10th Annual Aleksanteri Conference How Russian May Become Less Energy Dependent: Key Points of Russian Energy Strategy up to 2030 A.I. Gromov Deputy General Director Institute for Energy Strategy Moscow, Russia 10th Annual Aleksanteri Conference Helsinki 29 October, 2010

Energy intensity of GDP (by PPP) in Russia IES Energy intensity of GDP (by PPP) in Russia Results of policy in energy efficiency: Decrease in energy intensity of Russian economy by 34% Reasons of decrease in energy intensity between 2000 and 2008: Structural transformation of Russian economy (rapid growth of services) Growth of world prices for energy resources

Energy intensity of GDP (by PPP) in the world IES Energy intensity of GDP (by PPP) in the world Reasons of high energy intensity of Russian economy Severe climatic conditions Specific allocation of population and industry; necessity for extensive transport communications t o.e./ 1000 USD Prevalence of “heavy” energy-intensive industries in national economy Technological backwardness of some industries Underestimated price of energy resources in home market, which doesn’t stimulate energy saving

Barriers for energy saving and energy efficiency in Russia IES Barriers for energy saving and energy efficiency in Russia Lack of motivation Budget constraints Comparatively low energy tariffs Cross-subsidizing Shortage of controlling tools in energy consumption 1 Lack of information Weak informational support of measures in energy saving and energy efficiency Stereotyped energy-wasteful behavior 2 Lack of experience in financing projects in energy saving and energy efficiency Exacting requirements for projects in energy saving and energy efficiency from investment banks 3 Increase in energy efficiency is not perceived as a cure for a wide range of economic and social problems Lack of organizational and coordinating skills 4

Potential for energy saving in Russia IES Consumption of energy resources can be reduced by: 20% in heat supply 30% in electroenergetics 40% in transportation and industry 50% in living apartments 45% of the current consumption Strategic targets in energy saving and energy efficiency in Russia President D.A. Medvedev: reduction of energy intensity of Russian GDP by 45% by the year of 2020 (compared with the level of 2007) Energy Strategy 2030: reduction of energy intensity of Russian GDP by 2.5-3 times by the year of 2030 (compared with the level of 2007)

Expected Dynamics of Specific Energy Intensity of GDP and Domestic Demand for Primary Energy Resources 9

IES Key directions of the Russian energy policy for energy saving and energy efficiency Housing and communal services Rational utilization of APG, RES Effective use of energy resources in industry Elimination of infrastructure, technological and legal barriers for rational use of APG (increase in APG-utilization coefficient up to 95%) Wide-scale introduction and use of RES (5-fold increase in electricity production on the basis of RES) Top priority of decentralized heat- and power supply systems, rational use of local RES and modern technologies and equipment in the Siberia and Far East Wide-scale introduction of equipment controlling energy consumption Obligatory standards for energy efficiency for new and reconstructed buildings Modernization of heat and water supply systems Introduction of energy saving technologies in outdoor lighting, sanitation and etc. Provision state organizations with legal rights for allocation funds obtained from energy saving Ban against energy-wasteful technologies Obligatory standards for energy efficiency Development of energy services Modernization of statistical accounting in the sphere of energy saving and energy efficiency Energy audit of all the enterprises on a regularly basis Monitoring of energy saving programs Rationalization of prices for energy resources in home market Informational support of arrangements in energy saving and energy efficiency aimed at alteration of wasteful stereotypes of energy consumption among population

Investment in energy saving and energy efficiency in Russia IES Investment in energy saving and energy efficiency in Russia Total investment volume: 320 billion USD* Effect for: End users National economy Saving of 80* billion USD Payback – 4 years Saving of 120-150* billion USD Payback – 2-3 years The cost of energy saving and improvement of energy efficiency in Russia is 3 times cheaper than expansion of energy resources’ extraction ! * Official exchange rate, 2007

IES Expected results of energy saving and increase in energy efficiency in Russia Saving of 240 bln m3 of natural gas, 340 bln kilowatt-hour of electric power, 90 mln t of coal and 45 mln t of oil and oil products 1 Improvement in competitiveness of national economy under conditions of growing tariffs for energy resources 2 Increase in revenues from extra export of oil and natural gas: 84 – 112 bln USD 3 Decrease in governmental expanses: 3 – 5 bln USD 4 Reduction in СО2 –emissions: 790 mln t/year (Volume of emissions in 2030 = 80% of 1990’s level) Improvement of ecological situation in the country Rise of national status in resolving global ecological problems 5

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