The EC Directives set ambitious targets for mandatory 10 % biofuels share in road transport. 2nd generation biofuels will give significant benefits as ethanol blends in gasoline and synthetic biodiesel products. The innovative focus in the FibreEtOH project is to demonstrate for the first time globally in a commercial scale, a cost efficient paper fibre based ethanol production with high, > 70 % overall energy efficiency with high > 50 % green house gas reduction. 2nd generation ethanol production technology has been developed using mainly corn stover, straw or saw dust as raw material. So far reliable and cost efficient hydrolysis technology has been the bottleneck for large scale commercial success. By using paper fibres separated from commercial and municipal solid waste or de-inking sludge at paper mills, the hydrolysis process will be significantly easier as no pretreatment and special fractionation process is needed. It is estimated that such raw material is available in quantities for more than one million t/a ethanol production capacity. The EtOH production cost will be highly attractive due to the low price of the waste based raw material and the distillation steam compared to typical straw and wood EtOH production plants. The proposed demonstration plan with 20 000 m3/a ethanol production capacity will be build using 250 000 t/a waste from Helsinki metropolitan area in Finland. Biogas, district heat and electricity will be produced from the by-products. The site and environmental permits have already been granted. The ethanol will be used in Finland in dedicated E5 – E85 blends optimising the ethanol fuels to cold climate conditions and tail pipe emissions reduction. The FibreEtOH-proposal will demonstrate innovations in a novel 2G EtOH production chain using optimized and cost-effective enzymatic hydrolysis process taking advantage of the adjacent enzyme production and the whole production concept with high overall process integration.