HELSINKI, Finland (From news reports) -- Finnish pulp and paper maker UPM-Kymmene is planning its next step in wood-based renewable fuel products after a successful ramp-up at its initial biofuels plant, the head of UPM's biofuels business said on Wednesday.

UPM says the plant in Lappeenranta is the first in the world of its kind, making biofuel for vehicles and ships from crude tall oil, a residue of wood pulp production that produces significantly lower emissions than traditional fossil diesel.

The plant, which reached break-even late in 2015, improved profitability further in 2016, said Sari Mannonen, the head of UPM's biofuels business.

"We were able to improve our production efficiency clearly and the biofuel market was very favorable in the last quarter of the year," she told Reuters on the sidelines of a biofuels conference, without giving exact figures.

While biofuels at the moment represent only a small share of sales, UPM - the world's largest maker of graphic papers such as newsprint and magazine paper - is looking to expand the business.

"We have proved our business case, and our development team is preparing us for the next step... The goal is, at some point, to make an investment, but there are no plans in place at the moment."

Wood biofuels are one way in which Finland is reviving its forest sector, a major part of its economy long threatened by the shift from paper to digital publishing.

UPM's product is considered as "advanced biofuel" because it's made of the residue of the pulp production, thus prolonging the lifecycle of raw materials sourced from the forest.

In November, Finland's government proposed to lift the share of biofuels blended in transport fuel to 53 percent by 2030, from the previous 40 percent, as calculated under the EU's "double-counting" method for products based on forest residues.

This means distributors could sell fuel in 2030 which is 70 percent diesel and only 30 percent product from tall oil, and yet still meet the 53 percent renewable target.

That goal compares to an EU target of 10 percent by 2020.

"Finland is at the forefront here, and I believe the proposed new targets will bring investments into this industry," Mannonen said.

At the moment, China's Sunshine Kaidi New Energy Group and Nordic energy company St1 are planning investments in Finland to make biofuel from sawdust and other wood residues.

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