Statkraft will hold 51% stake in the new company while Södra will own the remaining interest.
Initially, Silva Green Fuel will focus on finding a cost-effective technology for commercial industrial production of second-generation biofuels based on forestry raw materials.
Statkraft CEO Christian Rynning-Tønnesen said: "Statkraft considers biofuels to be an exciting business development in renewable energy. The partnership with Södra, through Silva Green Fuel AS, is a good foundation for studying innovative technologies.
Södra CEO Lars Idermark said: "Södra is following, with great interest, the technological developments and business opportunities arising from the utilisation of forestry raw materials for industrial production of carbon-neutral fuel.
"We also have had a good experience from our previous partnership with Statkraft and look forward to uniting the two companies’ expertise and experience in this project."
Europe’s renewable energy generator Statkraft produces hydropower, wind power, gas power and district heating.
