E-methane was the pragmatic choice for Arctic Sisu's Kotka project, which could launch in 2030, writes Pamela Machado
Finland's Arctic Sisu has chosen e-methane as the first product in its Power-to-X strategy, arguing that it offers a faster and lower-risk route to market than other hydrogen derivatives. In contrast to many other developers, the firm has switched from a phased-development approach for its first plant to advancing full-scale plans from the get-go and has been able to revise down cost estimates.
Arctic Sisu is advancing plans for a large e-methane project in Kotka, in southeast Finland, and sees the fuel as the most commercially viable entry point for hydrogen derivatives, chief engineer Antti Pohjoranta tells Argus.
The project is designed to produce 56,100 t/yr of renewable hydrogen and convert it into 113,100 t/yr of e-methane using biogenic CO2 captured from neighbouring paper producer MM Kotkamills. Arctic Sisu plans to source renewable electricity from Finnish assets through power purchase agreements.
The company recently decided to develop the project in a single phase rather than in stages — a move intended to improve economics and reduce execution risk. "There is enough demand to justify building the plant in one go," Pohjoranta says. The project requires substantial electricity infrastructure, including a major grid connection, and much of that infrastructure would need to be built at full scale even under a phased approach. The company already has an offtaker for the project, although the details are confidential.
Power-to-X, as the hydrogen derivatives sector is often known, is a "really diverse and broad" market that presents opportunities to decarbonise activities ranging from shipping and steelmaking to chemicals production, Pohjoranta says.
But Arctic Sisu deliberately focused on the application with what it views as the clearest near-term commercial case. E-methane can already be deployed in existing gas infrastructure and end-use applications, avoiding many of the challenges facing newer-fuel value chains. "We find it the most cost-effective and pragmatic approach at this point in time," Pohjoranta says.
Stepping stone
Arctic Sisu acknowledges criticism that methane remains a greenhouse gas and could eventually lose market share to electrification or alternative fuels in the future. But the firm believes the market opportunity for renewable methane will persist long enough to justify investment in Kotka. The company also sees e-methane as a stepping stone towards broader PtX opportunities and an opportunity to learn about new technologies and supply chains.
The Kotka project is currently progressing through Finland's permitting process following completion of its environmental impact assessment. Arctic Sisu is targeting a final investment decision by mid-2027, subject to successful permitting and project development, with commercial production expected in 2030.
Capital expenditure is now expected to be in the €500mn-600mn range, suggesting it could stay below earlier estimates of around €600mn for the full plant. Pohjoranta says equipment suppliers, technology licensors and engineering firms have become more experienced in hydrogen and Power-to-X developments, helping to reduce project costs and improve confidence among investors.
Arctic Sisu's upbeat view comes as signs of increased interest from offtakers begin to emerge. Finnish developer Ren-Gas recently announced an agreement to supply e-methane to fuel companies in Germany for distribution to heavy-duty trucks, driven by quotas for use of renewable hydrogen derivatives in transport.
Even so, most e-methane plans remain at an early stage. Most announced projects have yet to reach a final investment decision, and even firmer demand signals will be needed on the path to wider adoption.
