FAME approves financing for biofuel plant in Millinocket

COURTESY / DESIGNLAB Financing was approved to build a renewable fuel oil facility at One North industrial site in Millinocket.

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By Laurie Schreiber

A project to develop a renewable fuel oil facility at One North, the industrial park at the former Great Northern Paper mill site in Millinocket, was approved for state new markets tax credit financing and tax-exempt bond financing up to $160 million.

The Finance Authority of Maine said its board of directors the plan to benefit EME Biofuels LLC, a subsidiary of Castlerock Biofuels LLC.

Once fully operational, the project is expected to create up to 83 full-time jobs at the facility, according to a news release.

An additional 150 jobs are anticipated during the construction phase, along with approximately 92 positions in the forestry and transportation supply chains, supporting feedstock procurement and product distribution.

“The project will target the renewable heating energy market for large-scale industrial and commercial customers with carbon reduction goals,” said Renee Ouellette, FAME’s board chair.

The project is expected to allow EME to eventually offer discounted fuel prices to customers, said Ryan Allen, Castlerock’s vice president of finance for biofuels.

“The biocrude and biofuel expected to be produced can be used as renewable fuel for heating and cooling, as well as a feedstock for co-processing in petroleum refineries in the production of renewable gasoline and diesel,” Allen said.

Biofuel

EME Biofuels is planning to construct an approximately 150,000 square-foot biomass-to-biofuels facility on approximately 30 acres at the former paper mill site.

The plant will utilize forest residuals — specifically “slash,” a byproduct of commercial timber harvesting — as feedstock for the production of up to 20 million gallons annually of “fast pyrolysis bio-oil,” or FPBO, which will be marketed as “renewable fuel oil” or RFO.

According to the company, renewable fuel can be used as a sustainable replacement for heating oil and as a biocrude feedstock in the production of renewable gasoline and diesel through co-processing.

Castlerock, a Houston firm, has said the EME facility will use a process called “rapid thermal processing.” The plant would be a larger version of Castlerock’s advanced thermal processing plant in Quebec, where fuel oil production has been effectively established at scale since 2018.

Tax credits

FAME approved the issuance of tax credit certificates related to $746,123 in investments through the Maine New Markets Capital Investment Program to assist EME Biofuels. The certificates authorize the issuance by the state of approximately $291,000 in tax credits through the program.

FAME administers the Maine New Markets Capital Investment Program in cooperation with Maine Revenue Services.

The program is designed to attract investment in economically distressed areas of the state. It allows eligible investors to claim tax credits against state taxes in amounts up to 39 percent of a project’s total cost. The maximum aggregate amount of tax credit investment authority is set forth at $250 million, which equates to approximately $100 million of tax credits. With the issuance of tax credits for EME, the program has been zeroed out, FAME said.

Bond financing

The tax-exempt bond financing comes from FAME’s revenue obligations securities program, which provides tax-exempt bond financing to eligible borrowers. FAME acts as a conduit for borrowers in order to allow them to access favorable interest rates and to help stimulate the economy and create and retain Maine jobs.

Such bonding — commonly referred to as “conduit bonds” due to their relatively risk-free, pass-through nature — are authorized by the Internal Revenue Code in order to stimulate economic development in certain targeted industries such as manufacturing and solid waste disposal facilities.

Construction

On-site construction is expected to start approximately six months after the funding closes. The plant is expected to be in full operation in 2027.

Castlerock has said it chose Millinocket based on its access to renewable hydroelectric power from Brookfield Renewable, which has hydropower facilities in the Katahdin region, including One North.

The company also cited “strong local site management by Our Katahdin,” the town of Millinocket’s commitment to partner in building the roads, water, sewer and power infrastructure necessary to support the facility and future development and proximity to feedstock providers and the option for rail access to facilitate efficient distribution of the finished product.

The company has said the product’s greenhouse gas emissions rate would be up to 96% lower than petroleum-based heating oil or natural gas.

Bio-hub

The EME plant is one of a number of projects at One North that are making it a hub for renewable energy production and includes hydropower producer Brookfield Renewable, a testing site for ORPC’s hydro-electric system, a Greenbacker Renewable Energy Co. solar farm and a development of a combined heat and power facility in partnership with Peregrine Turbine Technologies.

One North is a 1,400-acre, mixed-use industrial site on the former Great Northern Paper mill site. One North is operated by Our Katahdin, a nonprofit founded in December 2014 to support community and economic development in the Katahdin region.

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