Chemrec, a company that converts paper mill byproducts into clean-burning biofuels, snagged $20 million in third-round funding from Environmental Technologies Fund, VantagePoint Venture Partners and Volvo Technology Transfer, the car maker’s venture branch.

The Swedish firm processes one particular mill byproduct known as “black liquor” first into a gas, and then into biofuels and biochemicals for automobiles and general electrical purposes. So far, it has implemented this technology at mills in Sweden and North Carolina, both of which generate thousands of tons of black liquor. If widely adopted, the system be capable of producing supplies equivalent to 12 billion gallons of gasoline — meeting about 2 percent of the world’s fuel demand, reports VentureWire.

Volvo, one of the company’s investors, currently has 14 prototype trucks that could run on the biofuels produced this way.

The amounts and investors of the two prior financing rounds have not been disclosed.