Estonian company Fibenol investing up to €700 million to develop a biorefinery in Latvia

On March 15, a Memorandum of Understanding was signed between the Estonian company Fibenol OÜ and the Ministries of Economy, Finance, Agriculture, Climate and Energy and the Investment and Development Agency of Latvia (LIAA) on the implementation of an investment project with a total investment of 600 to 700 million euros.

“Coming from Estonia, we recognise that countries rich in wood resources aren’t fully utilizing their potential, inspiring us to find solutions. With the completion of our demo plant commissioning, setting up the first commercial-scale biorefinery is our next goal. We want to make the most of local woody biomass and leverage Latvias inherent bioeconomy advantage. Latvia has demonstrated significant interest in enhancing the bioeconomy and promoting innovation growth through its supportive business environment for green technology solutions. Fibenol represents more than just one large industrial plant project; we see that in the future, the whole Baltics have the potential to lead the way for fossil-free industry models,” explains Raul Kirjanen, majority shareholder of Fibenol.

Fibenol will build its commercial-scale biorefinery in Latvia based on their patented and market-ready technology, the Sunburst pretreatment technology. Sunburst is a key-enabling technology that facilitates wood fractionation process, enabling the conversion of >90% of the feedstock into functional biomaterials that can replace fossil chemicals in the chemical and materials industries. Economic Minister Viktors Valainis stated that bioeconomics is a priority for Latvia’s economic development, and the planned biorefinery is proof that Latvia can attract large scale projects, using local resources and expertise.

“Latvia’s competitiveness in biotechnology development is quite high, especially in areas such as wood processing. The wood industry remains the most important segment of Latvia’s exports and provides a source of new investment in the regions. We are pleased that Fibenol has decided to set up its production facility in Latvia, thus appreciating our business environment and the opportunities for government support. At the same time, it demonstrates that this sector is also investing heavily in research and development, working on the development of new globally competitive products,” said Acting Director of LIAA Iveta Strupkāja.

The planned project stands out internationally for its role in replacing fossil chemicals with sustainable alternatives, creating a globally significant lignocellulosic biorefinery on an industrial scale, an approach that has so far only been used in laboratories. The development of such a project provides the possibility of storing carbon from low-quality wood over the long term, significantly reducing emissions from fossil resources. “The biomaterials produced at the Fibenol plant will also contribute to further innovation along the entire product value chain, creating new opportunities for Latvian industries aiming to move away from fossil-based materials and become more environmentally friendly. To ensure the success of this project, it is essential to attract additional funding to mitigate the risks. Therefore, in addition to traditional equity and bank financing, it is planned to apply for the EU Innovation Fund grant programme. The conclusion of the Memorandum of Understanding between Fibenol and the Latvian side is the result of a long-term cooperation. So far, the company’s representatives have already visited several municipalities, potential project sites and other partners involved. The signing of the MoU is an important step that gives confidence to all parties involved to move forward with the implementation of this project. Ministry of Economy Public Relations Division