Biomass market

opportunities

Russian

Federation 1. General country information

2. Economic indicators

3. Biomass availability

4. Energy profile

5. Energy & biomass policies

6. Funding opportunities

7. Business Climate

8. Important contacts

[Market Opportunities for Biomass in the Russian Federation] | [April 14, 2014]

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Colophon

Date April 14, 2014

Status Final

This study was carried out in the framework of the Netherlands Programmes Sustainable Biomass by

Name organisation Partners for Innovation BV

Contact person Emiel Hanekamp

Although this report has been put together with the greatest possible care, NL Enterprise Agency does not accept

liability for possible errors.

Contact

Netherlands Programmes Sustainable Biomass

Jobert Winkel

NL Enterprise Agency

NL Energy and Climate Change

Croeselaan 15, 3521 BJ Utrecht

P.O. Box 8242, 3503 RE Utrecht

The Netherlands

Email: Jobert.winkel@rvo.nl

Phone: +31 - 88 - 602 7969

www.rvo.nl/biomass

Partners for Innovation BV

Emiel Hanekamp, Saskia de Lint and

Floor Osseweijer

Partners for Innovation BV

Cruquiusweg 20

1019 AT Amsterdam

The Netherlands

Email: e.hanekamp@partnersforinnovation.com

Phone: +31 (20) 6200511

www.partnersforinnovation.com

This document

This document is part of a series of 16, providing information on biomass markets in:

Europe: Germany, France, United Kingdom, Spain and Finland

EU/Asia: Russia and Latvia

Asia: China, India and Thailand

North- and South-America United States of America, Canada and Brazil

Africa: South-Africa and Ghana

Australia Australia

The selection of countries is done in close cooperation with NL Enterprise Agency. The objectives of the

country documents are: To provide companies a first impression of doing businesses in a country;

To provide sources and contacts for more detailed information; To sketch opportunities how companies can be further supported when doing business in a country.

[Market Opportunities for Biomass in the Russian Federation] | [April 14, 2014]

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Russia has an abundant supply of biomass in the form of wood, animal waste and agricultural residues.

The country is, however, characterized by a relatively low domestic utilization of biomass and a growing

export-orientated wood pellet industry. The opportunities for Russia are twofold. There is a huge potential

with regard to using alternative and sustainable energy resources for which they do not have the

technology yet nor is there a real existing domestic demand. Therefore this is a long term goal which

allows them to use sustainable bio-energy and to reduce CO2 emissions and thereby contribute to a

healthier climate. The second opportunity is the possibility to create a market for their (biological) waste

material. Source: Larive 2013

1. GENERAL COUNTRY INFORMATION

Country profiles at RVO: http://www.rvo.nl/onderwerpen/internationaal-ondernemen/landenoverzicht/rusland

Descriptions of business sectors, key market players and business trends via Business

Monitor International: http://www.rvo.nl/onderwerpen/internationaal-ondernemen/landenoverzicht/marktvergelijkingen/bmi

The Economist Intelligence Unit provides you with articles and short reports about Country

Analysis, Risk Analysis and Industry Analysis:http://www.rvo.nl/onderwerpen/internationaal-

ondernemen/landenoverzicht/marktvergelijkingen/eiu

Im- and export figures can be found at the International Trade Centre Databank: http://www.rvo.nl/onderwerpen/internationaal-ondernemen/landenoverzicht/marktvergelijkingen/trademap

Information U.S. Energy Information Administration: http://www.eia.gov/countries/country-

data.cfm?fips=RS&trk=m

2. ECONOMIC INDICATORS

Russian Federation 2009 2010 2011 2012

GDP (current billion US$) 1,222.65 1,524.92 1,899.09 2,014.77

GDP growth (annual %) -7.8 4.5 4.3 3.4

GDP per capita (current US$) 8,615.7 10,709.5 13,284.0 14,037.0

Population (Total, million) 141.91 142.39 142.96 143.53 Source: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD, http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

Source: IRENA Renewable Energy Country Profiles 2013: http://www.irena.org/REmaps/CountryProfiles

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AON Risk Rating 2013

AON's risk rating combines market, political and security risks, allowing you to make informed decisions

regarding your operations and investments. Used risk Ratings are: VH= Very High, H=High, MH=Medium

High, M=Medium, ML=Medium Low, L=Low and NR=Not Rated.

