Russian ministry proposes spending 80 bln rubles to convert boilers to pellets to replace export markets

MOSCOW. April 15 (Interfax) - Russia's Industry and Trade Ministry has proposed to remedy the post-sanctions drop in fuel pellet exports with a large-scale program to convert fuel oil- and coal-fired boiler houses inside the country to pellets.

Russia would need to invest 80 billion rubles in such a program in order to annually redirect the 1.5 million tonnes of pellets it previously exported to domestic heat generation, Industry Minister Anton Alikhanov said.

Speaking at a meeting President Vladimir Putin held with the government on the development of the forestry sector, Alikhanov recalled that the government, on orders from the president, already allocated 8 billion rubles in 2023 for special treasury loans to 12 regions to convert boiler houses to pellets. A number of boiler houses in Arkhangelsk Region, Komi and Krasnoyarsk Territory have already switched to biofuel, he said.

"We've analysed the parameters of their operation and calculated the necessary amount of financing for modernization. In order to replace all of the 1.5 million tonnes in lost pellet exports annually, we need a total of 80 billion rubles to overhaul boiler houses. Such a program could be planned for 10 years to 2035," Alikhanov said.

If such a program were approved, it would make it possible to update heat generation primarily in remote communities, reduce emissions of pollutants and support the forestry industry and boiler equipment manufacturers, he said.

Concurrently, the Industry and Trade Ministry, together with the Economic Development Ministry and Foreign Ministry, is working on expanding foreign markets for Russian pellets in China and Mongolia, he said. Prior to sanctions, Russia primarily exported pellets to Europe, Japan and South Korea, but now it essentially only exports to the latter.

"The issue of lifting the ban on shipments of wood pellets to China is being considered by our colleagues in Beijing. Due to TN VED [customs] codes, they consider them waste...And in February in Ulaanbaatar, Russian fuel briquettes were successfully tested under our control for our Mongolian colleagues," Alikhanov said.