenon in Finnish energy production. Industrial wood-processing companies deliver
their waste wood to power plants and even cover most of their power demand with
power purchased from municipal power plants. In return, thermal power plants owned by
industrial companies often supply district heating to local consumers.
It is crucial for power plants combusting biomass to have a reliable supply of fuels
of uniform quality. Large-scale power plants, in particular, usually cannot acquire enough
biomass to cover their total fuel demand in a cost-efficient manner. A common practice
therefore is to use two or more kinds of fuel resources, and some Finnish power plants can
co-fire up to five different fuels. This requires excellent command of fuel properties and
mixing techniques. As a result, the plant has a flexible combustion system, which enables
economic power production also during times of limited availability of certain types of fuel.
Small-scale wood combustion still plays a major role in domestic heating, especially in
rural areas. Finnish companies have developed innovative manual and machine-operated
solutions for producing billets and firewood and energy-efficient soapstone fireplaces and
stoves that store and give off heat evenly over a long period of time.

Key areas in the development of biofuel production in Finland include:

Forest fuels and utilising wood from first-time thinnings
Developing competitive and environment-friendly production methods and equipment
and supply and distribution systems
Utilising residuals from final fellings and small-diameter wood in energy production
Utilising wood from first-time thinnings to secure the productivity of forests and high
quality of harvested
wood in future
Technical solutions for handling logging waste, logs, treetops and branches on site, at
terminals and in
the power plants
Intermediate fuel storage systems to level out seasonal fluctuation in availability, and
procurement logistics for the needs of large-scale consumption
Automated cutting and transport of energy wood and collection of logging residue
In billet production, focus on chopping machines, production systems, dryers,
distribution systems
and terminals
In chips and pellet production, focus on cutters, pelletisers, transport, drying and quality
control systems and terminals
Peat
In mass-scale production:
Reducing production costs by developing collection techniques
Developing peat-drying technology to increase the yield per hectare
Increasing cargo volumes in short-distance transport
Increasing the level of automation
In small-scale production:
Developing lighter and less expensive equipment
Increasing efficiency (joint usage of machinery)
Reducing discharges into waters from production sites
Processed biofuels
Developing liquid and gaseous processed fuels to increase bioenergy production volumes.
Developing pyrolysis oil production (cost reduction)
Developing gas-scrubbing techniques for the gasification process to meet the purity
standard required by engine and turbine applications
Co-production of biofuels
Improving the competitiveness of biofuels by developing co-production of fuel from wood,
peat, crop biomasses and combustible waste. This will result in standard quality fuel
unaffected by seasonal fluctuations.
Pellets
Pellets are a low-cost natural fuel that can easily be applied in an automated process. They
are usually manufactured from sawdust, shavings, grinding dust or bark without additional

Machinery and equipment in the solid biofuels production chain include harvesters,
balers, transport vehicles, chippers, crushers, pelletising and briquetting machines, screens,
metal detectors, conveyors, feeders, terminals, silos, warehouses, etc. A number of companies
manufacture these in Finland. OPET Finland maintains a list of equipment suppliers (in
Finnish) at: www.tekes./eng/default.asp
Energy conservation
The Energy Conservation Programme, which was completed in 2000, is the framework
for promoting efficient energy consumption and energy conservation. The programme
also complies with the objectives of the National Climate Strategy completed in 2001.
The programme is implemented, for example, by financing new technology investment
projects and energy auditing. Under certain conditions, the energy conservation agreement
scheme also allows for financial support for ordinary conservation investments. The energy
conservation measures can be grouped as follows:
1. Financial support for the development and commercialisation of energy-efficient
technology
2. Use of economic control methods, such as taxation
3. Norms and standards
4. Encouragement of voluntary energy conservation agreements
5. Development of energy auditing
6. Promotion of energy conservation through information and training services
7. Promotion of the energy conservation measures proposed by the EU and international
organisations
The implementation of these measures may reduce energy consumption by 3% during the
period 1999-2010, reducing the volume of greenhouse gas emissions by 4-5% (3-4 Tg
CO2 equiv.).
Automation
The competitiveness and energy-efficiency of biomass-fired power plants has also been
improved by developing ICT solutions for their automation. Most district heating plants are
unmanned teleoperated plants. The management systems for industrial power production
enable optimisation of plant performance, and not only in response to failures. In biomass
combustion, it is essential to know, for instance, the fuels thermal value at any given time.
This is automatically recorded in the fuel database.
Conversion table:
e.g. 1 toe = 11.63 MWh
Prefixes:

toe
MWh

toe
1
0.08598

MWh
11.63
1

GJ
41.868
3.6

k = kilo = 103
M = mega = 106
G = giga = 109

The needs to develop the Finnish bioenergy sector will most likely focus on the following
products, technologies and mechanisms:
Combustion techniques for municipal waste
In the area of processed wood fuels, technology for pellet production and utilization
Catalytic converters and other technologies for emission reduction
Turbine technologies
Application of new technologies for biomass combustion - ORC processes, pulverized
fuel combustion turbines and fuel cell techniques
Commercial applications for wood-based pyrolysis oil (pyrolysis techniques) and for
biomass-based transport fuels over the next decade
New business opportunities offered by joint implementation (JI), emissions trading and
clean development mechanisms (CDM) as a result of climate conventions
Last year, the EU implemented a directive to promote the consumption of electricity
produced from renewable resources in the internal electricity market. In Finland, some
energy companies have started marketing wood-based heat and electricity. Once the
European power market is liberalised, the green energy markets will most likely expand.

Examples of potential suppliers

Foster-Wheeler Energia Oy www.fwc.com
Wrtsil Biopower www.wartsila.com

Invest in Finland, Aleksanterinkatu 17 P.O.Box 800, FIN-00101, Finland.

Telephone +358 9 6969 2530, e-mail investinfinland@wtc.fi, www.investinnland.

The content of this paper has been supplied by a number of expert organisations. The Invest In Finland can not be held responsible for the accuracy of the information.

Opportunities in bioenergy
Finland is one of the worlds leading countries in energy supply and related know-how.
Factors contributing to this include our geographical location, climate, long distances,
energy-intensive industries and functional co-operation between the state, research institutes
and companies. Indigenous fuels will continue to play an important role in modernising
the structures of power production so that they are more energy-efficient and have lower
greenhouse gas emissions. Emissions trading mechanisms will also create new demand for
traditional solutions in the near future.