More than paper: the biorefinery

← The Pulp Trade Map

The Pulp Trade Map · Innovation

Södra can make about 46,000 tons of crude tall oil a year at its pulp mills, and UPM turns tall oil into about 130,000 tons a year of renewable diesel and naphtha. Lignin has had a harder path: the Sunila lignin plant in Finland closed in September 2023. This post gives every product a stage label, so a reader can see what is sold, what is being built and what is still a pilot.

Published October 27, 2026 · Facts as of October 27, 2026 · 10 min read · Sources listed at the end

Facts as of October 27, 2026. This page states the facts as they stood on that date. Figures, rules and company plans may have changed since publication. We review this guide every six months and update the pages.

46,000 tSödra's annual crude tall oil capacity across its pulp mills ⁴

130,000 tUPM Lappeenranta's yearly output of renewable diesel and naphtha made from tall oil, running since 2015 ⁵

Sep 2023Stora Enso permanently closed pulp production and lignin extraction at Sunila ⁸

2027Scheduled completion of Södra's kraft lignin plant at Mönsterås ¹⁰

The 60-second version

What is it?

A biorefinery turns the parts of wood other than fiber into products. At a kraft mill these are crude tall oil, crude sulfate turpentine, methanol, lignin, biogas and surplus power ^1,3,11.

Why does it matter?

Tall oil and turpentine are sold today. Lignin and carbon capture are at earlier stages, and some plants have closed ^7,8,13. A buyer or lender needs the stage of each product, not only the headline.

How does it work?

The liquid left after cooking wood holds tall oil soap and dissolved wood material. Mills recover tall oil before the liquid burns, and some add plants for methanol, lignin or CO2 ^3,10,11,14.

Myth or fact?

"Pulp mills now turn lignin into large volumes of new products."

See the answer

Mostly myth. The first full-scale lignin plant started at Domtar Plymouth in 2013 with 25,000 tons a year of capacity ⁷. Lignin extraction at Sunila closed in September 2023 ⁸. Södra's lignin plant is scheduled for 2027 ¹⁰. Tall oil is the best documented product sold today ^3,4,5.

In this post

1. What leaves a kraft mill besides pulp?
2. Which products are sold today, and where?
3. How real is each product?
4. What has failed or closed?
5. Who is building the next lignin plant?
6. Can a pulp mill capture its carbon?
7. What dates should a reader watch?

01What leaves a kraft mill besides pulp?

A kraft mill cooks wood chips in chemicals and separates the fiber. The cooking liquid carries products that mills can recover. How a kraft mill works explains the loop. Metsä says it recovers crude tall oil from the spent liquor before the liquor is burned ³.

Metsä sells crude tall oil and crude sulfate turpentine from its Aanekoski and Kemi mills ^1,2. At Aanekoski, a biogas plant makes biogas and pellets from wood-based sludge ¹. Södra extracts raw methanol from the pulp process at Mönsterås ¹¹. Power is a further output: Metsä lists electricity self-sufficiency of 240% at Aanekoski and 250% at Kemi ^1,2. Mills that make their own power covers this in detail.

1. Tall oil and turpentineRecovered from the cooking liquor before it burns. Sold as crude tall oil and crude sulfate turpentine ^1,3.
2. MethanolSödra extracts raw methanol from the pulp process and refines it into biomethanol ¹¹.
3. LigninPlants can separate lignin from the process. Plymouth in the US started one in 2013, and Södra is building one for 2027 ^7,10.
4. Biogas and bark gasAanekoski makes biogas from wood-based sludge and gas from bark that replaces heavy fuel oil ¹.
5. PowerMetsä lists 240% electricity self-sufficiency at Aanekoski and 250% at Kemi ^1,2.

02Which products are sold today, and where?

Tall oil is the best documented. Metsä names Joutseno, Rauma, Aanekoski and Kemi in Finland, and Husum in Sweden, as mills that produce it ³. Södra says it has capacity for about 46,000 tons a year ⁴. That is capacity, not output. No source we found gives a tall oil yield per ton of pulp.

Tall oil then goes to refiners. UPM's Lappeenranta refinery in Finland makes about 130,000 tons a year of renewable diesel and naphtha from crude tall oil ⁵. It is a separate site that buys the oil. In the United States, Kraton upgraded its crude tall oil biorefinery at Panama City, Florida, for $35 million. The plant splits the oil into four fractions: fatty acid, rosin, distilled tall oil and pitch ⁶.

