Sustaining the future: Neste leads the renewable and circular solutions revolution

In the third webinar in our series Sustainability in Action: Real-world Examples for a Greener Future, Sakari Hiidenheimo opens in new tab/window, R&D Manager at Neste, walks us through Neste’s transformation from a traditional oil refiner to an industry leader in sustainability solutions. “Through innovation and collaboration, industry leaders like Neste can lay the foundation for an energy revolution,” he says.

From traditional oil refiner to sustainability leader

Founded in Finland in 1948, Neste opens in new tab/window quickly expanded operations, established locations in Naantali and Porvoo, and diversified its portfolio to include natural gas, exploration and production, and chemicals.

By the 1970s, Neste had emerged as Finland's largest company, playing a pivotal role in balancing trade relations and establishing service stations across Finland, the Baltic countries and Northwestern Russia.

The early 2000s marked a turning point with the development of Neste’s NEXBTL opens in new tab/window refining technology, enabling the production of renewable diesel. As Neste scaled up production in Porvoo, Singapore, and Rotterdam, it solidified its position as the world’s largest producer of renewable diesel.

“It has actually taken a very long time to scale and commercialize our technology,” Hiidenheimo says. “Every long-lasting transformation includes phases where challenges must be solved in order to move forward. Only in this way, change can be sustainable and profitable. With regards to Neste’s proprietary NEXBTL technology, the development has continued for decades. We have, for instance, been able to grow the pool of renewable raw materials from one suitable raw material to a wide variety of renewable oils and fats.”

Today, Neste stands poised for further growth and transformation, driven by its ambition to lead the global transition towards renewable and circular solutions.

Neste’s climate commitments in action

“If we want to tackle climate change, we have to start early and we have to drive innovation to get things started because we have an urgent need for solutions,” says Hiidenheimo. To address the challenge, Neste has committed to the following milestones:

• 2030: Help their customers reduce greenhouse gas emissions (GHGs) by at least 20 million tons annually

• 2035: Reach carbon-neutral production

• 2040: Reduce the use-phase emission intensity of sold products by 50%

To put the plan into immediate action, Neste is working on transforming the Porvoo oil refinery into the leading renewable and circular solutions hub by the mid-2030s. When completed, it will have a capacity potential of renewable and circular products of 3 million tons annually and target carbon neutral production by 2035.

Currently, the Porvoo facility is still processing 10 million tons of crude oil annually, along with renewable diesel in the NEXBTL units. Although Neste’s climate change commitments will create major changes in the future, the company is presently hitting some major milestones, as highlighted by Hiidenheimo in the webinar:

• Amount of greenhouse gas emissions Neste’s customers reduced with renewable products in 2023 was 11 million tons. This reduction equals GHGs from more than 4.3 million road cargo trips from Rome to Stockholm or from more than 22,000 full aircraft round trips from Amsterdam to San Francisco.

• Neste had a 3.3 million ton annual renewables production capacity by the end of 2023.

• Neste had reduced refinery use of conventional palm oil to 0% by the end of 2023.

These achievements wouldn’t be possible without strategic thinking, innovation and collaboration. “What we want to do is be broader and bolder in our approach to innovation,” Hiidenheimo says.

Innovation at Neste: methods and technology

“Innovation is really in our DNA,” he explains, emphasizing the importance of revolutionary thinking. “It has enabled us to get where we are now, and it’s the future. It’s something that we have to nurture to get to the next step and maintain the position we have at this moment.” Innovation at Neste means growth-oriented methods paired with transformative technology.

Forward-looking methods

When Hiidenheimo shares that Neste wants to maintain its momentum, he deconstructs this statement into actionable steps:

1. Scale up projects and activities based on successful innovations.

2. Enable existing businesses to grow and build new platforms for growth.

3. Convert scalable carbon sources into preferred solutions.

4. Engage in extensive collaboration with research and value chain partners.

When it comes to collaboration, Hiidenheimo says Neste is “always working with a large group of partners in the field of technology and R&D.”

“R&D institutes and universities play a remarkable role in the early phases of technology development,” he says. “The Neste Veturi R&D opens in new tab/window program is an example of an ecosystem where Neste has plenty of R&D consortia to co-develop solutions for sustainable fuels and chemicals.”

From fossil-based to renewable raw materials

With a focus on sustainability and a circular economy, Neste has shifted its attention to new raw material inputs. “Our approach: We want to use low-quality raw materials and produce high-quality drop-in solutions,” Hiidenheimo explains. “It’s not an easy task, so the core is really technology and know-how. That’s where we focus our efforts on the innovation side.”

Although Neste currently uses waste and residues as 90% of its raw materials, potential mid- and long-term raw material inputs include:

• Novel vegetable oil

• Lignocellulosics

• Municipal waste

• Waste plastics

• Algae

• Renewable hydrogen

Change is already in the air at Neste with renewable raw materials being co-processed with fossil raw materials at the Porvoo facility. The company also works with liquified waste plastic, which it processes into raw material for circular plastics and a renewable hydrogen plant with 120 MW electrolysis unit is in the basic engineering phase.

NEXBTL technology

NEXBTL — Neste’s proprietary technology for the production of hydrocarbons from renewable oils and fats — is an industrial-scale success story. Three of Neste’s refineries spread throughout three countries currently use NEXBTL technology.

“It serves as a solid foundation for business expansion and is a great example of how Neste can create competitive advantages,” Hiidenheimo noted. “This innovation allows Neste to turn a wide variety of renewable raw materials into premium-quality renewable products.”

The cornerstone of all Neste’s renewable products lies in sourcing renewable raw materials globally. Establishing a dependable network of raw material sources and optimizing the logistics chain to the most suitable refinery for renewable products is the first crucial step in ensuring commercially viable products.

During the pretreatment state, various impurities are removed from these renewable raw materials. Following pretreatment, oxygen atoms are removed by using hydrogen through hydrodeoxygenation to create pure hydrocarbons with high energy density. The second stage of NEXBTL involves processing the hydrocarbons through isomerization to create desired properties for different end-product applications.

Shifting organizational priorities

“We have committed to reach carbon neutral production by 2035, which is a very enormous undertaking,” Hiidenheimo says. “It will require a lot of new ways that we operate, a lot of innovation, and a lot of cooperation.” To support these efforts, the Neste Excellence Program puts forth a series of concrete steps centered around organizational changes and a streamlined development portfolio. The core concepts of the program include:

• Digital and data-driven decision-making

• End-to-end (E2E) process excellence

• Production excellence

• Business optimization

According to Neste, the program holds a potential value of €350 million. It will also improve the company’s competitiveness and lead to continuous improvement in fixed cost efficiency and net working capital cost.

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