UPM: The evolution from a traditional paper manufacturer to a producer of materials for everyday products made from wood components
UPM stands for United Paper Mills and is a Finnish company with 54 plants and 17,000 employees worldwide, and is a leader in the forest, pulp and paper industry. As the market for graphic paper continues to shrink, with less and less graphic paper being used and therefore less recovered paper being available, UPM is opening up numerous new markets.
These include the biofuels sector as well as the biochemicals sector. For the latter, the Group has now recently started to construct a large biorefinery in Leuna (Saxony-Anhalt) for the production of biochemicals, mainly monoethylene glycol and renewable fillers as a substitute for industrial carbon black, from sustainably sourced hardwood for the manufacture of recyclable everyday items and materials. These can be used, for example, for applications in the fields of packaging, textiles, plastics, rubber, and cosmetics. For this process, only wood is used that accumulates during the sustainable management of forests and is not otherwise recycled, as well as residual materials from sawmills. By its completion at the end of 2023, the use of these products will significantly reduce the consumption of fossil raw materials and thus CO2 emissions. The Group announces: “We deliver renewable and responsible solutions as well as innovations for a future without fossil raw materials.”
During a visit to the site, Vice President of UPM Biochemicals Business, Dr. Michael Duetsch, gave us a comprehensive interview on current topics and the Group’s ambitions.
1. Please explain UPM’s “Biofore strategy” in a few words. How significant will the contribution of this strategy be now and in a future without fossil fuels? How do you assess the need for transitional solutions?
“UPM is pursuing its own transformation process from a paper to a biomaterial producer with the so-called “Biofore strategy. “Biofore” is a made-up word deriving from various terms such as “bio”, “looking forward”, but also “forest industry”. Despite the steady decline in the graphic paper market, the company has managed to maintain a constant turnover (around EUR 10 billion) for the last 10 years. This has been made possible by opening up new business fields (including pulp, labels, biofuels, bio-naphtha). These new product fields significantly contribute to a successful circular economy and actively help to redefine value chains. UPM successfully operates large-scale industrial plants and understands the importance of energy efficiency not only for a competitive cost base but also for lower greenhouse gas emissions. UPM has joined “The Climate Plegde” with a commitment to achieve climate neutrality by 2040. If the processes of a biorefinery are operated with renewable energy in the future, the carbon footprint will be further improved. CO2-neutral or even CO2-negative products are then within reach. The chemical site operated by Infra-Leuna GmbH is characterized by a mix of low-CO2 steam generation (heat recovery from chemical processes, waste incineration). And this is being further improved: In this context, a gas-fired power plant has been planned that can quickly regulate its output depending on demand. Transitional solutions of this kind will continuously be required to remain competitive and to provide a basis for new investments. At the same time, however, technologies such as green hydrogen (e.g., from Linde AG) or possibilities for energy storage of temporarily available solar or wind energy must be increasingly taken into account.”
2. What is UPM’s understanding of sustainability?
“Sustainability is in our DNA and for UPM it means much more than climate protection and saving CO2. Since the company manages about 1 million hectares of forest worldwide (Finland, Uruguay, USA) and wood is the raw material for numerous processes, the Group is paying increased attention not only to increasing biodiversity and maintaining the age structure in the forests, but also to ensure that the forests themselves remain healthy, climate-stable and usable in the long run (FSC/PEFC certification). To achieve this, it is also important to adhere to guidelines such as the Code of Conduct, the Supply Chain Act and the Code of Suppliers (e.g., prohibition of child labor in the supply chains). UPM has already won numerous awards in the field of sustainability and supports well-known projects, such as the goal set out in the Paris Climate Agreement to limit global warming to 1.5 °C, or to achieve the 17 UN Global Compact Sustainable Development Goals (SDGs) and to operate in a CO2-neutral manner by 2040. But it’s not just about avoiding greenhouse gases. From the 17 SDGs, we have identified the goals where our negative impact is the strongest and the goals where we can make the strongest positive contribution. These are the following six: Goal 3: Health and well-being, Goal 8: Decent work and economic growth, Goal 9: Industry, innovation and infrastructure, Goal 12: Sustainable consumption and production, Goal 13: Climate action, Goal 15: Living on land. Other SDGs are also relevant to us but have a lower priority or affect us only indirectly. In addition, we participate in international projects such as the UN Global Compact LEAD and work with various expert organizations to promote and implement the SDGs.
UPM operates large industrial processes for processing biomass and thus naturally leaves an environmentally relevant footprint — in addition to CO2 emissions, for example, water use. We regularly publish the current impact, respective reduction targets and progress towards achieving them in our annual report. We must always remember: Sustainability consists of three dimensions: ecological, economic, and social. It can’t work in the long term without one of the three.”
3. How important are forests, forestry, and agriculture for bioeconomy and sustainability?
“In the future post-fossil era, only three main carbon sources for material use remain conceivable: Biomass, end-of-life materials and CO2 — none of which alone can replace the total carbon demand. This requires an intelligent interplay in which sustainable forestry and agriculture play an important role in replacing fossil carbon, for example in plastics. Recycling of old materials is another mainstay with great potential. Losses always occur, but if these are replaced by sustainably produced materials, a perfect sustainable circular economy would be achieved.
