Russia Biofuels Activities
Russia is one of the world's largest producers and exporters of fossil fuels, so biofuels don't receive particular attention by the government. However, commitments under the Kyoto Protocol and interest in producing biofuels for export, particularly to the European Union (EU), could provide a platform for biofuels industry development.
Although it doesn't produce fuel ethanol, Russia has a well-developed ethyl alcohol industry. There are many distilleries producing ethanol for the alcohol, chemical, and pharmaceutical industries with a total capacity of 1 billion liters. There are two fuel ethanol plants under construction (one in Omsk, Siberia, and another one in the Volgograd region) with about a dozen planned. Some sources report production of fuel ethanol in Russia, but no official data exists. Experts concede that most production is likely in the experimental stage (USDA 2007).
Russia is one of the world's largest producers and exporters of grains, particularly wheat, barley, and corn. Therefore, feedstock availability is not a concern. However, increasing grain prices may constrain bioethanol production in Russia. If grain prices continue to increase, using grain as the source of bioethanol will not be economically feasible. On the other hand, alternative sources such as sugar beet molasses may be an option. Furthermore, Russia has ample sources of cellulosic biomass from its large wood-processing industry. Experts estimate the total wood biomass available for production of energy at 800 million metric tons (USDA 2007).
There is no biodiesel production in Russia, but a number of companies have recently announced plans to build biodiesel plants, with rapeseed as the feedstock. National output of the oilseed has been increasing steadily, from 300,000 metric tons in 2005 to an expected 550,000-600,000 metric tons in 2006. The Russian Agriculture Ministry has also set targets of increasing rapeseed output to 1.5 million metric tons in 2007 and 5 million metric tons in the long term. As with the ethanol industry, biodiesel produced from the proposed biodiesel plants are also intended for export markets in the EU (IADB 2007).
Currently, there is neither federal legislation nor incentives to encourage the production and consumption of fuel ethanol in Russia. In December 2006, a group of deputies in the Duma, the lower chamber of Russia's National Assembly, prepared draft legislation that lifts the excise taxes and eases regulation on motor fuel containing less than 10% ethyl alcohol. This was intended to make bioethanol more economically attractive for alcohol-producing plants. The draft legislation was scheduled for consideration by the Duma in the fall of 2007, but there are no results to report yet (USDA). The government charges an excise duty of at least 26 rubles (US$1.10) to sell 1 liter of ethanol, the same as for other types of alcohol. The tax alone is more than the cost of 1 liter of gasoline (The Moscow Times 2008).
Prime Minister Viktor Zubkov announced that a government program to develop biofuels in Russia will start in 2008. It stipulates the construction of 30 new ethanol plants and upgrades of existing facilities. Zubkov said that Russia will eventually produce 2 million tonnes of ethanol per year if the program is successful, without specifying when the government hopes to reach this target (The Moscow Times 2008).