Chemicals plant in Germany bets on biomass

Staring at a pile of freshly cut beechwood, forestry manager Johannes Brodowski wonders if he is looking at the future of Germany’s chemicals industry.A local factory would use Brodowski’s trees and other organic material — instead of climate-harming fossil fuels — to make chemical products used to manufacture items ranging from packaging to car tires and fleece jackets. “The innovative part of the whole thing is that a new product is getting made,” Brodowski said. “Namely, chemical materials that were originally made from fossil fuels and now can be made from renewable sources.” Finnish group UPM Biochemicals unveiled its 1.3 billion euro (US$1.51 billion) biorefinery in Germany’s eastern state of Saxony-Anhalt this year, taking a big risk at a difficult time for the sector. Germany’s traditional chemicals industry has been battered by high energy prices and cheap competition from Asia, with national output now at its lowest level since 1995. Still, UPM thinks now is the right time to try, and get chemical giants to break with fossil fuels and switch to renewable biomass, in this case wood which grows abundantly in the region. “With local supply chains, we can be competitive and meet the needs of international markets,” UPM site manager Harald Dialer said. The opportunity is large: About 80 percent of German chemical products rely on imported fossil-based materials, said Paul Muennich of Agora Energiewende, an energy-transition think tank. UPM has signed a supply contract with the forest-rich state of Saxony-Anhalt, making use of beech tree branches and twigs for chemical processes in its refinery. As a result, beech wood production in this corner of Saxony-Anhalt could go up by 20-30 percent, Brodowski said. He said that the plant uses tree branches, which are less commercially viable than trunks and usually incinerated in factories. The wood is processed at the Leuna Chemical Park, home to more than 100 different firms. Most of the factories give out the smell of rotten eggs, but inside some areas of the UPM site, a sweeter smell fills the air. Wood chips are treated until they burst “like popcorn,” turning into a slurry that is fermented in huge metal tanks, UPM spokesman Martin Ledwon said. At the end of the process, two types of products emerge: liquids used to make clothing or bottles, and a brown powder that can replace carbon black, a powder used as a filler in tires and other rubber products. The UPM site should reach full capacity by 2027, with annual output of 220,000 tonnes of chemicals. That would mark a rare bright spot in Germany’s otherwise stagnant chemicals industry — a trend thrown into stark focus in Leuna where the US group Dow Inc is to soon close two plants. Opening the plant was a “very bold decision,” Dialer said, adding that the COVID-19 pandemic had doubled the timeline and the associated costs of the project. UPM would like to count on help from the German state, highlighting that its project is more ecologically sustainable than oil-guzzling plants that also accelerate climate change. However, the federal government led by conservative Chancellor Friedrich Merz, which took power in May, has been less enthusiastic about environmental and climate protection than its predecessors. When the project was launched in 2020, sustainability was “more at the center of the debate,” Dialer said. In his view, Germany and the EU should support European industry by imposing quotas on what he says are cheap but often environmentally damaging imports of Chinese chemicals. Muennich also said that government intervention with subsidies or tariffs would be “necessary to shift from fossil fuel to sustainable biomass.”