Completed projects

Utilization of Sawmill Side Streams – Feasibility Study​

Utilization of Sawmill Side Streams – Feasibility Study

Commissioned by: Sahateollisuus ry

Contractor: Indufor Oy

Date: October 29, 2024

Summary

The feasibility study found that current incentive structures in Finland—such as emissions trading and the biofuel distribution obligation—lack sufficient clarity and predictability. This has made it difficult for companies to invest in the utilization of sawmill side streams. While some financial support is available at the EU level, domestic incentives remain limited and are generally directed toward large-scale industrial projects. Logistics also pose a significant challenge, with sawdust typically transported by truck. Rail transport, which would be more efficient for bulk biomass, is underdeveloped.

Technological solutions for side stream utilization are increasingly mature and, in many cases, no longer the limiting factor. However, operational and market challenges persist. Compounding the issue is the recent REDIII directive, which categorizes all wood-based energy equally, further complicating the policy environment. In summary, the main barriers to effective utilization of sawmill side streams are political and logistical rather than technical.

Background of the Study

This study was commissioned to better understand the current and future landscape of sawmill side stream utilization in Finland. 

The study examined:

  • What types of projects are currently active or planned around sawmill side stream utilization

  • Why some past projects failed to become commercially viable

  • Which technologies and end uses are realistic in the next 10–20 years

  • What environmental or political shifts could create new demand

  • What the public sector can do to better support high-value uses of side streams

The study focused primarily on Finland, with reference cases from Sweden, New Zealand, and Canada.

Projects and Pilots

In total, the study identified 26 ongoing projects and 19 projects under development across Finland. Most of these initiatives fall under the category of fiber and composite products. Several Finnish companies—such as UPM, Sulapac, and Woodio—are working on innovative applications that include wood fiber insulation panels, bioplastics, and biodegradable packaging foams.

In the thermochemical category, companies are exploring products like biochar, activated carbon, and pyrolysis oil. However, the economic viability and technical readiness of these projects vary widely. The biofuel sector has also seen attempts to develop ethanol and green methanol production from sawmill side streams. Some of these projects, like ST1’s facility in Kajaani, have faced significant technical setbacks.

Internationally, countries like New Zealand and Sweden show similar levels of activity and innovation. Canada, by contrast, has focused more heavily on converting biomass into transport fuels.

Technologies and End Uses

The study highlights that many of the technologies involved in side stream utilization are no longer in their infancy. A number of products have already reached the pilot or demonstration stage, and some are even operating at an industrial scale. Notably, sawdust has emerged as the preferred raw material due to its consistent particle size, cleanliness, and year-round availability—all of which reduce processing costs.

Although energy generation remains the dominant end use for side streams, an increasing number of projects are targeting higher-value applications. The technology readiness level varies by sector: for example, fiber insulation materials are relatively mature, while pyrolysis oil still presents challenges related to usability and stability.

Operating Environment

The current operating environment presents a number of structural obstacles. Logistics remains one of the most significant constraints, as biomass is primarily transported by truck. Rail infrastructure exists but is not optimized for the efficient movement of side streams. On the policy front, national-level incentives are sparse and inconsistent, despite broader political goals that support the circular economy and green transition.

Moreover, the new REDIII directive treats all wood-based energy sources equally, without distinguishing between high-value and low-value applications. This regulatory approach may inadvertently discourage innovation in high-value utilization pathways, such as advanced materials or bio-based chemicals.

Summary and Conclusions

While Finland has clear technical capacity and market interest in utilizing sawmill side streams, many projects remain stuck at the pilot phase due to policy, economic, and infrastructure constraints.

To unlock the full potential of these resources, the report recommends:

  • Improving logistics, particularly rail transport infrastructure for biomass

  • Introducing clearer and more targeted incentives for companies investing in high-value side stream applications

  • Aligning national policy with EU-level goals for the green transition and circular economy

  • Encouraging the cascade use of wood — prioritizing long-term, high-value applications over short-term combustion

Oy DME Solutions Ltd