Finnish Company Launches Ethanol Production

Lannen Tehtaat has conducted a feasibility study on the launching of ethanol production primarily for use as transportation fuel in western or southwestern Finland. The study shows that it would be possible to produce ethanol for fuel in Finland on a profitable basis if integrated with the animal feed industry.

This region of Finland has sufficient barley-growing farming capacity to supply raw material for an ethanol plant. The region is home to one of two main pig-farming areas, as well as animal feed factories that could use some of the byproducts from an ethanol plant as raw material. The preliminary plan involves the ethanol plant producing 66 million kilos (83.5 million liters) of ethanol per year. This could generate 100 million kilos of animal-feed byproducts. The tentative cost estimate of the investment is EUR 45 million [USD$ 54.6 million]. The net turnover that could be generated from the ethanol and animal-feed fractions produced is some EUR 50 million [USD$60.7 million] at current prices. The company would employ about 40 people, and production could begin halfway through 2008. Important factors for the location of the ethanol plant are the availability of raw material (barley), transport costs, sale of animal-feed components, and transport distances from the plant to livestock farms. Sakyla is a favorable location in view of all these factors. Shipping is important for ethanol deliveries, and Rauma port is sufficiently close to Sakyla to ensure competitive sea transport. Following the preliminary studies, Lannen Tehtaat has decided to conduct an environmental impact assessment (EIA) for the factory investment in Sakyla, which is required. Ethanol production in Finland can only be profitable if it uses domestic raw materials. The capacity of Finnish agriculture to respond to the demand for barley is limited. The release states that estimates of 250,000 tons of barley can be acquired for ethanol production without the increased demand causing significant pressures on raw material prices. If the production of barley-based ethanol were to increase significantly from that which is now planned, the increased demand would raise the price of barley and undermine the profitability of ethanol production.