Metsä says its turpentine is typically processed into aroma chemicals for fragrances, cosmetics and cleaners ¹. We found no volume or price for it. Södra's biomethanol plant delivered its first commercial batches in February 2020, and all output goes to a biodiesel maker in Denmark ¹¹. We did not confirm that it still runs in 2026.

Plants

Named plants, capacity and start date

Figures are company statements. Södra's 46,000 t is capacity. UPM's 130,000 t is its stated yearly output. Sources: ^{1,2,4,5,6,7,8,10,11,12}.

Plant	Product	Capacity or size	Start	Status
Metsä Aanekoski, Finland	Tall oil, turpentine, biogas	No volumes published	Oct 18, 2017	In production
Metsä Kemi, Finland	Tall oil, turpentine, biogas	80,000 t of biochemicals (split not stated)	Sep 20, 2023	In production
Södra pulp mills, Sweden	Crude tall oil	About 46,000 t a year	Not stated	In production
Södra Mönsterås, Sweden	Biomethanol	6.3 million liters	Feb 2020	In production in 2020, 2026 not checked
UPM Lappeenranta, Finland	Renewable diesel and naphtha	About 130,000 t a year	2015	In production
Kraton Panama City, US	Tall oil fractions	Not stated, $35 million upgrade	Upgrade completed	In production
UPM Leuna, Germany	Biochemicals from hardwood	220,000 t a year designed	Sugars Dec 2025	Ramp-up
Södra Mönsterås, Sweden	Kraft lignin	Over SEK 2 billion, capacity not stated	Due 2027	Being built
Stora Enso Sunila, Finland	Lignin	50,000 t a year	2014 or 2015 to Sep 2023	Closed
Domtar Plymouth, US	Lignin	25,000 t a year	2013	Current status not confirmed

Metsä sells crude tall oil and crude sulfate turpentine from its Aanekoski and Kemi mills ^1,2.

03How real is each product?

Every product in this series carries one of four labels: in production, being built, pilot or lab. The list below shows the label and the evidence for each.

UPM's Leuna biorefinery in Germany shows why the label matters. It is designed for 220,000 tons a year of biochemicals from hardwood ¹². On December 19, 2025, UPM said it had started production and sale of industrial sugars ¹². Only the sugars are confirmed as commercial in the sources we found. Lignin-based rubber fillers were expected to ship by the end of September 2026, and we found no confirmation ¹². Sources describe Leuna as a stand-alone hardwood biorefinery, so it sits outside a pulp mill.

How real is it?

Biorefinery products at pulp mills, by stage

• In Production
  Crude tall oilMetsä names five mills as producers, and Södra has capacity for about 46,000 tons a year ^3,4.
• In Production
  Crude sulfate turpentineMetsä sells it from Aanekoski and Kemi. No volumes found ^1,2.
• In Production
  Biogas and bark gasAanekoski has run since 2017. Kemi gasifies bark to replace heavy fuel oil in its lime kiln ^1,2.
• In Production
  Biomethanol at MönsteråsFirst commercial batches in February 2020, capacity 6.3 million liters. 2026 operation not confirmed ¹¹.
• In Production
  Renewable diesel and naphtha from tall oilUPM Lappeenranta makes about 130,000 tons a year and has run since 2015 ⁵.
• In Production
  Industrial sugars at LeunaProduction and sale announced December 19, 2025. Ramp-up continues ¹².
• Being Built
  Kraft lignin at MönsteråsConstruction since 2025, completion scheduled for 2027 ¹⁰.
• Pilot
  Lignode battery materialPilot plant at Sunila since July 21, 2021. No capacity or commercial start found ⁹.
• Pilot
  CO2 capture at pulp millsSkutskar target of about 2 tons a day, Rauma about 1 ton a day, Peace River demonstration unit with no capacity published ^13,14,16.

Stage labels: In production (commercial plants running), Being built, Planned (announced, not yet built), Pilot (test plant), Lab (research only), Stopped (closed or cancelled). No product in our sources for this post is at lab stage. Lab-stage cellulose materials are in post 14.

04What has failed or closed?

