The green transition is an unprecedented global challenge that requires cross-border cooperation and a diverse set of new energy sources. Biofuel is important here, and Estonia, with its natural resources and investment opportunities, is ready to shine.
As announced recently, Dutch company Power2X plans to build Europe’s largest green methanol plant in the Estonian city of Pärnu. With an investment exceeding one billion euros, the project aims to reduce carbon emissions in traditionally difficult-to-decarbonise sectors. While final permits are still pending, the company aims to open a local office within the next six months, Delfi reports.
Pärnu, a city of 40,000 best known as a sleepy seaside tourist hub, will soon be visible on the global energy map. The new plant is currently scheduled to begin production in 2028, with the possibility of expansion in subsequent years. At full capacity, it will produce an impressive 500,000 tons of green methanol annually. This will be achieved using low-value wood, including leaves, bark, and treetops, as the primary raw material. What may once have been considered mere waste will power a giant industrial complex.
Turning twigs into treasure
The facility’s annual requirement is estimated at about 1.5 million cubic meters of forest material. The Estonian State Forest Management Centre’s volumes won’t fully meet the plant’s annual needs. To close the gap, private landowners and Latvian sellers will likely enter the fray, boosting the timber economy.
The economic impact of the Power2X project extends beyond mere output numbers. During the peak construction phase, it’s expected to create employment for up to 2,000 people. Once operational, the plant will provide permanent jobs for 200-250 high-skilled professionals, contributing significantly to the local economy.
Power2X has garnered strong government support. Climate Minister Yoko Alender and Minister of Economic Affairs and Industry Erkki Keldo have supported the initiative, viewing it as a significant opportunity to give the country a competitive edge in attracting energy-intensive, high-value-added foreign investments.
“Clean energy means clean industry. The methanol plant aligns with two important goals for the state: Estonia’s complete transition to clean energy and the reduction of fossil fuels and thus pollution in the industrial sector,” says Alender.
Green light for green innovation
While Estonia’s climate might be challenging at times, few can match its attractiveness when it comes to doing business. Consistently ranking high in Doing Business and Economic Freedom ratings, the country has the infrastructure to venture into new sectors and help investors. Peter Daemen, Power2X’s Project Director for Estonia, explains the project’s origins: “We came here initially to advise an offshore wind farm developer.” From there on, a value chain opportunity emerged.
“My investors asked when a billion-dollar investment was last made in Estonia. There haven’t been any, and they know it, so I have to convince them that many supportive processes are already happening,” says Daemen.
What made the difference?
Location is key for a project of this magnitude and significance, and such decisions are rarely (i.e. never) made lightly. Before settling on Pärnu and Estonia, Power2X considered all the usual suspects. Sweden, often a go-to for similar projects, no longer has a sufficient supply of the necessary resources, Delfi reports. Estonia also has the added advantage of being compact enough to keep transporting materials quick and efficient.
The company found that Estonia’s renewable energy sector is better developed than Latvia’s, including an imminent boom of offshore wind farms. They also felt that forest management is transparent in Estonia, adding an extra dimension of confidence.
Government support for the project has been strong at all levels, with Invest Estonia playing a crucial role in facilitating Power2X’s entry into the Estonian market. “We are actively cooperating with Invest Estonia, which has simplified our local operations with their advice,” Daemen told Delfi.
Power2X plans to establish a stronger presence in Estonia as the project moves forward. The final investment decision for this transformative project is expected by 2026, pending necessary permits and land allocation decisions.
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