The European Commission has approved €55m in state aid for the development of a demonstration plant for the production of bio-methanol and other biofuel from pulp mill residue material. The Commission accepted that Domsjö Fabriker AB could not attract sufficient funding from the market in light of the project’s high technological and commercial risks. At the same time, the project is expected to deliver significant commercial benefits and facilitate uptake of this technology in the sector. Accordingly, the scheme met the conditions under the Commission’s guidelines for research and development and innovation aid. It concluded that the potential distortion of competition is likely to be limited due to the expected growth of the relevant market and the relatively limited boost to Domsjö Fabriker AB market share as a result of the aid.