On 15 March, a Memorandum of Understanding was signed between the Estonian company Fibenol OÜ and the Ministries of Economy, Finance, Agriculture, Climate and Energy and the Investment and Development Agency of Latvia (LIAA) on the implementation of an investment project with a total investment volume of 600 to 700 million euros.
“Coming from Estonia, we recognise that countries rich in wood resources aren't fully utilizing their potential, inspiring us to find solutions. With the completion of our demo plant commissioning, setting up the first commercial-scale biorefinery is our next goal. We want to make the most of local woody biomass and leverage Latvias inherent bioeconomy advantage. Latvia has demonstrated significant interest in enhancing the bioeconomy and promoting innovation growth through its supportive business environment for green technology solutions. Fibenol represents more than just one large industrial plant project; we see that in the future, the whole Baltics have the potential to lead the way for fossil-free industry models," explains Raul Kirjanen, majority shareholder of Fibenol.
Fibenol is considering establishing its commercial-scale biorefinery in Latvia based on their patented and market-ready technology, the Sunburst pretreatment technology. Sunburst is a key-enabling technology that facilitates wood fractionation process, enabling the conversion of >90% of the feedstock into functional biomaterials that can replace fossil chemicals in the chemical and materials industries.
Viktors Valainis, Minister for Economics: "Knowledge-based bioeconomy is one of Latvia's top priorities for economic development and the planned plant is proof that we can attract large-scale projects to Latvia using local resources and knowledge. The Fibenol plant will also contribute to the processing of low-quality wood in Latvia, reducing the export of raw wood and providing higher added value in the timber sector."
The Fibenol demo plant was set up in Imavere, Estonia. This project received support from the EU's Horizon 2020 research and innovation programme. Total investment in the demo plant has now reached around €70 million, of which the European Union contributed almost €20 million by various research and development projects.
"Latvia's position for the development of biotechnology is quite strong, especially in areas such as wood processing. The wood industry remains the most important segment of Latvia's exports and ensures new investments in the region. We are pleased that Fibenol is looking to set up its production facility in Latvia, thus appreciating our business environment and the opportunities for government support. At the same time, it demonstrates that this sector is also investing significantly in research and development, developing new globally competitive products," said Iveta Strupkāja, Acting Director General of LIAA.
The planned project stands out internationally for its role in replacing fossil chemicals with sustainable alternatives and creating globally significant lignocellulosic bioprocessing on an industrial scale, as until now, this approach has only been used in laboratories. The development of such a project allows to store carbon from low-quality wood over a more extended period, significantly reducing the emissions that fossil resources would generate.
The biomaterials produced at the Fibenol plant will also drive innovation across the entire product value chain, creating new opportunities for Latvian industries to transition from fossil-based materials to bio-based alternatives.
To ensure the success of this project, it is essential to attract additional funding to mitigate the risks. Therefore, in addition to private equity and bank funding, it is planned to apply for an innovation grant from the European Union Innovation Fund.
For Fibenol and the Latvian parties, reaching the cooperation memorandum is the result of long-term collaboration. Fibenol has been visiting several municipalities, potential project sites, and other involved partners before reaching this milestone, and this has been an essential part of the collaboration. The signing of the memorandum is a major step forward and gives confidence to all parties to move forward with this project.
Public Relations Division
Ministry of Economics
Republic of Latvia
