Three years ago, Alex Ablaev, the director of the Russian National Biofuels Association, was not very optimistic about the biofuel industry in Russia. But now he is surprisingly confident about it. The Voice of Russia asked him what is happening in the biofuel industry today, and what advantages this new technology can bring to Russia.
What is the Russian national Biofuels Association do?
We are promoting the renewable fuels in Russia and now are expanding and promoting even the renewable chemicals. Basically, that is called bioeconomy – the production of energy and products from a renewable feedstock.
The Government set target to convert 10 percent of its transportation by 2020 to biofuel usage. Does that mean that the Government is going to start subsidizing biofuel production? Because I can’t see how it is going to be economical for farmers to produce that amount of material unless there is some sort of support for them.
Target is more of an indication of the Government's willingness to go this way. I doubt that there will be any subsidies and I don't expect any subsidies in the next several years. If you produce biofuel or ethanol, the price of grain in Russia in some remote areas, like Siberia or the Volga River areas, is quite low. So, it is very economical to produce bioethanol from grain or from sugar beet, especially if we have overproduction of both products – grain and sugar beet – like in the last couple of years.
If the price of oil begins to come down or, at least stabilizes, does that mean that it is possible that we are going to see a biofuel boom in Russia simply because this is a way that Russia can earn money? For example China.
Yes. You kind of touched two problems. First, it is the stable price of oil. This means that fertilizers and oil for agricultural machinery will be cheaper, which will boost the production of agricultural feedstock. And again, the price of the feedstock will go down. So, it will be very economical to convert it to biofuel.
As for China, yes, China is potentially a huge market for the Russian biofuel. There are problems political and logistic. It is very difficult to export so far; there are not many railroads. And politically, China has to agree to accept biofuel. So, it should be an agreement on the high level between the Chinese and the Russian governments to discuss that, because so far China is not willing to import biofuel just because of the China's internal political reasons.
Is the transfer from hydro-carbons to alternative fuels going to affect Russia?
Yes. Right now Russia is really interested in new technologies, especially industrial biotechnology, as the Government is interested in that. And while in the West there are established capital expenses, basically, the old plants are still working on old technology, Russia is ready to invest in the very new technology and invest new capital expenses in advanced technology. The Russian businesses are looking for interesting technology in this renewable segment. For example, a large Russian company signed an agreement with a Dutch company to build a plant for bioplastic. It is separate from Coca Cola project. So, it will be a renewable bioplastic based on sugar beet or grain.
