Russian forests could produce enough bio fuel to meet Europe's needs, according to the Chief of the Federal Forestry Service, Valery Roshchupkin. He spoke to RT about the industry's challenges.

Valery Roshchupkin: The forestry industry is very underdeveloped. It refines only two per cent of wood resources in the richest parts of Russia – Siberia and the Far East. This June a development strategy for the next decade will be submitted to the government.

Every cubic metre of unrefined wood earns about $US 30 but refined wood can earn up to $US 500. To encourage that Russia is tightening its customs policies from next January when export duties on raw timber will rise to 80 per cent.

RT: And turning to the Far East – the Chinese rely heavily on Russian wood – what will happen there?

V. R.: The eastbound export of timber has fallen, while sales to Finland remain unchanged. However, we see a lot of interest from China – especially in the Far East, Siberia and Ural regions. I think we will see more business coming from China in the near future. And I expect contracts in 2009. Foreign companies are gaining their own niche on the Russian market.

RT: Do you think the development of the forest industry plays an important role for the future growth of bio-fuel production in Russia?

V. R.: Bio fuel is very promising direction for both external and internal trade. Russia has almost 700 million cubic tones of unused wood – and we plan to start using it in bio fuel production.

The European Union, for example, wants 20 per cent of all energy consumption from bio fuel. And I'm sure Russia can supply this market. The government is due to set up a special corporation to handle bio fuel, and I'm sure the Russian market will be opened to foreign investors. For example, if all municipal boilers in the country switch to bio fuel – we could save up to 70 million tones of oil a year.