Neste Oil: Biofuels Digest’s 2014 5-Minute Guide

March 24, 2014 |

Neste Oil is a refining and marketing company, with a production focus on premium-quality, lower-emission traffic fuels. The company produces a comprehensive range of major petroleum products and is the world’s leading supplier of renewable diesel. The company has operations in 15 countries. Its growth strategy is focused on producing premium- quality renewable diesel fuel. The company had net sales of EUR 11.9 billion in 2010 and employs around 5,000 people.

Rankings

50 Hottest Companies in Bioenergy: #18, 2013/14

Biofuels Digest Awards

Finalist, 2014 Transformative Technologies, “Plant or Integrated Biorefinery”

The Situation

Neste already has established substantil renewable diesel capacity, based originally on palm oil but targeting a wide range of feedstocks now. It has been expanding not only in feedstocks but in adding a sugars-to-oils technology. To that end, Neste Oil has joined forces with DONG Energy to develop an integrated process to produce renewable diesel and aviation fuel based on agricultural residues. DONG Energy’s Inbicon technology will be used in the first part of the process to pre-treat biomass and produce cellulosic sugars that can be converted into microbial oil with Neste Oil’s technology. Microbial oil can be used as a feedstock for premium-quality renewable fuels such as renewable diesel and renewable aviation fuel.

Major Investors

Neste Oil’s share is listed on the NASDAQ OMX Helsinki. The company’s biggest shareholder is the Prime Minister’s office.

Type of Technologies

Neste Oil has developed a premium quality NExBTL renewable diesel production technology which allows flexible use of any vegetable or waste oil in the production of premium-quality renewable diesel and aviation fuel. Based on its technical qualities, NExBTL diesel is one of the best diesel fuels in the world. NExBTL is produced by hydrotreating vegetable or waste oils. As a hydrocarbon it corresponds to the chemical composition of traditional diesel.

Neste Oil’s major investment projects are linked to increasing the company’s NExBTL renewable diesel capacity. In 2011, Neste Oil started up the Europe’s largest renewable diesel plant in Rotterdam. The plant has a capacity of 800,000 t/a. Neste Oil already operates a renewable diesel plant in Singapore that came on stream in 2010 and two plants in Porvoo in Finland that came on stream in 2007 and 2009. All Neste Oil’s NExBTL plants are capable of producing both NExBTL renewable diesel and NExBTL renewable aviation fuel.

With the Rotterdam start-up, Neste Oil’s major €1.5 billion investment program aimed at increasing the renewable diesel capacity and the company is very well placed to meet world’s growing energy needs and demand for cleaner, sustainable bio-based fuels.

Feedstocks:

Neste Oil’s NExBTL renewable diesel production technology allows flexible use of any vegetable or waste oil in the production of premium-quality renewable diesel without compromising on quality.

At the moment, Neste Oil produces NExBTL renewable diesel from a mix of palm oil, stearin and palm oil fatty acid distillate (PFAD) which are by- products of palm oil production, rapeseed oil, jatropha oil, camelina oil, soybean oil as well as waste animal fat produced by the food processing industry.

Widening the raw material base is one of the company’s main future goals. About 80% of the company’s R&D costs totaling approximately 40 million euros annually are directed to researching renewable raw materials. Progress continues to be made and in 2011 Neste Oil expanded the raw material feedstock with jatropha oil, camelina oil and soybean oil. In addition, research has shown that algae oil and microbial oil, together with wax derived from wood-based biomass, can all be used as feedstocks for producing NExBTL renewable diesel.

Notable successes in this area include: patented a waste-based microbial oil technology; progressed with research on algae oil and produced an initial trial batch; achieved good results at our pilot plant in producing biowax from wood- based biomass and started environmental impact assessments for a possible commercial plant; partnered with the world’s leading research institutes, companies anduniversities to find ways to produce renewable raw materials on industrial scale.

Products

NExBTL renewable Diesel

Based on Neste Oil’s proprietary technology, premium-quality NExBTL renewable diesel is the most advanced diesel fuel on the market today. It easily outperforms both conventional biodiesel and fossil diesel, and can be produced from a flexible mix of vegetable oils and waste animal fat sourced from the food industry. Neste Oil’s procurement chain ensures that all the raw materials it uses for NExBTL are produced responsibly. NExBTL renewable diesel has been shown to reduce greenhouse gas emissions by over 40% over the product’s entire life cycle when compared to fossil diesel. Its lower tailpipe emissions also make a valuable contribution to enhancing overall air quality.

NExBTL renewable aviation fuel
Neste Oil is a global pioneer in aviation biofuels. The company’s NExBTL renewable aviation fuel meets the very stringent quality standards demanded of aircraft fuel and can be produced in industrial quantities. Production of Neste Oil’s renewable aviation fuel is based on the company’s NExBTL technology.

NExBTL renewable aviation fuel can significantly reduce an aircraft’s greenhouse gas emissions compared to fossil fuel. In addition to a smaller carbon footprint, it also offers lower emissions of other pollutants such as NOx. Neste Oil’s NExBTL renewable aviation fuel is a pure hydrocarbon comparable to fossil-based aviation fuel. NExBTL renewable aviation fuel is fully compatible with all current aircraft engines and no aircraft-related investments or modifications are needed before it can be used.

Past Milestones
1. Compared to fossil diesel, NExBTL reduces greenhouse gas emissions by over 40% over its entire lifecycle. NExBTL is currently being sold to consumers in Finland and to other oil companies in Europe and North America to be used as a premium quality biocomponent. It can be used in blends in any concentration, i.e. 0–100% of the content. The company started up three plants in Finland, Singapore and Rotterdam and increased its total production capacity to 2.0 million t/a.