Lignin has the most mixed record. Valmet says the first full-scale LignoBoost plant started at Domtar's Plymouth mill in North Carolina in 2013, with 25,000 tons a year of capacity ⁷. In August 2013 a Domtar executive said that until lignin commands a higher price, the investment is hard to justify ⁷. We found no source that confirms the Plymouth lignin plant runs today.

At Sunila in Finland, Valmet lists a 50,000-ton lignin plant whose first lignin cake came on December 7, 2014 ⁸. In December 2020 Stora Enso announced a EUR 14 million plant to granulate and pack its Lineo lignin ⁸. Then Stora Enso permanently closed pulp production and lignin extraction at Sunila, with a decision on September 4, 2023 ⁸. Whether the Lineo plant was built is not confirmed. The site was sold on November 8, 2024 ⁸. For the companies' own reasons behind such closures, see why northern mills close.

The Lignode battery material pilot at Sunila opened on July 21, 2021, and was to continue operating after the November 2024 site sale ⁹. A September 2025 trade article still calls it a pilot ⁹. We found no capacity, customer or commercial start date. Stora Enso's product page calls it a scalable model for commercial production, and no commercial plant is stated ⁹.

05Who is building the next lignin plant?

Södra is building what it calls the first commercial kraft lignin plant in Sweden, at Mönsterås. The investment is over SEK 2 billion, construction started in 2025 and completion is scheduled for 2027 ¹⁰. Södra names glue, batteries, rubber and composites as uses ¹⁰. A September 2024 report says Södra could make up to 250,000 tons a year if it used the technology at all three of its pulp mills ¹⁰. The capacity of the Mönsterås plant itself is not stated in the sources we found.

The same report names Stora Enso as one of the first customers ¹⁰. Stora Enso closed lignin extraction at Sunila, so Lignode needs lignin from another source (our reading) ^8,9. This kind of offtake agreement links a plant under construction to a buyer. Battery materials and other cellulose products are covered in new materials from cellulose, and textile fibers in clothes from trees.

06Can a pulp mill capture its carbon?

Pilots exist, and each is small. Stora Enso installed capture equipment on a recovery boiler unit at Skutskar in Sweden in April 2024, with a target of about two tons a day of captured carbon ¹³. Metsä's pilot at Rauma can capture about one ton of CO2 a day and has been online since June 2025 ¹⁴. Mercer and Svante started a demonstration unit at Peace River, Alberta, on December 31, 2025, planned to run about six months ¹⁶. We found no published result.

Metsä plans a plant at Rauma for 100,000 tons of CO2 a year, with EUR 21 million of aid awarded in September 2026. The final investment decision can come at the beginning of 2027 at the earliest ¹⁵. A January 2026 IEA Bioenergy presentation says about two thirds of Sweden's large biogenic CO2 sources are in pulp and paper ¹⁷. The Swedish projects it names as supported are not pulp mills ¹⁷.

07What dates should a reader watch?

Each plant below moves from one stage to the next on a date a company has given. A plant that is being built is a large piece of capital equipment and carries performance risk until it runs. A new product also carries commercial risk until buyers sign. Lenders that finance such plants often look at the buyer contract first; see structured commodity finance (also in the glossary) and financing industrial goods in the Ossiano Trade Finance Guide. Rules and tariffs that affect pulp trade are in the pulp watch.

• 2027Södra's kraft lignin plant at Mönsterås is scheduled for completion ¹⁰.
• During 2027UPM expects Leuna to reach full capacity and positive EBIT, as European Rubber Journal reports ¹².
• Early 2027 at the earliestMetsä can take a final investment decision on the 100,000-ton CO2 capture plant at Rauma ¹⁵.
• Sep 2026Finland awards Metsä EUR 21 million of aid for the Rauma plant ¹⁵. UPM's first lignin filler deliveries from Leuna were expected by the end of the month, and we found no confirmation ¹².
• About Jun 2026The planned six-month Peace River CO2 demonstration ends. We found no published result ¹⁶.

What this means for traders

• Ask for the stage of each product: in production, being built, pilot or lab. Tall oil and turpentine are sold today. Lignin and carbon capture need a second look.
• Check whether a plant has a signed buyer. Södra's lignin plant has a named first customer, Stora Enso, according to Bioenergy International.
• Watch the dated milestones for 2027. A closed plant such as Sunila shows that a plant can start up and later close.

Questions traders ask

What is a pulp mill biorefinery?

