TOFTE, Norway -- Södra and Statkraft announced that they have signed a cooperation agreement to start a jointly-owned company for the future production of biofuel at the former Tofte pulp mill in Norway.

The company will be named Silva Green Fuel AS, and will be 49-percent owned by Södra and 51-percent owned by Statkraft. Biofuel will play an important part in the drive to achieve national and international targets for reducing climate emissions from the transportation sector, Södra said.

The company said its first task is to find a cost-effective technology for profitable production of second generation biofuels based on forestry raw materials. A future commitment depends on whether the authorities facilitate the increased use of biofuels through tax changes and other attractive incentives.

"Statkraft views forest-based biofuel as a potential new growth area in renewable energy. I think that the collaboration with Södra constitutes a solid basis for developing a commercially-viable and profitable project," said Christian Rynning-Tønnesen, CEO of Statkraft.

"Södra is monitoring closely the technology developments and the business opportunities presented by the utilisation of forest raw materials for industrial production of climate-neutral fuels. We have also enjoyed good collaboration with Statkraft in the past and look forward to combining the two companies' expertise and experience in this project," said Södra's CEO Lars Idermark.