2. Lufthansa started commercial flights powered by Neste Oil’s NExBTL renewable aviation fuel in summer 2011. This was the first time that renewable fuel is used in regular commercial airline service. Neste Oil is currently one of the only companies in the world capable of producing renewable aviation fuel at commercial scale.

3. Neste Oil is committed to using sustainably produced bio-based raw materials. The company has developed its own sustainability verification system which exceeds the industry standards for renewable raw material procurement and meets the requirements of legislation. The commitment to expanding the raw materials portfoliio has meant Neste Oil has successfully widened its raw material base to produce NExBTL renewable diesel. About 80% of the company’s R&D costs totaling approximately 40 million euros annually are directed to researching renewable raw materials.

In December 2012, Neste Oil said it will produce 4,000 metric tons per year of renewable jet fuel using sustainable Spanish camelina oil and used cooking oil under the EU-funded ITAKI project. The three-year project received $13.2 million and will feed into the 2 million ton renewable jet fuel initiative European Aviation Biofuels Flightpath. Overall, the company said it increased the use of waste and residue raw materials for renewable fuels refining by over 400,000 tons in 2012. A total of 742,000 tons of these raw materials were used compared to 330,000 tons in 2011. The use of waste animal fat in particular increased last year and fish processing industry waste fat was added to the company’s feedstock base.

In June 2013, Cellana announced that it has entered into a multi-year, non-exclusive, off-take agreement with Neste Oil for commercial-scale quantities of Cellana’s ReNew Fuel algae oil feedstocks for biofuel applications. Cellana expects to be able to produce algae oil on a commercial scale from late 2015 onwards.

The partners did not reveal specific pricing or volumes, except to say that the price of algal oil would be competitive with other biofuels raw materials used by Neste, and that annual volumes would be in the thousands or tens of thousands of tons — and given that Cellana’s commitment to develop “commercial algae facilities throughout the world with a total capacity of at least 100,000 metric tons of algae biomass per year” suggests that Neste will have the offtake options for Cellana’s algal fuel oil for some time to come.

The agreement is contingent on Cellana’s future production capacity and on compliance with future biofuel legislation in the EU and US, among other factors.

In November 2013, Neste Oil committed to a Dutch initiative aimed at the deployment of sustainable biofuel in the aviation sector. The signatories of the initiative include KLM, SkyNRG, Schiphol Airport, the Port of Rotterdam, the State Secretary of Infrastructure and the Environment, and the Minister of Economic Affairs. Neste Oil’s role in the initiative is to explore the production opportunities for aviation biofuel and scaling up production. Its renewable fuel refinery in Rotterdam would potentially be the first site for producing renewable aviation fuel in the Netherlands.

Future Milestones
1. Generate profitable growth in the renewable fuels market by developing global customer base and supply chain, expanding the feedstock base, ensuring smooth operation of the new production plants and taking part in developing and planning new legislation.
2. Continue researching and introducing new raw materials. When selecting its inputs, Neste Oil prioritises suppliers that follow sustainable cultivation and production practices and have a good greenhouse gas balance. The final deployment decision is also affected by raw material availability and consistency of supply, as well as price.
3. Develop new applications, such as NExBTL renewable aviation fuel, that help customers to reduce greenhouse gas emissions and dependence on fossil fuels.

Business Model:

Neste Oil is a refining and marketing company, that produces renewable fuels based on its proprietary NExBTL technology. The company owns and operates four production plants producing NExBTL renewable diesel. The output of the plants is sold to other oil companies in European and Northern American markets to be used as a premium quality bio- component.

Competitive Edge:
Neste Oil’s strategy is founded on its unique ability to refine premium- quality fuels from a wide range of different, cost-effective feedstocks. Specialisation and in-depth expertise are central to enabling Neste Oil to
succeed in the international marketplace, despite its small relative size.

Neste Oil’s strengths in renewable fuels business include: cutting-edge NExBTL technology and product, growing production capacity, and industry-leading operations based on sustainable raw material procurement. Additionally, Neste Oil’s expertise in research and technology is one of the company’s key success factors.

Research, or Manufacturing Partnerships or Alliances.

NExBTL renewable diesel, for example, is the outcome of an intensive R&D effort.
Neste Oil has invested around EUR 40 million annually in R&D in recent years, of which around 80% has gone on research into renewable raw materials and technology for refining these inputs.
Neste Oil is involved in research in both completely new raw materials such as microbes, algae, and wood-based biomass, and existing alternatives such as used cooking oil and waste fat from the fish processing industry.

Neste Oil cooperates closely with some of the world’s leading research institutes and companies.

Neste Oil and Stora Enso are collaborating on research into utilizing wood biomass. The partners will decide whether to go ahead with basic engineering on a 200,000 t/a plant when the question of public subsidy for the project is solved.

Neste Oil, Boreal Plant Breeding, and Raisio are developing high- yielding rapeseed varieties that could be used as a raw material for renewable diesel.

Neste Oil has researched waste-based microbial oil in cooperation with the Aalto University School of Technology.

Neste Oil takes part in international algae research projects in Australia and the Netherlands to test various methods for growing algae in outdoor conditions.
Neste Oil and the Finnish Environment Institute have launched a joint algae research program testing the lipid production capacity of different types of algae and analyzing how the quality and quantity of these lipids can be optimized by adjusting the conditions under which algae are grown.

Neste Oil cooperates with approximately 25 universities and research institutes worldwide.

Stage (Bench, pilot, demonstration, commercial)
Commercial

Company website

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