Incorrect classification of crude tall oil a serious threat to the european pine chemical industry

This week the European Parliament will conduct its final vote on the ILUC Directive. A tiny detail in the Directive will, if adopted, have detrimental effects to the EU economy, environment and society.
Brussels – the ILUC directive jeopardizing the European bioeconomy development
Annex IX of the Directive lists and classifies some materials explicitly as residues. Upsettingly, that list also includes Crude Tall Oil (CTO), a scarce and valuable renewable biodegradable product, intentionally extracted and produced from soap in the kraft pulping process.

Even the Legal Services of the European Commission have examined the legal status of CTO and concluded that it is a product. It is hence legally, and scientifically, wrong to refer to CTO as a residue in the ILUC Directive . It is difficult to see why EU co-legislators would wish to accept such an evident and serious mistake in the draft legislation.

The pine-chemical industry, foremost Arizona Chemical in Europe, Forchem in Finland and Respol in Portugal, refine and upgrade CTO into numerous high value added products. These include important intermediates for various chemical companies and other EU-based industries producing paints, adhesives, car tires, machine hardware configuration such as the Vision System and other like hygiene commodities, substitutes for antibiotics and other new innovative solutions such as products enabling reuse of old asphalt. The R&D as well as the new upgrade investments of pine chemical bio-refiners are remarkable; they already employ more than 3,000 people and provide 1 billion euro turnover yearly in the EU without any State subsidies!

Kees Verhaar, CEO of the Arizona Chemical, says: “This addition of CTO as a residue in the Annex IX list stems from the desire of the Finnish and Swedish governments to support an exclusive use of CTO for their biofuel production. The incorrect residue classification makes it possible to circumvent EU obligatory sustainability criteria and to grant major State Subsidies, in the form of tax relieves, to this kind of fuel. The odd “double-counting” method allowed for residues in ILUC makes it possible for Finland to reach its bio-content quota in the traffic fuel distribution: You blend 10 percent bio but can report 20 percent to the EU!”

Michael Carus, Managing Director of nova-Institute, a renowned and independent research company, and a well known expert on the bio-based economy, says: “Several studies have shown that 5 to 10 times more gross employment and added value is created per unit of land or ton of biomass by material use than energy use. This is largely due to the considerably longer process and value chains for material use – and the higher value of the products. Using CTO for energy is a misallocation of a high-value biomass.”

Risto Näsi, CEO of Forchem, comments: “CTO is a scarce product. Fuel is bulk produced in extensive volumes and may suck huge volumes of available CTO. In the EU, there is a shortage on CTO and the refiners have to source it from around the world. There is no net gain for society to direct it, by artificial demand, from lucrative biochemical business to State aided biofuels.”

Rui Brogueira, CEO of Respol, adds: We are ready and well equipped to continue to compete for this fine product, but we want a fair and competitive market that is not seriously distorted by the political intervention causing severe damage to the existing and innovative bio-refining. ”

For further information and research data please contact:

Nella Baerents, Sustainability Policy Director, Arizona Chemical Europe tel.+31 629 725 978

Risto Näsi CEO, Forchem Oy
tel. +358 50 315 15 85

Rui Brogueira, CEO, Respol Resinas
tel. +351 244 850 940

Michael Carus, Managing Director, nova-Institut
tel. +49 223 348 14 51