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Geography of wood pellet mills in Russia SOURCE: WHATWOOD
Russia’s Global Wood Pellet Supply Potential
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BY MARIA FROLOVA
ccording to official data, Russia is one of the world's largest wood pellet producers, ranking among the top five. The country’s current share in global output is about 6%, and it ranks fourth in terms of exports with a 7.6% share of the global market (Food and Agriculture Organization/United Nations Economic Commission for Europe, 2020). The Russian wood pellet industry is exportoriented—85% of output is sold to foreign markets. Such dependence on exports determines the quality of wood pellets produced by Russian companies. Russian wood pellet manufacturers are currently guided by the requirements of ENplus standards or by contractual technical specifications close to the European standard. As of the beginning of 2021, 57 ENplus certificates have been issued in
Russia (including 51 certificates issued to manufacturers). The exact number of Russian wood pellet producers is unknown. According to WhatWood's estimates, about 500 companies are engaged in the production of wood pellets in Russia. The 40 largest producers account for about 80% of the market. The main wood pellet production hub in Russia is the Arkhangelsk region (ULK Group, Sawmill 25, Region-Les, etcetera.) The top 10 regions account for 55.6% of the total wood pellet output in Russia. Russia has substantial potential for further capacity growth. According to WhatWood's preliminary estimates, about 3 million tons of wood pellets were produced in Russia in 2020. The output growth was about 23% year-over-year, ranking only second to the U.S.
Exponential Growth in the Next 10 Years An evaluation of the past five years indicates that the Russian wood pellet industry has rapidly grown. Although the history of wood pellet production in the country dates back over 15 years, it was during the past five years that a breakthrough was made. It so happens that the wood pellet industry in Russia is significantly conditioned by the development of sawmilling. There is a direct correlation: The higher the output of saw timber, the higher the output of sawmilling byproducts—sawdust, shavings and chips, which are used for wood pellets. Despite rapid development in recent years, Russia still lacks large enterprises with a consistent wood pellet business without integration with sawmilling, for example, such as U.S.-based Enviva or Canada-based Pinnacle Renewable Energy. Although there are many more prerequisites for creating such a business in Russia, opportunity is ripe. According to rough estimates, 15–20% of the volume of harvested timber remains as sawmilling waste in forest depots, especially in Siberia and the Far East. It seems the first wave of active wood pellet production growth in Russia has ended, as nearly all large sawmills have provided their plants with wood pellet production facilities. Approximately 75% of wood pellets in Russia are produced from sawmill waste. Future production growth may be driven mainly by small- and medium-sized sawmills. While it is not improbable that one major player will form and, in line with Russian realities, adopt the North American model of doing business (that of Enviva and Pinnacle). There are certain prerequisites, however, as the export of roundwood of coniferous and valuable species will likely be banned after 2022. About 8 million cubic meters of roundwood is subject to the ban. It is likely that investments will be made in the processing of these raw materials and, firstly, production of saw timber. This could provide the market with an additional output of 1.7–2 million tons of wood pellets annually.
CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
20 PELLET MILL MAGAZINE | ISSUE 1 2021
