Norwegian pulp and paper company Norske Skog has received NOK6.5m ($0.7m) grant from state-owned company Innovation Norway for two projects.
Of the total grant, Norske Skog has received NOK4.5m ($0.5m) for the further development of microfibrillated cellulose (MFC) or nanocellulose, and NOK2.0m ($0.2m) for the development of fibreboard.
The renewable MFC will enhance paper-based products and be developed as a replacement for plastic products.
It can also be used as a thickening substance in several products, such as paint.
Norske Skog president and CEO Sven Ombudstvedt said: "If we succeed in producing MFC with this technology and use it in our paper production, this could reduce our costs and make us more competitive in the future."
Innovation Norway has already financed a pre-built pilot plant for MFC production at Norske Skog Saugbrugs, a pulp mill and paper mill located in Halden, Norway.
Slated to open later this year, the MFC manufacturing plant has a daily capacity of about 1t.
Innovation Norway senior advisor Erlend Ystrøm Hårtveit said: "Creating new businesses at Norske Skog Saugbrugs is a future-oriented development within a traditional industry.
"The projects are based on world-class wood fibre competence, creating new jobs in south-east Norway."
Norske Skog will also construct a pilot plant to develop necessary production techniques and ensure full-scale production of the new fibreboards.
As revealed in preliminary test results, the new light-weight fibreboards have a solid structure and improved insulation capabilities.
The fibreboards will be tested and developed jointly with potential customers in the construction industry.