SWEDEN -- RenFuel and Nordic Paper have signed an agreement to build a production test facility in Bäckhammar, Sweden, in order to test manufacture an advanced biofuel based on lignin. The project has been granted US $8.7 million by the Swedish Energy Agency.

RenFuel has developed and patented a method to refine the lignin from black liquor, a renewable byproduct from the production of paper pulp, into lignin oil. The oil, called Lignol, can replace fossil oil and be used as raw material in the production of renewable gasoline and diesel. Using the black liquor also leads to an increase in production capacity and profit in the paper pulp industry.

"Our product Lignol is the key to reaching the goal of a fossil free vehicle fleet in Sweden by 2030. We are very pleased to finally being able to put the product into large scale testing," Sven Löchen, CEO of RenFuel said.

The production test facility will be built inside the Nordic Paper pulp factory in Bäckhammar, and will be ready for production by the beginning of 2017.

If the production tests are successful, the next step will be large scale production of Lignol to meet the demands of the rapidly growing market for biofuel. Lignol has the potential to quickly lessen the need for fossil oil, and it's a realistic way of reaching the goal of a fossil free vehicle fleet by 2030.

"The paper and paper pulp industry is an important link in the bio economy. We can, through this cooperation, contribute tangibly to a fossil free future. That is incredibly gratifying," Per Bjurbom, CEO of Nordic Paper, said.

Another important link in the chain is access to refineries that have the capacity to produce diesel and gasoline from Lignol. Preem has since 2010 gradually adjusted its production toward renewable fuels through exchanging crude oil with for example tall oil.

"Preem welcomes this initiative by RenFuel and Nordic Paper. One of the big challenges of the adjustment into independence from fossil fuels in Sweden is supply of sustainable raw materials. Byproducts from Swedish forestry, such as lignin, more than fulfill our requirements of the sustainability of the raw material, and in addition, the demand of lignin can be met in great volumes. We look forward to receiving the first volume of Lignol at our refineries and start producing the renewable gasoline and diesel of the future," Petter Holland, CEO of Preem said.

Nordic Paper is the global market leader within grease proof paper and selected segments of unbleached paper.