Chemical pulp mills in future energy markets with variable electricity prices and increased demand for biogenic carbon

Journal article, 2025

In a typical chemical pulp mill, heat and electricity are generated as by-products. With increased value of biogenic carbon, however, alternative products may be more valuable. In the present study, a techno-economic optimisation model representing a pulp mill is subjected to possible near-future energy markets to compare investments in: (i) a condensing turbine for increased electricity generation; (ii) lignin extraction for biofuel production; and (iii) carbon capture for either storage or utilisation. Under present market conditions, the model mill invests in a condensing turbine for increased electricity generation. In a scenario representing Year 2030, the condensing turbine is complemented with a lignin extraction plant, and for scenarios representing Year 2040, the mill invests also in carbon capture. When both lignin and CO2 are priced based on the demand for sustainable fuels, lignin extraction is favoured over carbon capture (although the technical limitations of lignin extraction motivate a combination of both technologies). When instead the CO2 price is set by the demand for negative emissions, according to an assumed price of emissions allowances in the EU ETS, lignin extraction cannot compete with carbon capture. Already at a CO2 price of 75 €/t (The ETS credit price of 2024), the price of lignin must be over 300 €/t for the optimisation model to choose investments in lignin extraction over carbon capture. The share of green carbon atoms used for products can be improved with lignin extraction; however, for the highest potential to reduce fossil emissions in other sectors, carbon capture is required.