UPM and L&T Develop Ethanol Production

Helsinki, Finland, 30 January 2008 -– UPM and Lassila & Tikanoja (L&T) have developed a new ethanol and energy production concept that, for the first time, uses commercial and industrial waste.

UPM and L&T have studied the concept under laboratory conditions in cooperation with the Technical Research Centre of Finland (VTT) and will now begin extensive testing at VTT’s Rajamäki unit. The objective is to be ready by the end of the year to decide on building a commercial scale plant.

In the production concept developed by UPM and L&T, ethanol and energy are produced from commercial and industrial waste, such as paper, cardboard, wood, and plastic. The paper industry’s deinking sludge, which is generated in mills that use recycled fiber when printing ink is removed from recovered paper, is also a suitable raw material. When mixed with gasoline, ethanol manufactured from these raw materials that, until now, have been used only partly is suitable for biofuel for combustion engines.

The planned ethanol and energy production plant can operate in connection with a waste treatment unit or a paper mill. A part of the waste used as raw material is used for generating ethanol and a part for generating energy. The solution makes it possible to manufacture cost-effective second-generation biofuels for traffic in Europe without endangering the raw material supply of the forest industry.

In the EU's recent energy and climate package, it is considered that biofuels produced from waste and lignocellulosic material contribute to the mitigation of climate change more than other biofuels. Their contribution in the targeted consumption volume set by the EU is considered to be twice that of traditional biofuels.

Using commercial and industrial waste in the production of ethanol and energy causes remarkably less greenhouse gas emissions than dumping the waste at a landfill. Making ethanol from waste puts less stress on the climate than its production from grain, which is the traditional raw material. In addition, using waste promotes the recycling of material in accordance with the principles of sustainable development.

UPM is one of the world’s leading forest products groups. The Group's sales in 2006 were EUR 10 billion, and it has about 28,000 employees. UPM's main products include printing papers, label materials, and wood products. UPM is the biggest user of recycled fibers in printing paper production in Europe. The company has production units in 14 countries. Its main market areas are Europe and North America. UPM's shares are listed in Helsinki and the company also has an ADR program on the OTC market in the United States. www.upm-kymmene.com

Lassila & Tikanoja specializes in environmental management and property and plant support services. L&T operates in Finland, Sweden, Latvia, Russia, and Norway. Net sales in 2006 amounted to EUR 436 million. L&T employs 9500 persons, 2300 of which are located outside Finland. L&T's shares are listed on OMX Nordic Exchange. www.lassila-tikanoja.com