The Making Of Graanul Invest

Raul Kirjanen


EDITOR’S NOTE: Raul Kirjanen started Tallinn, Estonia-based Graanul Invest in 2003 in a small office, but growth came quickly and hasn’t slowed. By 2005 the company had opened its first wood pellet mill in Imavere, Estonia. Ten more followed and today Graanul Invest is Europe’s largest manufacturer of wood pellets. It also operates its own bulk carrier shipping vessels. The company employs more than 500 through numerous subsidiary companies in the Baltic States. Recently CEO Kirjanen was elected to the steering committee of the Forestry Development Plan as a commissioner of the Estonian Renewable Energy Assn. Kirjanen says the main problem of Estonian forestry is that a significant part of Estonian private forests are in poor condition and thus maintenance and renewal of forests should form the cornerstone of the Forestry Development Plan. Kirjanen is convinced that biomass is the solution to Estonian heat production. “Biomass production creates jobs in rural areas, brings income to forest owners, provides security of supply to the country, and balances the foreign trade balance. This is also the base of today’s renewable energy targets,” he says. “Organizing demonstrations and making meaningless noise will not help find solutions to our problems today or in the future.” The company has begun publishing an annual Sustainability Report each spring. Its sustainability officer serves on the Sustainable Biomass Program certification standards committee.

Recently Wood Bioenergy magazine caught up to Kirjanen with a few questions:

WB: Can you provide a little background on the formation of the company and its entry into pellet production?

Raul: I had my first contacts with the wood pellet business in 1999, so I have been around almost 20 years. At that time we had a problem in the Baltics; sawmills had good business but there was no use of residues. That started to become an environmental issue as the piles of sawdust started to gather. It was also a time when some of the Scandinavian companies were starting to use wood pellets in larger scale for energy. So we connected the dots and saw that there is a business opportunity. Graanul Invest was established in 2003 and the first pellet plant started operation in Imavere, Estonia in February 2005.

Raul Kirjanen

Raul Kirjanen became interested in wood pellets 20 years ago.

WB: Was it always the intention to create a large-pellet-production-capacity, multiple-pellet-mills business, as you have done?

Raul: I think eventually every business is a journey and never a linear journey; you test, you fail, you learn, you succeed. It depends on the people you work with and working together, it depends on how the market develops, how opportunities arise and so on. We were ambitious since day one; when we started we did not start with one pellet mill, but we simultaneously developed two mills at the same time. The second mill is in Alytus, Lithuania. I think we have been lucky with timing but also prepared for opportunity. The pellet business has seen an enormous growth story over the years and we have grown with the general market. But we also from very early on understood that there are very few substantial players in the market so that keeping your image, your name and your promises straight are paramount to your future. That concept has helped us a lot.

WB: What has been the inspiration or driving force behind the successful evolvement of the company?

Raul: I think it is combination of things really. It is the growth of the market; when market grows it is always easier to develop and grow your business. Secondly, people, we have a very good, uniform and professional team—a few people but they really know what they’re doing. So we have very seldom been stuck behind an issue that we cannot solve. And finally technology; we believe that wood pellet processing needs to be energy and cost efficient in order to really provide value to the market. You need to keep the total processing-logistical chain efficient in energy and cost perspective.

WB: Since the formation of the company, what is your perspective on the evolvement of wood-based renewable energy in Europe, and worldwide really?

Raul: Biomass-to-energy is under a lot of attack recently and I think it is important that we are transparent and communicate well both our strengths and issues. Biomass-to-energy is in the European sense really a waste/residues to energy solution and as the industry grows we need to be respectful of that. As it is dependent on public support everybody must understand that there is no question complicated or embarrassing enough that must not be answered. Otherwise the public would lose trust in the business and the support will vanish.

On the other hand I think it is a very important step from fossil fuel based energy system to renewable energy system. Photosynthesis is today the easiest way to absorb CO2, so we need to keep the forests healthy and in the growing stage and using wood for energy on a sustainable basis is a very important part of the climate solution for the future. But again we also need to be mindful of biodiversity, other wood consumers etc. The picture is complex. I am more and more concerned that there is too much you versus us discussion in the market. If you look at who are some of the biggest funders of the lobby against biomass-to-energy, these are pulp and paper companies and other renewable energy technologies. I do not really understand why that is necessary. We have one uniform large scale target—to keep the planet in good shape and all parts of that puzzle are important. Stabbing each other in the back will not help any of the industries.

WB: What do you feel are the biggest challenges with regard to the continued evolvement and growth of wood-based renewable energy?

Raul: Competition with other renewable energy production technologies and public education that using wood for energy is good for the environment.

WB: How would you describe your company’s approach to and support of sustainability efforts? 

Raul: We consider ourselves as garbage guys for the wood industry and a bottom feeder in forest harvesting. We use what has little value domestically in the Baltics and provide added value for these feedstocks. That is also the reason why we are mindful of our growth opportunities here and take good care that we are seen as an integral part of the chain.

Another important step is to minimize the usage of fossil based energy in the total chain from forest to customer. I feel absolutely no sympathy to technical solutions that use natural gas to dry wood to produce “renewable wood pellets.” This is green washing and makes the industry very vulnerable to attacks from the public. We need to be mindful what has happened to liquid biofuels in Europe and neither people nor politicians are stupid in this sense. But again it is a journey, technology develops, rules develop etc. The target must be the best final outcome.