It is a pulp mill, or a plant next to one, that makes products from wood besides pulp. Examples are crude tall oil, crude sulfate turpentine, biogas, methanol, lignin and renewable diesel.

What is tall oil?

Tall oil is a bioproduct recovered from the spent cooking liquor of a kraft mill before the liquor is burned. Metsä says it is used in fuels, lubricants, paints, tires, adhesives and inks.

Is kraft lignin sold at scale today?

No source we found confirms that. A US plant started in 2013 and its current status is not confirmed. A Finnish plant closed in September 2023. Södra's plant is scheduled for 2027.

Is UPM Leuna a pulp mill product line?

Sources describe Leuna as a stand-alone biorefinery that makes biochemicals from hardwood. Only its industrial sugars are confirmed as commercial products.

Do any pulp mills capture carbon dioxide?

Pilots and demonstration units run at Skutskar in Sweden, Rauma in Finland and Peace River in Canada. Skutskar targets about two tons a day and Rauma can capture about one ton a day. No capacity is published for Peace River. Metsä's planned plant at Rauma has no final investment decision yet.

Read next

• Inside the millMills that make their own power: energy, water and the recovery boiler
• Inside the millHow a kraft mill works: the chemical loop that made modern pulp
• InnovationClothes from trees: dissolving pulp, viscose and new fibers
• InnovationNew materials from cellulose: what is real and what is still in the lab
• Inside the millWhy northern mills close: the companies' own reasons
• Money and rulesPulp watch: every rule and date in one place
• Ossiano Trade Finance GuideHow each trade finance instrument works
• GlossaryTrade finance terms in plain English

Financing a new plant or a first offtake contract in pulp? Ossiano Capital works on trade finance for pulp and paper trades.

