Metsä Group’s next-generation bioproduct mill in Äänekoski will be operational within Q3/2017 and it will have significant regional economic impact on Central Finland. The mill will operate applying principles of circular economy, and thus utilize all possible side streams from pulp production. Lignin is one of the side streams that has huge potential to be refined, as sustainable products and by creating new value added. Conventionally, lignin is combusted with black liquor to generate energy in pulp mills. This thesis compares this conventional situation to refining lignin into biocomposite products made from 100% renewable resources with regard to regional economic and environmental impacts.

Production impact, employment impact and income effects are estimated using input-output analysis (IOA) in order to estimate regional economic impact. Global warming potential and acidification potential are assessed applying the environmentally extended input-output methodology to estimate environmental impacts of the two cases. The key data was collected from the latest Finnish national input-output tables (2012) and Finnish national emission tables by industry (2012). Crucial information was also gathered from Metsä Group and the Department of Chemistry at University of Jyväskylä.

The results of the study indicate that refining lignin has 9 to 14 times higher production impact, employment impact and income effects compared to combusting the same amount of lignin. The global warming and acidification potentials were also higher with refinement, but only 1.6 to 3 times. One of the key outcomes of the thesis is that the environmental impact cannot be assessed only by the applied method, but also e.g. carbon sequestration and possible product substitution must be taken into account in the assessment.

For the region of Central Finland, refining lignin is interesting option compared to combusting lignin, for it would create significantly more jobs, value added, municipal taxes and multiplier effects. The refinement is aligned with Central Finland ́s Strategy 2040, and it would increase the innovation capital and export potential of the region. The intriguing environmental features of the biocomposite products are also interesting for the whole nation.