The Climate Fund invests €5 million in Joensuu Biocoal Oy production facility to promote the replacement of coal in heavy-industry processes

The Climate Fund has granted a 5 million euro capital loan for the construction of a torrefied biomass plant to accelerate the industrial transition away from fossil-based raw materials. Later, the plant also aims to produce high added value carbon sequestration products for applications such as soil improvement and water filtration.

The transition from fossil to renewable raw materials requires a variety of solutions. There are currently very few short- and medium-term alternatives for coal as an industrial raw material, slowing the reduction of emissions in industries such as steel and cement production in comparison to other sectors.

Joensuu Biocoal Oy plans to build the first industrial-scale torrefied biomass production plant in Finland to process forest-industry side streams for industrial use. Wood-based products can replace fossil raw materials and torrefied biomass could be a working solution in the medium term on the way to carbon-neutral industry- achieved for example with a gradual transition towards green hydrogen.

The biomass produced by the plant will primarily be used to replace coal as a raw material for industrial processes, such as metal and cement manufacturing. In the future, however, torrefied biomass has more valuable potential applications in carbon sequestration and its use in for example soil improvement and rainwater filtration is being studied actively.

The facility will be built on the plot of the Iiksenvaara heat and power plant operated by Savon Voima. As a condition for the Climate Fund’s funding, the wood raw material for the biomass must be obtained from domestic, certifiably sustainable timber and must meet the requirements of the Act on Biofuels, Bioliquids and Biomass Fuels.

The project has significant emissions reduction potential and the estimated annual emissions reduction potential is 140 Kt CO2-eq once fully in operation. The estimated cumulative emission reduction potential of the Joensuu demonstration plant, without considering potential future carbon sequestration products, is 1.1 MtCO2-eq over ten years. The calculation of the emissions reduction potential can be impacted in the future by alternatives as well as the definitions for biomass emissions. If the plant is a success, the solution has global scaling potential where emissions reductions could be supported especially in markets where biomass is readily available and the scalable technology would represent a higher added value compared to the alternatives.

Joensuu Biocoal -solution

Joensuu Biocoal Oy is a project company established by the Taaleri financial group. The company plans to test the functionality of torrefaction technology on an industrial scale by building a torrefied biomass production plant in Finland. The plant will process side streams from the forest industry, primarily to produce a replacement for coal in industrial applications. The process achieves a higher degree of processing for the side streams than if they were incinerated for energy production.

As a condition for the Climate Fund’s funding, the wood raw material must be obtained from Finnish PEFC- or FSC-certified timber and must meet the requirements of the Act on Biofuels, Bioliquids and Biomass Fuels. The company must also ensure that the torrefied biomass will be categorised as an emissions-free raw material under national and EU emission trading legislation.

Replacing fossil raw materials with the biomass produced by the production plant in Joensuu would generate an estimated emission reduction potential of 1.1 MtCO2-eq over ten years in Finland and in the vicinity of Finland. Furthermore, the company aims to enable the use of its products for higher added-value production, such as carbon sequestration. If the Joensuu plant is a success, the solution could be scaled up to global use, potentially involving an emission reduction potential of up to ten million tonnes.

The plant construction will begin spring 2022 and it’s estimated to commence production mid-2023. A cooperative group is set up around the facility including the Natural Resources Institute Finland Luke, University of Joensuu, Karelia University of Applied Sciences and Business Joensuu. the group focuses on product development and new applications for the torrefied biomass.

The value of the investment is approximately 20 million euros, and the funding base of the project consists of the €5 million capital loan from the Climate Fund, a €3.4 million subsidy from the Centre for Economic Development, Transport and the Environment, and €11.6 million in equity financing from Taaleri and a group of Finnish family-owned private investors. 

The interest on the Climate Fund’s capital loan is priced at the market rate listed in the EU’s reference interest rate table. In other words, the Climate Fund is entitled to the market rate on its capital loan. The Climate Fund’s €5 million capital loan is allocated to the construction of the facility in Joensuu, and the purpose of the project is to demonstrate the viability of the torrefied biomass production plant on an industrial scale. The capital loan also includes a conversion right in the event of an increase in the company’s value.

More information

Saara Mattero, Communications Director, the Climate Fund, tel. +358 400 114 777,

Tero Saarno, Director, Taaleri Bioteollisuus, tel. +358 50 373 1923, 

The Finnish Climate Fund is a Finnish state-owned special-assignment company. Its operations focus on combating climate change, boosting low-carbon industry and promoting digitalisation. The Climate Fund invests in large-scale projects in which the fund’s investment is crucial to enable the project’s realisation in the first place, on a larger scale or earlier than it would with funding from elsewhere.

Preview article
The Climate Fund bolsters its team with two experienced finance and business professionals
Next article
Three new Senior Leads join the Finnish Climate Fund