A Nova Scotia company says it's the first in the world to create biofuel completely out of a forestry product.

Cellufuel moved into the former Bowater Mersey paper plant in Brooklyn, N.S., after the plant closed in 2012, throwing around 2,000 people out of work

Since then, Cellufuel has been developing biofuel that could be used in vehicles and for heating.

Company president Chris Hooper says it has succeeded in creating a biofuel similar to petroleum-based diesel — but is carbon neutral.

"For the Canadian forestry industry — absolutely a game changer," Hooper said. 

Bowater Plant

The old Bowater Mersey Plant has been housing the company, Cellufuel, since 2012. (CBC)

The plant transforms otherwise low-value wood fibre into renewable diesel fuel for the refinery market.

Cellufuel sources its raw material from Freeman's Lumber in Greenfield, N.S.

"The economic value generated from that litre of diesel starts and ends in the region," Hooper said. "Today in the typical oil and gas story, that is not the case." 

Freeman's normally sells woodchips for animal bedding, but the company has more than it needs. 

The opportunity to sell it for fuel is more lucrative and better for the environment, co-owner Richard Freeman said. The biofuel created by Cellufuel is carbon neutral. 

Woodchips

Freeman's Lumber usually sells woodchips as animal bedding. (CBC)

"The forest industry is one of the oldest renewable resource industries in the world," Freeman said.

"We're growing more trees everyday and it's far, far superior, from an environmental perspective, than taking oil out of the ground."

The pilot project is still a long way from taking the product to market. Cellufuel will spend a year evaluating the biofuel and determine if it's worth developing for the commercial market.

At first, the fuel will likely be blended with petroleum-based diesel, before being sold for use on its own, Hooper said.