PaperShell secures €40.3 million from the EU Innovation Fund to build a flagship factory in Sweden for its fossil-free composite material
PaperShell, the Swedish developer of a sustainable composite material designed to replace aluminium, plastics, and glass fibre, has reached a significant financial milestone. The company has signed a Grant Agreement under the EU Innovation Fund, securing up to €40.3 million in financing. This capital is earmarked for the construction of a new flagship factory in Tibro, Sweden, representing the first full-scale implementation of a production system intended for future replication across Europe.
The proprietary material developed by PaperShell is 100% fossil-free and offers a combination of high strength, lower weight, and increased flexibility compared to conventional industrial alternatives. The composite is already NATO-approved and has seen adoption across the construction, electronics, defence, and transport sectors. Since becoming operational in 2023, the company’s existing pilot facility in Tibro has produced over 150,000 components across three production lines, with the business reporting positive cash flow since the final quarter of 2025.
Anders Breitholtz, Founder and CEO of PaperShell, commented, “Europe is entering a new industrial phase where resilience and decarbonisation go hand in hand. PaperShell is already producing fossil-free materials at industrial scale, and with this expansion we can meet growing demand from sectors like construction and defence. The factory in Tibro is not just increased capacity — it is proof that a new industrial production system is ready to scale.”
Construction of the new facility is expected to begin in 2027, with the site moving into full operation by 2030. Once the ramp-up is complete, the factory is projected to reach an annual production capacity of approximately 23,000 tonnes. Environmental impact assessments suggest the project will avoid roughly 2.6 million tonnes of CO₂ emissions over its first decade of operation.
The investment underscores a broader European shift towards reindustrialisation based on fossil-free materials. By combining scientific innovation with large-scale industrial production, PaperShell aims to strengthen regional industrial resilience while significantly reducing greenhouse-gas emissions across global supply chains.