It has been awhile since I last covered the tall oil market that includes crude tall oil (CTO), tall oil rosin (TOR), and tall oil fatty acid (TOFA). In my past experience, it has been difficult to get information on this industry as pulp and paper chemicals companies are not that many and they are not really that media-friendly. If you want to get some information on this industry, you might want to visit the Pine Chemicals Association website.
Anyway, when I was covering the CTO market at around 2007, there were already grumbles from pine chemicals producers that their feedstock CTO produced from the paper mills (via Kraft pulping of pine trees) were being used more as biofuel feedstock in the US because of the biodiesel tax credits, and now more in Europe where CTO is considered a waste/by-product. At that time, CTO production in the US was around 1 million tons and 550,000 tons in Europe.
In Europe, pulp mills are being encouraged to burn their CTO product as a fuel in order to reduce their greenhouse gas emissions. Current and proposed European policies could result in CTO being classified as renewable biomass for energy production, which can create incentives to convert CTO into fuel rather than use it for chemicals.
The American Chemistry Council’s Pine Chemistry Panel recently released a study conducted by Franklin Associates, a division of Eastern Research Group, assessing the greenhouse gas and energy life cycle assessment (LCA) of pine chemicals derived from CTO. At the ACSGCI Green Chemistry & Engineering conference this week, Sarah Cashman of Eastern Research Group noted that the study has three goals: (1) to determine the cradle-to-gate carbon and energy footprint for CTO-derived chemicals, (2) to compare CTO-derived chemicals to their likely substitutes, (3) and to calculate the carbon and energy effects of shifting CTO resources from current chemical production to biodiesel production.
According to the study, diverting CTO into biofuel production in Europe will not have a significant effect in either reducing carbon emissions nor fossil fuel consumption. The global carbon footprint of pine chemicals produced from CTO is reportedly 50% lower than substitute products used in the same situation. CO2 equivalent emissions is said to be the same if CTO is used as a fuel or in chemical products in Europe. The amount of fossil fuel required to manufacture the substitute products of pine chemicals substantially offsets any fossil fuel reduction that might occur if CTO were used in fuel.
As CTO is an inelastic byproduct, industries who uses this feedstock (as you can see some from the chart above) compete in the marketplace to purchase CTO. According to the ACC, government mandates and subsidies incentivizing the use of this finite biomass material in fuels damage the pine chemical biorefining industry by limiting CTO availability.
The study demonstrates that while there are no significant environmental gains from giving the biofuel industry incentives, at the same time it could cause unintended negative consequences to the established pine chemicals industry.
The data the study collected represent 100% of the US and 90% of the European CTO distillation industry.