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New Study Shows the Impact and Value of Pine Chemicals Industry

Friday, June 3, 2016  
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Last week the PCA released a study conducted by the prestigious Fraunhofer Institute for Environmental, Safety and Energy Technology UMSICHT. The study estimates and compares the economic added value (EAV), the social impact (direct, indirect and induced jobs) and the environmental impact in Europe of processing Crude Tall Oil (CTO) for pine chemicals versus biofuels (renewable diesel).

The findings of the study, entitled of “Analysis of the European Crude Tall Oil Industry – Environmental Impact, Socio-Economic Value & Downstream Potential” are compelling:

• The EAV generated by the entire pine chemicals industry (CTO refiners and the extended downstream operators along the value chain) is at least 4 times more than the added value generated from the production of renewable diesel. The total EAV generated by pine chemicals was estimated to be around 1,800 million euros, whereas the renewable diesel would have generated only 300 million euros (for the base year 2015).
• The European pine chemicals industry has a significant social impact in terms of generated employment compared to renewable diesel production. The upstream pine chemicals industry alone generated total employment of 4,000 jobs (1,000 direct jobs and 3,000 indirect jobs). The downstream CTO-derived chemicals industry generated an additional 5,100 jobs, yielding in total about 9,100 jobs. Renewable diesel production route was estimated to generate 400 jobs in total. Thus, the total employment generated by the pine chemicals industry and its downstream value chain is at least 20 times more than that generated from the production of renewable diesel.
• Using CTO in the full life cycle of production, the use and disposal of industrial and consumer chemicals produces slightly lower amounts of greenhouse gas (GHG) emissions compared to using the same amount of CTO in the production and consumption of renewable diesel.
• If all available CTO in the EU (650,000 tonnes per year) were to be converted to biofuels with a theoretical yield of 100%, it would only contribute an additional 0.2% to the total EU transportation fuels consumed in 2014.

What these findings ultimately reveal is a vibrant European pine chemicals industry that generates thousands of jobs and hundreds of millions of euros for the economy. However, the European Commission’s stipulation in its Renewable Energy Directive (RED) Annex I that CTO as a “biomass fraction of wastes and residues” encourages use of the substance for biofuel since CTO can be double counted against the EU’s 2020 targets for energy in transport. It has led some EU Member states to provide incentives such as subsidies and tax exemptions to biofuel manufacturers that use CTO, which effectively allows biofuel manufacturers to pay a lower price for CTO.

The PCA favors fair competition for this valuable raw material, and strongly opposes the uneven playing field that has been created by the RED Directive. Biofuels are important in reducing our carbon footprint. But we insist that CTO be used intelligently, and this study helps confirm that there is no data or logical rationale that supports promoting CTO use for biofuels over pine chemicals.

Access the full study using this link