Pulp mills have traditionally generated value from fibre, pulp, energy and established process byproducts. But the development of carbon-removal markets and synthetic fuels is creating another potential commercial opportunity from something mills already produce: biogenic carbon dioxide.

Unlike CO₂ originating from fossil fuels, biogenic CO₂ comes from biomass. In the pulp and paper industry, that biomass originates primarily from wood and other forest-derived materials processed or used for energy at mill sites.

If suitable biogenic CO₂ streams can be captured, they could potentially be directed toward two very different markets: used as a carbon feedstock for synthetic fuels or permanently stored to generate carbon dioxide removal.

This distinction matters because a tonne of captured biogenic CO₂ does not necessarily have one fixed economic value.

Its value increasingly depends on what happens to it next.

Why Pulp Mills Are Interesting Sources of Biogenic CO₂

Pulp production processes large quantities of biomass, while many mills also generate substantial portions of their energy from biomass-derived fuels and process streams.

This creates significant biogenic carbon flows at industrial sites.

Historically, carbon dioxide generated from biomass combustion or processing has generally been treated primarily as part of the mill’s emissions profile.

Emerging low-carbon markets introduce a different possibility.

If economically viable capture systems can separate appropriate CO₂ streams, the carbon could become a feedstock or environmental commodity rather than simply being released.

For mills, however, installing carbon capture equipment is only the beginning.

The commercial question is:

Which downstream market can justify the cost of capturing, conditioning, transporting and verifying that CO₂?

Two pathways are attracting particular attention.

Pathway 1: Turning Biogenic CO₂ Into E-Fuels

Captured carbon dioxide can be combined with hydrogen produced using low-carbon electricity to manufacture synthetic hydrocarbons.

Potential products include e-SAF for aviation and other synthetic fuels.

In this pathway, the carbon is not necessarily removed permanently from the atmosphere. Instead, it becomes a feedstock used to manufacture another product.

The economics are therefore connected to transportation-fuel regulation, hydrogen costs, renewable electricity availability and the rules governing acceptable carbon sources.

Europe is particularly relevant because regulation is creating demand for lower-carbon and renewable transportation fuels.

ResourceWise reports that optimism around European biofuel markets has strengthened as RED III implementation approaches. In Germany’s renewable fuels of non-biological origin market, it identified an implied biogenic CO₂ value reaching approximately €600 per metric tonne.

That figure should not be interpreted as a universal market price for biogenic CO₂.

Instead, it demonstrates how valuable an eligible carbon source can potentially become when it enables compliance with a specific regulatory fuel market.

Pathway 2: Permanently Storing the Carbon

The second route has fundamentally different carbon accounting.

Trees absorb CO₂ from the atmosphere as they grow. That carbon subsequently enters the forest-products value chain when biomass is harvested and processed.

Normally, much of the biogenic carbon associated with mill energy systems eventually returns to the atmosphere.

But if biogenic CO₂ is captured and permanently stored in suitable geological formations, that return can be prevented.

This approach is commonly associated with bioenergy with carbon capture and storage, or BECCS.

Under appropriate accounting, sustainability and permanence conditions, the process can constitute carbon dioxide removal because atmospheric carbon taken up by biomass is ultimately placed into long-term storage.

That removal can potentially have commercial value through government procurement programs, incentives or voluntary carbon-removal markets.

Again, however, prices vary substantially.

Some discretionary CDR values cited by ResourceWise are below $150 per tonne, illustrating how differently markets can value the same underlying molecule depending on its environmental attributes, policy treatment and ultimate destination.

One Tonne of CO₂ Could Have Very Different Values

The gap between potential e-fuel and CDR values reveals an emerging commercial challenge for pulp producers.

A mill evaluating carbon capture should not necessarily begin by asking:

“How much CO₂ can we capture?”

A more useful question may be:

“Which market should this CO₂ serve?”

