SEK 500 million in investment grant for biofuels project at Swedish Domsjö Fabriker

The Swedish Energy R&D Board today decided to provide an investment grant for demonstration in industrial scale of the Chemrec technology for production of the renewable motor fuels BioDME and Biomethanol. The plant will be built at the Domsjö Fabriker biorefinery in Örnsköldsvik. The investment grant of up to SEK 500 million (€49 million, $73 million) is contingent on approval by the EU Directorate General for Competition according to the State aid rules.

The plant is based on the Chemrec technology for black liquor gasification combined with technology from the petrochemical industry. Investment cost is calculated at about SEK 3 billion (€300 million, $440 million) for a capacity of about 100 000 tons or 40 million gallons per year of the renewable motor fuels BioDME and Biomethanol. During the pre-feasibility study phase liquor from Domsjö Fabriker has been gasified in the Chemrec development plant in Piteå with very good results. Extensive front-end engineering and design work will now be done to provide a solid foundation for final decision on project procurement planned for the fall of 2010.

- The Chemrec technology has the potential to reduce greenhouse gas emissions by 95% compared to gasoline and diesel, replace imported fossil fuels with renewable and to create improved profitability and employment in the forest-based industry, says Chemrecs COO Jonas Rudberg.

The Domsjö plant will have the capacity to supply well over 2000 heavy trucks with fuel. With fully implemented renewable fuels production at all pulp mills in Sweden, half of all heavy road transports could be propelled by BioDME. The technology can replace half of all fuels used for heavy road transports with BioDME and Biomethanol. At the same time total Swedish fossil carbon dioxide emissions would be reduced by 10% or about 6 million tons and replace fossil fuel imports worth about SEK 10 billion (€ 1 billion, $1.5 billion) annually. Globally applied the technology has the potential to replace about 30 million tons of diesel oil annually.

- We continuously work with product and business development to strengthen the competitive position of our biorefinery, Domsjö Fabriker. With this planned biofuels production we are adding another value-added product to our current product portfolio of specialty cellulose, lignosulfonate and ethanol, says Ola Hildingsson CEO of Domsjö Fabriker.

The energy raw material for the biofuels is forest harvest residues, primarily branches and tree-tops. The project will generate substantial employment during the construction phase and permanently in the local forestry and for the operation and maintenance of the plant.

For further information please contact

Jonas Rudberg, COO Chemrec, +46 70 622 35 71 or jonas.rudberg@chemrec.se

Ola Hildingsson, CEO Domsjö Fabriker, +46 660756 11 or ola.hildingsson@domsjoe.com

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About Domsjö Fabriker
The biorefinery Domsjö Fabriker produces specialty cellulose, lignosulfonate and ethanol at its facilities near central Örnsköldsvik,550 km north of Stockholm. The biorefinery employs about 340 persons and generates about SEK 1.5 billion (€150 million, $220 million) in revenue. For more information see www.domsjoe.com

About Chemrec
Chemrec is a Swedish company developing and commercializing technology for black liquor gasification, which when integrated into a pulp mill gives to possibility to produce large quantities of renewable motor fuels or power from biomass. The company's shareholders include VantagePoint Venture Partners, Volvo Technology Transfer, Environmental Technologies Fund and Nykomb Synergetics. For more information see www.chemrec.se