Investments in the future - Promoting a sustainable carbon cycle

The entire energy system is transitioning away from fossil fuels. The emission targets will require global actions, significant investments, and innovative collaborations. But to limit global warming to well below 2 °C we must considerably accelerate the pace and increase the efforts as current policies and mitigation tools are inadequate.

Phasing out fossil energy is and will continue to be, challenging, since the economic well-being of mankind is built on combustion energy. As an example, getting rid of oil is a challenge because when crude oil is refined, a host of other products are always produced as part of the process: petrol, diesel, aviation fuel, marine and heating oil, liquefied petroleum gas, plastic raw materials, bitumen for asphalt, among many others. That’s why we must find sustainable substitutes for all those products to reduce the demand for oil.

To meaningfully reduce the atmosphere’s excess carbon content, we must use all available means and at the same time develop new ones. Besides decarbonizing through energy efficiency, as well as developing and producing more renewable energy to replace fossil energy, we need to take significant measures in carbon sequestration.

In 2021, we accordingly continued to work on our existing projects and to set up new projects and partnerships to develop sustainable future business opportunities.


Power-to-X, a category of technological solutions for converting electricity into energy carriers, offers the possibility to integrate different energy sectors. The idea is that by using renewable electricity to synthetize CO2 and hydrogen, we will be able to produce a wide range of hydrocarbon products, including liquid and gaseous synthetic fuels. By combining our Nordic wind potential with low-carbon fuels and energy carriers, Power-to-X also promises to boost investments and create employment. One of the biggest advantages of these synthetic fuels is their compatibility with existing liquid and gaseous fuel storage and distribution infrastructure. We are setting up new Power-to-X projects and partnerships to move towards our first production site.

Exploring the X in "Power to X"

Green ammonia project in Norway

In 2021, St1 and Horisont Energi started to conduct prestudies on the potential of green ammonia production in Finnmark based upon electrolysis using wind power, hydrogen from various green feedstocks. In addition, they began exploring the use of several new and alternative technologies for green ammonia production.

Together we also study the value chain for negative emissions – from carbon capture to final storage – to create carbon removal credits (CRCs) for commercialization and to contribute to the development of related legislation. Positive results from the prestudies may lead to jointly developing a hybrid green ammonia plant.

By combining the competencies in our respective fields, we will model a viable non-fossil ammonia value chain from feedstock to consumer. As part of the study, we will also be assessing potential locations for green ammonia production in Finnmark.

The electrolysis will require the wind power that St1 plans to produce in Finnmark. St1 has already submitted a permit application for the development of Davvi wind park (800 MW), in addition to other pipeline projects.

Feasibility study on synthetic fuels pilot plant

LUT University headed a feasibility study on an industrial scale P2X-pilot plant for synthetic fuels in Joutseno, Finland. An extensive business consortium, including St1, participated in the study that started in late 2019 and ended in April 2021.

The study showed that the technology needed for fuel production is sufficiently advanced for applications on an industrial scale. The pilot plant would produce synthetic methanol from recovered industrial carbon dioxide and hydrogen emissions. The methanol could, then, be further refined into carbon-neutral transport fuels. The researchers and corporate representatives involved in the study consider that the possibilities for establishing such a plant are good. Synthetic methanol provides a great opportunity for the decarbonization of transport and industrial production. That is, detaching them from fossil energy sources. The study focused on the production of transport fuel but also shed light on methanol’s other potential advantages.

The production of hydrogen needed in the large-scale production of synthetic fuels is a considerable challenge as it requires a great deal of electricity. The investments’ profitability would require adjustment of legislation.

Carbon sequestration

Significant investments must be made in preserving and restoring biological carbon sinks, which, for example, capture CO2 through photosynthesis and sequester it to plants and soils. This process of carbon sequestration can be better achieved if economic models for promoting carbon sinks are created.

We are developing our nature-based programs, sequestering carbon in the forests and soil. Additionally, we are looking to offer a role for companies to invest in such carbon sequestration programs.

We are investigating locally approved and well-implemented afforestation projects, combined with agriculture, which would benefit communities in areas suffering from land degradation. Regarding these projects, we must consider a variety of other factors, such as the social sustainability, the aspirations of and benefits to the local population. The ecological impact, including biodiversity, must also be noted, as well as the issues of human rights in general and workers’ rights in particular. In addition, we must take the verification of carbon sequestration and transparency of carbon credits into account.

