Report - UNDP Russia

practices in Russia's housing utilities sector,which are usually attributed to harsh climaticconditions.If the energy concern index in Russia is5.5-8 times lower than that of our Nordicneighbors, it is unsurprising that unit heat use forheating residential buildings in Russia (500–600kWh/m 2 per year) is several times higher than inSweden or Finland (135 kWh/m 2 per year), whereclimatic conditions are similar to the average inRussia (averaging is carried out with adjustmentfor population density, and not simply over thecountry’s territory). Table 7.8 shows heatinsulation of all premises (not only housing), asgross output of heat insulation corresponds topopulation size, rather than to floor area ofparticular premises. Severe climate is often citedto excuse higher energy costs in Russia. Russia isa northern country and much heating will berequired, even with the best possible housingutility system. But the issue is the extent, to whichhigher energy consumption is due to climate,and the extent, to which it is due to other, quiteunrelated circumstances. Estimates have shownthat the climate factor can only be used to justify25% excess of energy intensity in Russian GDPcompared with western Europe (even if the needfor air conditioning is left out) 20 .Energy intensity of Russian GDP at thestart of the 21 st century was 3.1 times higherthan in the European Union (prior to theadmission of new members, i.e. with 15member countries). Maintenance of a relativelyacceptable economic situation in the countrywas only possible thanks to large-scale exportof oil and natural gas at relatively high prices.This makes the Russian economy extremelyunstable and over-dependent on the state ofglobal fuel markets. These discrepancies havebecome apparent since the 2008 globalfinancial and economic crisis. Russian productscannot be competitive in the world marketwhen their manufacture is so energy intensive.Only industries making semi-products fromdomestic raw materials (low-level metallurgy,mineral fertilizers, timber) can keep afloatthanks to disproportions between global anddomestic energy prices. These factors cast ashadow on the long-term outlook. Long-termeconomic problems could only be addressedby efficient deployment of resources obtainedin years when the market environment washighly favorable. But trends in energy intensityof GDP in 2000–2007 show that the potential isnot being used adequately. Some reduction ofthe energy intensity index since 2000 isinsufficient and much less than observed in theWest after 1974.These points are, essentially, platitudes,and are cited here to emphasize that Russia’slong-term economic interests by no meansconflict with its environmental interests: bothnecessitate reducing the power intensity of GDPthrough energy saving and increased energyefficiency. The modernization needed for energysaving would simultaneously yield considerableeconomic benefits, because new equipment isnot just more energy efficient, but moreeconomical overall and more reliable, enablingmanufacture of better-quality products in betterconditions of work, where staff can make fulleruse of their professional skills. The latter aspect isparticularly important, since current productiontechnologies in Russia often fail to match theeducational attainment level of industrialemployees, entailing inefficient use of laborresources and negative social consequences.7.9. Social and economicconsequences of hypertrophicdevelopment of the fuel& energy sectorAs shown in previous chapters,development of fuel & energy without regard forenvironmental concerns will have seriousnegative impact on the environment. If existing20The United States spend more power for air conditioning than Russia for heating. This is partly due to the climate but partly is a result of thepower wasting attitude. It is worth noting that Table 8 takes into consideration only the ‘harshness’ of the climate, but other aspects of a climatecan also be unfavorable . Other negative climate aspects are also found in Russia, but they are less vivid and systematic in inhabited areas.132 National Human Development Report in the Russian Federation 2009