The answer could depend on several interconnected factors:

• Distance to geological storage or CO₂ transportation infrastructure
• Proximity to e-fuel production
• Carbon capture and conditioning costs
• CO₂ purity
• Renewable hydrogen and electricity availability
• Regulatory eligibility
• Biomass sourcing
• Certification and traceability
• Carbon-removal prices and incentives
• Long-term offtake agreements

Geography could consequently become a major competitive factor.

A mill located near suitable storage infrastructure may have very different economics from one positioned near a planned e-SAF project.

The highest headline carbon price will not automatically represent the most profitable option once processing and transportation costs are included.

Policy Is Creating the First Commercial Signals

Government intervention is helping establish these markets.

European and North American governments are using combinations of tax incentives, subsidies, competitive tenders and carbon-removal procurement programs to support carbon capture and storage.

Sweden and Denmark, for example, have developed support mechanisms for carbon capture and storage, while Canada has introduced incentives for carbon capture, utilization and storage investment.

Meanwhile, fuel regulation can create a different form of demand for eligible carbon feedstocks.

These mechanisms matter because carbon capture projects can require substantial capital expenditure and supporting infrastructure.

For pulp mills, a reliable long-term revenue mechanism may therefore be necessary before carbon capture moves from technical feasibility to an investable project.

Traceability Could Determine Which Carbon Qualifies

There is another challenge that sits upstream of the capture equipment: proving where the carbon came from.

Low-carbon markets generally do not pay premiums simply because a supplier labels CO₂ as biogenic.

Depending on the relevant market and methodology, documentation may be required to establish biomass origin, sustainability characteristics and the integrity of the carbon stream.

Purity can also matter for downstream processing.

This introduces a significant traceability challenge for the forest-products sector.

ResourceWise estimates that the U.S. South alone contains more than 12 million private forestry holdings. Following biomass through fragmented forest supply chains can therefore involve substantial amounts of data.

For a pulp producer, information about fibre sourcing that was previously used primarily for forestry certification or procurement could consequently acquire another commercial function.

It may help determine whether the resulting carbon qualifies for a particular low-carbon market.

Carbon Capture Alone Does Not Create a Carbon Product

This distinction is important.

Installing equipment that captures biogenic CO₂ does not automatically create a premium commodity or verified carbon removal.

The complete value chain needs to work.

For geological removal, that can involve capture, conditioning, transportation, injection, monitoring and verification of permanent storage.

For e-fuels, the chain extends through carbon specifications, hydrogen production, fuel synthesis and the applicable regulatory qualification system.

Both routes can therefore require capabilities extending far beyond conventional pulp production.

Partnerships with carbon-capture technology providers, transportation infrastructure operators, storage developers, fuel producers and certification organizations could become increasingly important.

A New Layer of Pulp Mill Economics

Biogenic CO₂ fits into a broader transformation occurring across the pulp industry.

Mills are increasingly examining whether existing process streams can support products outside traditional pulp and paper markets.

Lignin can potentially enter chemicals, materials and energy applications. Tall oil already connects kraft pulp production with fuels and chemicals. Methanol and other process streams may offer additional opportunities.

Biogenic CO₂ adds another possibility.

The opportunity is particularly interesting because its potential value comes not only from the physical material but also from its verified carbon attributes.

That makes data, certification and regulatory eligibility part of the product itself.

The result could be a new commercial calculation for pulp producers.

Instead of treating every tonne of biogenic CO₂ in the same way, mills may eventually evaluate competing pathways and direct suitable carbon streams toward the applications offering the strongest netback after capture, transportation, processing and verification costs.

Not every mill will have favorable economics, and these markets remain dependent on evolving policy, infrastructure and carbon pricing.

But the strategic direction is becoming clearer.

As e-fuels and permanent carbon-removal markets develop, biogenic CO₂ could shift from being primarily an emissions stream to becoming another potentially monetizable output of the modern pulp mill.

Last Updated on 25/08/2026 by Jota Machinery