Risk type Rating Risk type Rating

Exchange transfer ML

Political violence H

Sovereign non-payment M

Risk of doing business VH

Political interference H

Banking sector vulnerability ML

Supply chain disruption M

Inability of government to provide stimulus

ML

Legal & regulatory risks H

Overall risk rating M Source: AON political Risk Map, Q3 2013, http://www.riskmap.aon.co.uk/Political_Risk_Map.aspx

3. BIOMASS AVAILABILITY

Land Use Parameters

Country Land area

(km2)

Agricultural

area (km2)

Arable land

(km2)

Permanent

crops (km2)

Forestry area

(km2)

Russian Federation 16,376,870.00 2,145,369.97 1,211,888.38 16,376.87 8,090,173.78 per 1000 capita 114.10 14.95 8.44 0.11 56.36 Source 2012: http://data.worldbank.org/indicator/AG.SRF.TOTL.K2

The Russian Federation covers 22 percent of all forests and ca 9 percent of all agricultural area

worldwide, which makes a large potential for biomass processing. Agricultural and Forest Production

Country Forest production (m3) 2012 Agricultural production (1000 kg) 2012

Russian Federation

210,316,981 156,878,485

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Biomass Resources

Russia’s biomass resources consist mainly out of forestry biomass, basic species are bruce,

pine and birch. Usually wet woodworking waste and illiquid round wood is used to create wood

pellets for bioenergy.

Source: Land use in Russia, mapped by satellites (International Institute for Applied System Analysis)

http://www.iiasa.ac.at/web/home/resources/publications/IIASAMagazineOptions/Satellite.en.html

Source: Russian biomass and soil composition mapped http://www.whrc.org/resources/publications/pdf/HoughtonetalEnvResL.07.pdf

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4. ENERGY PROFILE

National Energy Profile

• Total Primary Energy Supply: 30,604.2 PJ - Of which renewables: 742.5 PJ (2.4%)

• Energy self-sufficiency: 179.9%

• Fuel imports: 6.1 billion USD (1.9% of total imports)

• Electricity generation: 1,053.0 TWh - Of which renewables: 166.4 TWh (15.8%)

• Electricity use per capita: 6,486 kWh

• Electrical capacity: 223.1 GW - Of which renewables: 46.9 GW (21.0%)

• Electricity access rate: 93.0%

• Share of population using solid fuels (2010): < 5%

Biomass Related Projects

BNEF-Database

• More than 4 MW and 7 MWth of biomass-fired capacity addition announced (4 projects)

• 738 million litres of biodiesel per year capacity addition announced (5 projects)

• 1,425 million litres of bioethanol per year capacity addition announced (6 projects) Source: IRENA Renewable Energy Country Profiles 2013: http://www.irena.org/remaps/countryprofiles/pacific/australia.pdf

Other Projects

1 Sustainable Biomass Project at NL Agency, Duurzame Biomassa Mondiaal and

Duurzame Biomassa Import http://english.rvo.nl/sites/default/files/2013/12/All_projects_sustainable_biomass_NPSB_0.pdf

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Energy Sources and Forecast

Source: Global and Russian Energy outlook http://www.eriras.ru/files/Global_and_Russian_energy_outlook_up_to_2040.pdf

5. ENERGY & BIOMASS POLICIES

Targets

• 2.5% of electricity generation from renewables (excluding large hydro) by 2015

• 4.5% of electricity generation from renewables (excluding large hydro) by 2020

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In Russia, main drivers for development in the field of renewable energy and biobased

economy are social and economic motives. Since for example the prices of fossil fuels are

being kept low artificially, initiatives have to be triggered by governmental parties and

knowledge institutes. However, industrial clustering of organizations in this field is stimulated.

Russia has recently adopted a pro-active policy towards green and renewable energy, which

includes:

• the need to support enhanced energy efficiency of the Russian economy;

• requirement to better protect the environment by reducing emissions and fighting

adverse climate change;

• uptake of advanced technology and promotion of innovation in energy generation,

facilitated by international cooperation.

The Russian Federation has set in its Energy Strategy (2009) energy efficiency as a priority for

the period up to 2030. This strategy aims at a 56% energy reduction by 2030 (compared to

the 2005 level).

The ‘State Coordination Program for the Development of Biotechnology in the Russian

Federation until 2020’ (shortened as Bio2020) is the central policy in this field. Part of this

policy is a high-level working group to coordinate collaboration between several ministries,

knowledge institutes and industrial organizations. However, the program does not have a

budget. This has to be set in collaboration with the several involved ministries.

As mentioned before, the Ministry of Economical Development knows a policy that stimulates

clustering of industrial organizations. These clusters can develop innovation programs that are

eligible for a subsidy.

Another positive development to minimize the gap between research institutes and industry is

the formation of Technological Platforms. Among over thirty platforms, two platforms exist for

the purpose of the Biobased Economy:

• Bioindustry and bioresources (Biotech 2030)

• Bioenergy (lead by the Kurchatov Insitute, Moscow) Source: Biobased Rusland, J. Ten Holter, Attaché for Science and Technology; Larive International Market Survey 2013 Bio-energy

Russian Federation

6. FUNDING OPPORTUNITIES

Partners for International Business, subsidie voor groepen bedrijven die gezamenlijk een

buitenlandse markt willen betreden: http://www.dienst-regelingen.nl/subsidies-regelingen/partners-international-

business-pib.

