The Finnish refiner is turning slaughterhouses into oil wells
IN ALDOUS HUXLEY’S “Brave New World”, the human corpses in Slough Crematorium are turned into a phosphorous-based fertiliser. “Fine to think we can go on being socially useful even after we’re dead,” a character enthuses.
An engineer at Neste, a Finnish oil company, wryly echoes that observation while showing visitors around a novel diesel refinery in Porvoo, an industrial town 50km (31 miles) east of Helsinki. But the sickly-smelling brown gloop fed into the town’s pre-treatment plant has nothing to do with humans. It is made from the rendered fat of slaughtered cattle and pigs, transported by tankers in heated vats to stop it congealing. No reindeer, either. “Too lean,” he says.
In a triumph of the “circular economy”, Neste has found a way to make transport fuel more sustainable. After heating and filtering the gunk, what is left of it is mixed with hydrogen in a refinery, producing diesel-like hydrocarbons that are then tailored so that they can be poured straight into the tanks of everything from cars to passenger jets. “You could put this in your VW diesel and drive off,” says Joshua Stone of Barclays, a bank.
Since BP, a British firm, made its attempt to go “Beyond Petroleum” in the 2000s, many oil companies have sought to become greener. But few have taken a more idiosyncratic route than Neste, which is part-owned by the Finnish state. In the past decade it has invested €1.42bn ($1.55bn) in “biorefineries” in Porvoo, Singapore and Rotterdam. These process animal waste and recycled cooking fat into renewable diesel, a cleaner form of the fuel than that which, since the scandal at Volkswagen, has tainted the car industry. It is also a more sustainable alternative than the biofuels made from food crops. Neste has become the world’s biggest producer.
For years, Neste’s diversification away from fossil fuels terrified investors. “They really didn’t believe us,” says Matti Lievonen, its chief executive. But since 2013, when its operating profit from renewable diesel turned positive for the first time, to last year, when it reached €469m, its shares have outperformed other refiners. A few competitors, such as Valero, an American refiner, Total of France and Eni of Italy, also produce renewable diesel, but Neste’s 2.6m-tonne capacity dwarfs theirs.
The preference for renewable diesel over other biofuels is because it can be “dropped” straight into a tank with no blending. Neste says its products generate less carbon dioxide, nitrogen oxides and particulates than fossil diesel, which is why California, a clean-energy pioneer, is its biggest market. Renewable diesel is more expensive than its traditional counterpart, however, so it relies on clean-energy mandates, fuel standards and tax credits for growth. Demand is thus subject to the whims of regulators, which can fluctuate.
Most intriguing is Neste’s impact on slaughterhouses globally. Ryan Standard of The Jacobsen, an American journal that tracks the trade in animal fats, says that anticipated global demand from Neste and its smaller American rival, Diamond Green Diesel, is likely to account for the equivalent of almost half the tallow, lard, white grease, poultry fat, used cooking oil and other Dickensian-sounding waste products produced in America. That may put an upper limit on the supply of raw materials, meaning renewable diesel will always remain a niche product.
Yet Neste still sees ample room for growth, as restrictions on cars using fossil diesel increase, and fuel-guzzling heavy vehicles and jet aircraft strive for lower emissions. Petri Lehmus, its head of research and development, says the firm is exploring new potential feedstocks such as forest residues and algae. However successful it is, Neste will never become the next Saudi Aramco. But what it lacks in natural resources, it will strive to make up for in human ingenuity.