Carbon sinks should be considered as an incremental tool, not a substitutive one. For carbon sinks to become an official and commercial method for reducing carbon dioxide emissions, an internationally accepted verification method for sustainable carbon sequestration will be the prerequisite for the economic basis and a wider use of the concept.

Afforestation pilot in Morocco

To examine the utilization of carbon sinks, St1 is running a three-year pilot project for researching sustainable carbon sequestering through afforestation in Morocco. The project is implemented together with the Université Mohammed VI Polytechnique. The field tests are directed and monitored by LUKE, the Natural Resource Institute of Finland. The pilot project is funded by Business Finland.

In the pilot project, we are examining carbon sequestration by trees under various controlled conditions. The research project involves testing seven tree species and various irrigation and soil improvement methods to find the optimal growth conditions for large-scale, cost- effective afforestation and carbon sequestering. This afforestation pilot seeks to demonstrate under what conditions and measures the forest could be grown in a semi-arid area. Besides the pilot project, methods for measuring and verifying carbon capture are also being studied.

The project has advanced well but the second sampling was delayed due to the COVID-19 pandemic. The project will be finished, and the final conclusions will be documented, in April 2022. The results will be utilized in the coming carbon sequestration projects.

The preliminary results conclude that carbon sequestration is possible even in dry areas with small amounts of irrigation. The roots of the planted trees have grown well and accumulated more carbon than was anticipated at the start of the project. Carbon sequestering trees can also be used to improve the conditions for local food production in places where it is absolutely needed. Afforestation, or the agroforestry concept, can also slow desertification in arid areas. However, it is economically challenging.

The pilot has created a new research area in the carbon sequestration for the university and they will continue the measurements in the area and explore the concept of a carbon market.

Afforestation pilot in Morocco

LIFE CarbonFarmingScheme

LIFE CarbonFarmingScheme pursues the expansion of carbon sequestration activities by providing best practices and guidance for future carbon farming schemes. The project is also looking for incentives for farmers and foresters to implement carbon farming practices in the EU.

The two-year project started in 2020 and has received funding from the LIFE Preparatory Programme of the European Union. LIFE is the EU’s financial instrument supporting environmental and nature conservation projects throughout the EU. Preparatory projects address specific needs for the development and implementation of EU environmental policy and law.

St1 is the coordinator of the consortium, whose partners are the Baltic Sea Action Group (BSAG),

Tyynelä Farm, the Natural Resources Institute of Finland (LUKE),, and the North European Oil Trade (NEOT).

The aims of the LIFE CarbonFarmingScheme are as follows:

  • Develop guidance for policy makers for the implementation of a carbon farming incentive scheme.
  • Identify factors in efficient markets by studying demand from sectors mandated to reduce their greenhouse gas (GHG) emissions, alongside supply from the agricultural and forest sector.
  • Demonstrate the rules in 10 test farms and 10 forests, two from each of five different pedoclimatic regions in Europe.

The project has advanced well and already delivered interim results. LUKE has drafted a report on calculation methods to be applied in estimating quantitatively agricultural and forest carbon sinks and their stability. The survey has been conducted in 20 different European countries to research the views of farmers on carbon farming (BSAG). has piloted carbon credit trading using soil amendment methodology developed in the project (Puro. earth). NEOT has produced a cost-analysis and proposal for incentivizing demand and supply by carbon contract for difference.

The project will finish in 2022. The project consortia are now working on guidance for policy makers as an input for EU work on certification of carbon removals. The guidance will introduce supply and demand measures to invite the private sector to accelerate climate action.

LIFE CarbonFaarmingScheme - Shaping regulations through human rights

The carbon market

We believe the climate actions should be generated on a global carbon market where the key target is to reduce CO2 in the atmosphere in the future regardless of the different sector or national borders. The multiple benefits of carbon sequestration can be more effectively achieved if economic models for promoting carbon sinks and trading carbon credits are created. The sustainable global climate actions should start on the initiatives where the most cost-efficient impact will be achieved.

A successful carbon market would foster private capital investments directed into sequestering carbon from the atmosphere, additionally countering deforestation, erosion, and other types of environmental degradation. Such a marketplace would also create new business opportunities and economic value in the forestry and agricultural sectors.

If such a marketplace allows for actions and projects outside the EU, major investment projects can be initiated in regions affected by poverty, climate change, as well as demographic challenges. Afforestation and other carbon sequestration projects in these areas would create new jobs and repair or alleviate damage that has already been caused by global warming and reduce some of the key drivers for migration.

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