Start the Conversation

Sources and notes

1. Metsä, Aanekoski bioproduct mill page (undated); Pulpapernews, Metsä Group inaugurates new Aanekoski pulp and bioproducts mill (inaugurated October 18, 2017), https://www.pulpapernews.com/20190803/8935/metsa-group-inaugurates-new-aanekoski-pulp-and-bioproducts-mill https://www.metsagroup.com/metsafibre/about-metsafibre/pulp-production/aanekoski-bioproduct-mill/
2. Metsä, Kemi bioproduct mill brochure (undated; mill started September 20, 2023). https://metsagroup.com/globalassets/metsa-fibre/attachments/brochures/metsa-fibre-kemi-bioproduct-mill-en-lowress.pdf
3. Metsä, Metsä Crude Tall Oil (CTO) product page (undated). https://metsagroup.com/metsafibre/products-and-services/biochemicals/metsa-crude-tall-oil-cto
4. Södra, Tall oil product page (undated). https://www.sodra.com/en/uk-ie/products/bioproducts/tall-oil/
5. UPM, UPM Biofuels marks 10 years of pioneering renewable fuel production in Lappeenranta, Finland, April 28, 2025. https://www.upm.com/news-and-stories/releases/2025/04/upm-biofuels-marks-10-years-of-pioneering-renewable-fuel-production-in-lappeenranta-finland/
6. European Rubber Journal, Kraton completes $35m investment at US biorefinery, April 15, 2024; Process Worldwide, 35 Million Dollar Investment Kraton Upgrades Crude Tall Oil Biorefinery Towers, January 30, 2024. https://www.european-rubber-journal.com/article/2095338/kraton-completes-35m-investment-at-us-biorefinery
7. Valmet, LignoBoost plants produce large volumes of lignin, case studies (undated); Pulp and Paper Canada, Domtar betting on biochemicals, August 1, 2013, https://www.pulpandpapercanada.com/domtar-betting-on-biochemicals-1002535008/ https://www.valmet.com/insights/articles/up-and-running/new-technology/PEERS1stLignoBoostPlants/
8. PaperAge, Stora Enso divests Sunila site to Aalto Development, November 8, 2024; Renewable Carbon News, Stora Enso granulated lignin investment, December 11, 2020, https://renewable-carbon.eu/news/?p=82769; Valmet LignoBoost article (undated). https://paperage.com/2024news/11-08-2024stora-enso-divests-sunila-site-to-aalto-development.html
9. PaperAge, Stora Enso divests Sunila site to Aalto Development, November 8, 2024; CompositesWorld, Stora Enso opens pilot plant for lignin-based carbon materials for batteries, July 21, 2021; PaperAdvance, Stora Enso Turns Lignin into a European Battery Breakthrough, September 10, 2025, https://www.paperadvance.com/bioeconomy/biomaterials/stora-enso-turns-lignin-into-a-european-battery-breakthrough.html https://compositesworld.com/news/stora-enso-opens-pilot-plant-for-lignin-based-carbon-materials-for-batteries
10. PaperAge, Sodra starts construction of its new kraft lignin plant in Sweden, May 28, 2025; PaperAge, Sodra to build lignin production plant, June 25, 2024; Bioenergy International, Sodra secures kraft lignin offtake deal with Stora Enso, September 23, 2024, https://bioenergyinternational.com/sodra-secures-kraft-lignin-offtake-deal-with-stora-enso/ https://www.paperage.com/2025news/05-28-2025sodra-starts-construction-of-its-new-kraft-lignin-plant-in-sweden.html
11. Andritz, Spectrum customer magazine, Sodra Monsteras (undated, after March 2020); Pulpapernews, Andritz starts biomethanol plant at Sodra Cell Monsteras, March 24, 2020, https://www.pulpapernews.com/20200324/11296/andritz-starts-biomethanol-plant-sodra-cell-monsteras https://www.andritz.com/spectrum-en/soedra-moensteras-spectrum-customer-magazine
12. Hydrocarbon Processing (UPM release), UPM unlocks new bio-based markets as Leuna biorefinery produces its first commercial product, December 19, 2025; European Rubber Journal, UPM set to start rubber-filler deliveries from Leuna, August 18, 2026, https://www.european-rubber-journal.com/article/2099587/upm-targets-set-to-start-rff-deliveries-from-leuna; UPM Biochemicals, Biorefinery Leuna page (undated). https://hydrocarbonprocessing.com/news/2025/12/upm-unlocks-new-bio-based-markets-as-leuna-biorefinery-produces-its-first-commercial-product/
13. Stora Enso, Capturing carbon at Stora Enso Skutskar Mill, April 29, 2024. https://www.storaenso.com/en/newsroom/news/2024/4/capturing-carbon-skutskar-mill
14. Metsä Group, Metsä Group's carbon capture pilot underway, investigation of a demo plant beginning, September 4, 2025. https://www.metsagroup.com/news-and-publications/news/2025/metsa-groups-carbon-capture-pilot-underway--investigation-of-a-demo-plant-beginning/
15. Metsä Group, Metsä Group's carbon dioxide capture plant receives EUR 21 million in aid (2026); Advanced Biofuels USA, Three Finnish Industrial Biogenic Carbon Capture Projects Receive EUR 26.6 Million in Support (decision dated September 9, 2026), https://advancedbiofuelsusa.info/three-finnish-industrial-biogenic-carbon-capture-projects-receive-eur-26-6-million-in-support https://www.metsagroup.com/news-and-publications/news/2026/metsa-groups-carbon-dioxide-capture-plant-receives-eur-21-million-in-aid/
16. PaperAge, Mercer's Peace River Pulp Mill Starts-up CO2 Capture Demonstration Unit, December 31, 2025; PaperAdvance, Mercer launches CO2 capture pilot at Peace River pulp mill, December 23, 2025, https://www.paperadvance.com/news/sustainability/mercer-launches-co2-capture-pilot-at-peace-river-pulp-mill.html https://www.paperage.com/2025news/12-31-2025mercer-peace-river-pulp-starts-up-co2-capture-demonstration-unit.html
17. IEA Bioenergy Task 40 and IETS workshop, CCUS Sweden, January 15, 2026. https://task40.ieabioenergy.com/wp-content/uploads/sites/29/2026/05/IEA-IETS-XXI-WS-Jan-15-2026-CCUS-Sweden.pdf

Trade figures come from UN Comtrade (2015 to 2025, as reported by 10 countries) and FAOSTAT (1961 to 2024), checked and recalculated by us; each chart names whose data it uses. All tons are metric tons. All facts on this page are as of October 27, 2026, the date of publication, and may have changed since. For rules and tariffs, check the pulp watch before you act.

About this post. Prepared for Ossiano Capital. People planned, researched, wrote and checked this post, using AI tools to help with research and checking. You are welcome to quote or reuse it: please credit Ossiano Capital and link to this page.