OREANDA-NEWS.  July 23, 2014. The Estonian unit of the Finnish energy group Fortum plans to build a bio-oil plant in the southwestern city of Parnu by 2016.

The European Union has decided to support the 30 million euro project with 6.9 million euros.

"We plan to make the investment decision at the end of this year. The decision has not yet been taken, but getting support from the EU will certainly help in its making. If the decision is made at the end of 2014 the plant could be finished during 2016," CEO of Fortum Eesti Margo Kulaots told BNS.

"The overall size of the investment would be around 30 million euros. The annual capacity of the plant could be 50,000 tons of bio-oil. In the more distant future production of bio-oil could be raised to the level where producing motor fuel becomes possible," he added.

Kulaots said that producing bio-oil in Estonia would pay. "Fortum has a similar plant in Joensuu, Finland. True, it's still in the trial phase, but the facility itself is ready. Its output has even been sold in advance," he said.

The new plant would give work to about 10 people but considering that the raw material will be sourced from the vicinity of Parnu launch of production might indirectly result in 300 new jobs, he said.

The European Commission on Tuesday approved 6.9 million euros for the construction of a bio-oil plant using the fast pyrolysis technology in the framework of the second round of the NER300 funding program.

In fast pyrolysis, biomass is decomposed in an oxygen-free atmosphere by heat and the product gas is condensed to bio-oil. The side products, coke and noncondensible gas, can be utilized fully and energy efficiently in the boiler of the power plant.

Bio-oil can be used at heat plants or in industrial steam production as a replacement for fossil fuels. In the future it can be used as a raw material for various biochemicals and environmentally friendly motor and ship fuel.