The rethinking of sustainable growth is also increasingly demanded by society. Nevertheless, these conversion processes need a lot of time — therefore intensive research and development will remain important in the future and must even be further expanded, for example for the use of carbon from CO2. In addition, conventionally produced plastics must be prevented from knowingly entering the environment, as in the case of mulch films or trimmer filaments. For these applications, sustainable, biodegradable materials should already be used in a timely manner.”
4. What kind of sustainable economy is needed in Germany that is both, environmentally friendly and not borne by our competitiveness?
“The processes of the UPM biorefinery and especially their combination are new. To assess competitiveness, one must not only consider production costs alone, e.g., in comparison with MEG production based on naphtha, but consider that bio-MEG is chemically the same, however significantly more advantageous in terms of its CO2 footprint. UPM is investing EUR 550 million in the new biorefinery because we are convinced that we will be very profitable, especially once the plant is operating at full capacity. The overwhelming interest from potential customers in all products of UPM’s biorefinery in Leuna confirms our assumptions so far.
In the future, it will become increasingly important to price CO2 to create incentives to operate more ecologically and sustainably. To eliminate a competitive disadvantage compared to goods produced under climate-damaging conditions in other regions, a so-called carbon border tax must be introduced.
The glycols produced in the Leuna biorefinery have the same physical properties as conventional products (drop-ins) but are not produced in the conventional way. The renewable, functional fillers produced from lignin have different, largely superior properties compared to fossil fillers (in this case, industrial carbon black, silicate); for example, a significantly reduced density or that they are electrically non-conductive, both of which are critical advantages when used in rubber products (e.g., sealing tapes). They also have an unprecedented low carbon footprint — ultimately all values that are paid for.
If biobased products are to be manufactured, the origin of the biomass must also be permanently maintained. It goes without saying that UPM procures wood only from sustainably managed forests and thus preserved in the long term. This is the only way to ensure that they will continue to provide raw materials in 50 years or more. And only then does an investment like the one we are making in Leuna make sense. Sustainable forestry is therefore an important segment for competitiveness. In this context, more tax incentives should be created to mobilize the wood reserves from private forests (double-digit percentage in Germany). For the time being, timber harvesting is not worthwhile for private small forest owners.”
5. How is the concept of sustainability and recycling implemented at the new biorefinery in Leuna?
“At the new biorefinery in Leuna, it is important that the raw material sources, primarily mixed and deciduous forests, are managed sustainably. We also calculate the carbon footprint and have these values audited externally. In this way, we can clearly demonstrate that our products have an advantage over traditional fossil fuels and thus help our customers to achieve their sustainability goals with a focus on greater climate protection. Almost all brand manufacturers have promised very ambitious climate neutrality targets for the decade to come and see this as one of the essential prerequisites for their future business success.
The closed-loop concept is implemented in that the glycol produced is used primarily in polyesters. Polyester products can be recycled in a variety of ways (mechanically, chemically, and enzymatically). Especially in PET bottles, Germany has already reached a high level with a collection rate of 94%. The small amount lost could then be replaced by biobased, sustainably produced materials from the biorefinery industry.
6. How does the Leuna plant fit into UPM’s existing business structure? What makes the biorefinery in Leuna unique worldwide? What have been the biggest obstacles in site selection and construction so far?
“UPM now consists of six business fields: Printing Paper, Pulp, Self-adhesive Labels, Specialty Paper, Energy Production and Trading as well as Plywood. UPM occupies leading positions in many fields, e.g., magazine paper, plywood, or labels. Starting with macroscale wood and moving on to microscale cellulose fibers, UPM has made its way up to the molecular level and is now also active in the field of bio-based fuels and chemicals.
The uniqueness of the biorefinery lies not only in the fact that chemicals are produced from wood, but also in the fact that all wood components are used as materials. For example, glycol is produced from cellulose via sugar, hemicellulose is processed into industrial sugar, and lignin is used to make fillers. This is the first fully integrated wood-based biorefinery in the world that breaks down a single biomaterial and uses it entirely as a material.
Important criteria for the site selection were the availability of sufficient space (25 hectares) and existing infrastructure at an existing chemical site. In addition, it was enormously important to build the biorefinery near sustainably managed hardwood forests. This is given in Leuna by the forests in eastern Germany, Hesse, Bavaria, and the Czech Republic. Logistics also play a major role concerning transportation to and from the site — the Leuna plants, with their rail connection, provide an optimal supply. The framework conditions for the adaptation of the existing infrastructure were also extremely flexible and the capacities in the field of energy (steam, electric power) and water (process water, cooling water, waste water treatment) were available and very competitive. The region has a long history in the chemical industry and has a good education network, with renowned universities and colleges in the fields of natural sciences, chemical engineering, and process engineering, but also for the education of professionals in production. Although the labor market is tight, most vacant positions can nevertheless be adequately filled in a timely manner due to the scale and scope of the project. Our experience is that many new employees have made a conscious decision to join UPM to help build a future-oriented sustainable chemical production.”
7. What does UPM expect from participating at ISEF (International Sustainable Economy Forum)? How can large companies like UPM benefit most from such an event?
“By participating at ISEF, UPM expects a high density of companies that care about sustainable business. Bioeconomy also means building bridges between different industry sectors, such as the forestry, chemical and beverage industries — for this, an event like ISEF is enormously important. Moreover, far too few stakeholders still know what the bioeconomy really is about. To get stakeholders from all sectors excited about the bioeconomy, it is important to communicate innovations and technologies in a pragmatic and solution-oriented way. ISEF will help to find creative solutions on how to promote bioeconomy — and not only through financial means.”