Pine-Based Chemicals and Fuel Demand in the Spotlight

Investments are ramping up for chemicals, materials, and fuel using woody biomass and pulp by-products for feedstock. Supply and demand for crude tall oil (CTO), in particular, are being scrutinized because of a projected growing deficit in the global CTO availability from 0.6% in 2020 to 8% in 2030 because of increased biofuels demand, according to a recent study commissioned by the Pine Chemistry Panel of the American Chemistry Council (ACC) and published in the Journal of Cleaner Production in December.

CTO, a side stream of the pulp and paper industry, is an essential raw material used to make pine chemicals. Although the supply of CTO for biofuels could come from anywhere in the world, there are certain conditions on regional quality and trade relationships to consider in each region. According to the study, CTO produced in the USA is seen as the highest quality CTO on the market and therefore is almost exclusively consumed for making chemicals. Most European pulp and paper mills also produce good quality CTO compared to mills outside Europe or the USA. The majority of the CTO supply in Europe is located in Scandinavia, particularly in Sweden and Finland.

As a by-product, CTO supply is limited by the production volume of the Kraft pulp process. Around 40-60 kilograms of CTO is produced per ton of softwood Kraft pulp processed. Global CTO availability in 2019 was estimated at 1.85 million tpa and is expected to increase to 2.26 million tpa by 2030 due to current and future softwood kraft pulp capacity expansions. Global demand for CTO in bio-based chemicals is expected to grow at a rate of 0.5% from 1.48 million tpa in 2019 to 1.56 million tpa by 2030. Distillation of CTO, by far is the most significant application, and in 2019, it was estimated that around 75% of global CTO consumption was in fractionation capacity producing tall oil rosins (TOR), tall oil fatty acids (TOFA), distilled tall oil (DTO), tall oil pitch (TOP) and tall oil heads (TOH). Demand for CTO-based end-use products is derived from a large number of market applications including paints/coatings, adhesives, food additives, chewing gum, soaps and detergents, synthetic rubber, lubricants, fuel additives, inks, paper sizing chemicals, oilfield and mining chemicals, etc.