Regulated Eco-Tariffs in Belgorod Oblast: http://belgorodinvest.com/index.php/en/invest-potential/investment-

climate-of-the-region/about-region, http://www.ifc.org/wps/wcm/connect/bf9fff0049718eba8bcaaf849537832d/PublicationRussiaRREP-

CreenGiant-2011-11.pdf?MOD=AJPERES

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7. BUSINESS CLIMATE

Overall Rating

World Bank Ease of Doing Business index 2013 (Ranking out of 189 countries). In comparison,

the Netherlands is ranked 28 (2014) and 30 (2013). On this website information about

necessary permits, administration time, specific laws et cetera is present.

Topic DOING BUSINESS 2014 DOING BUSINESS 2013

Total rating 92 111

Starting a Business 88 100

Dealing with Construction Permits 178 180

Getting Electricity 117 188

Registering Property 17 46

Getting Credit 109 105

Protecting Investors 115 113

Paying Taxes 56 63

Trading Across Borders 157 162

Enforcing Contracts 10 10

Resolving Insolvency 55 53 Source: http://www.doingbusiness.org/data/exploreeconomies/russia Logistics and Infrastructure

Except for the North-Western region of the Russian Federation, high transportation costs make

the use of forestry biomass less economically viable. The best alternative is to process biomass

locally. Such regional initiatives do require elaborated feasibility studies, large investments,

public-private partnerships and political commitment on the long run. Source: Biobased Rusland, J. Ten Holter, Attaché for Science and Technology

Based on a worldwide survey of operators on the ground, such as global freight forwarders and

express carriers, the Logistics Performance Index (LPI) measures the logistics "friendliness" of

155 countries. Ranking of the Russian Federation is place 95, scored 50.7% of highest

performer (Singapore). Source: World Bank web.worldbank.org/WBSITE/EXTERNAL/TOPICS/TRADE/0,,contentMDK:23188613~pagePK:210058~piPK:210062~theSitePK:239071,00.html

Culture and Education

The UNDP Human Development Index (HDI) is a composite statistic of life expectancy,

education, and income indices, used to rank countries into four tiers of human development:

very high, high, medium and low. According to HDI, the Russian Federation belongs to the group of

“High human Development” and is ranked 55 out of 186.

HDI rank (2012)

Life Expectancy at Birth (2012)

Mean Years of Schooling (2010)

Expected Years of Schooling (2011)

55 69.1 11.7 14.3

Source: Human Development Index https://data.undp.org/dataset/Table-1-Human-Development-Index-and-its-components/wxub-qc5k

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8. IMPORTANT CONTACTS

Dutch Embassy + Consulates

• Embassy of the Kingdom of the Netherlands in Moskou

• Consulate General of the Kingdom of the Netherlands in Sint Petersburg Source: http://www.rijksoverheid.nl/onderwerpen/ambassades-consulaten-en-overige-vertegenwoordigingen

Economical Mission on Energy to the Russian Federation (Moscow and Yamal), May 13th-16th

2014: http://www.rvo.nl/actueel/evenementen/energiemissie-rusland-met-minister-henk-kamp?ns_service=mail&ns_robot=partner-

mailplus&ns_mail_uid=WNa74HFZxSYdiqv&ns_mail_job=31193953&ns_mchannel=nieuws

Chamber of Commerce

European Chamber of Commerce Russian Federation: http://ruscham.com/

Universities and Research Institutes

Kurchatov Institute, Moscow

Moscow State University

Bach Insitute for Biochemistry

Research Centres on Biotechnological Cluster in Pushchino (Mowcow Region)

Existing Agreements

The Ministry of Economic Affairs of the Netherlands has signed a cooperation agreement with

the Ministry of Energy of the Russian Federation. Bio-energy has been defined as a focus area.

The scope of the assignment entails two segments:

• Determining the possibilities for Dutch companies to export knowledge and technologies

in the field of biomass applications to Russia.

• Determining the possibilities for importing Russian biomass.

Part of this agreement is the Energy Mission that will be organized by the Dutch Ministry of

Economic Affairs May 13th to 16th 2014. Source: Larive International Market Survey 2013 Bio-energy Russian Federation

Bilateral treaties: http://www.minbuza.nl/producten-en-diensten/verdragen/zoek-in-de-

verdragenbank?treatytitle=&formsubject=&formtreatyparty=&f=&t=&formlocation=&formspecialyear=&formspecialnr=&formtreatytype

=true#jump

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