EUR 10 million capital loan from the Finnish Climate Fund to Paptic to replace plastics as packaging materials

Plastics made from crude oil have a considerable carbon footprint as well as globally significant negative environmental impacts as plastic waste often ends up in polluting the environment. The demand for plastics has been estimated to double or even quadruple by 2050 - which makes developing alternative materials so important.

Paptic, known for its wood fibre-based packaging materials, is working on a new technology to enable the production of more environmentally friendly flexible packaging materials. Packaging materials produced using its innovative foam manufacturing technology have the potential to replace LDPE, a plastic used to package, for example, hygiene and food products. The funding helps Paptic to ramp up the development process and accelerate the deployment of its foam manufacturing technology on an industrial scale.

‘The capital loan from the Finnish Climate Fund enables us to launch our new technology on an industrial scale considerably faster than what would otherwise be possible. The funding significantly speeds up efforts to reduce climate emissions, improve resource efficiency and cut down on the use of plastics in packaging solutions. This benefits the entire value chain from the forest to the consumer’, says Tuomas Mustonen, CEO and Co-Founder of Paptic Ltd.

The materials that Paptic is working on are recyclable as cardboard which means that the fibres can be reused in the manufacture of new materials. Fibre-based packaging is efficiently recycled in Europe and wood-based fibres can be reused several times.

‘Paptic helps its customers to switch to renewable and recyclable packaging materials. The Finnish Climate Fund’s mission is to accelerate the deployment of new solutions that have significant climate and environmental impacts, and high-grade biomaterials play an important role in this’, says Toni Mikkonen, Climate Fund’s Director, Investments.

Paptic’s solution:

Paptic is a Finnish company established in 2015, which uses wood fibres sourced from sustainably managed forests to make recyclable flexible packaging materials to replace plastics. The company is currently in the process of developing a resource-efficient and low-carbon foam manufacturing technology. With foam manufacturing technology, two-thirds of the water involved in the process is replaced by air, which reduces both water consumption and the amount of energy needed to dry the product. The new technology also makes it possible to make thinner and lighter materials, and therefore to produce more packaging using the same volume of raw material.

Paptic’s emissions-reduction potential is based on the emissions associated with packaging material produced by means of foam manufacturing compared to the fossil plastics that the technology replaces. The emissions reduction is thanks to not just the raw material but also the use of renewable energy to make the material and the lower energy consumption of the process. Paptic’s material is typically used instead of LDPE, which has a cradle-to-gate carbon footprint (from raw material production to the manufacturing of the end product) of 2,400 kg CO₂-eq/t. Comparable emissions with packaging material produced using Paptic’s foam manufacturing technology are estimated at approximately 1,400 kg CO₂-eq/t. The cumulative ten-year emissions-reduction potential of the solution is estimated at approximately 0.4 million tonnes of CO₂-eq, subject to successful execution of the client’s business plan. Most of the reductions will contribute for the ETS sector. Taking emissions from incineration at the end of the product’s life cycle into account would more than double the solution’s emissions-reduction potential.

Paptic uses FSC®-certified, sustainable fibre-based raw materials. FSC® is currently regarded by, for example, the WWF as the gold standard of forest certification from the perspective of environmental sustainability.

Paptic’s most recently published funding round has raised a total of EUR 23 million in new capital. In addition to the EUR 10 million loan from the Finnish Climate Fund, the company has raised funding by, among others, the ECBF, Ecolab and Itochu Fibre Ltd. Paptic has also received a grant worth 2.5 million euros from the EIC Accelerator.

The Finnish Climate Fund’s capital loan of up to EUR 10 million is to deploy Paptic’s patented foam manufacturing technology on an industrial scale. The Finnish Climate Fund’s capital loan is priced at market terms and includes a profit-sharing component. The funding is designed to accelerate the commercial launch of Paptic’s solution for replacing fossil-based plastics. The solution is based on renewable raw materials and energy sourced primarily in Finland, which means that it also supports the development of Finnish bio-based industry.

Paptic Ltd (or Paptic Oy) is a Finnish packaging material manufacturer established in 2015. The company has developed a recyclable and reusable fibre-based material to replace plastics in flexible packaging. Paptic® has been available on an industrial scale since 2018 and has been exported to more than 50 countries. The company currently employs 35 professionals. www.paptic.com