1. 1 The actual problems of Energy Saving and Energy Efficiency in Russia Northeast Asia International Conference for Economic Development 2009 Niigata, Japan A.I. Gromov Deputy General Director Institute for Energy Strategy PhD in Economic Geography

2. 2 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

3. 3 Energy intensity of GDP (by PPP) in the world Technological backwardness of some industries Prevalence of “heavy” energy-intensive industries in national economy Severe climatic conditions Underestimated price of energy resources in home market, which doesn’t stimulate energy saving Reasons of high energy intensity of Russian economy Specific allocation of population and industry; necessity for extensive transport communications t o.e./ 1000 USD

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

5. 5 Potential for energy saving in Russia 45% of the current consumption Consumption of energy resources can be reduced by: 20% in heat supply 30% in electroenergetics 40% in transportation and industry 50% in living apartments 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)

6. 6 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 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 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 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

7. 7 Investment in energy saving and energy efficiency in Russia Total investment volume: 320 billion USD* End users Effect for: * Official exchange rate, 2007 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

8. 8 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 Increase in revenues from extra export of oil and natural gas: 84 – 112 bln USD Decrease in governmental expanses: 3 – 5 bln USD Improvement in competitiveness of national economy under conditions of growing tariffs for energy resources 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 1 2 3 4 5

9. 9 Thank you for your attention!