Report - UNDP Russia

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Figure 1.8Proven oil reserves: years until depletion at currentrate of extraction (1990-2008)Years till depletion90807060504030201001990 2000 2005 2008World OPEC OECD RussiaSource: British Petroleum (BP Statistical Review of World EnergyJune 2009)these two approaches have not even beendiscussed to date, but, when the time comes,they will represent a difficult choice requiringpublic discussion. Russian leaders are takingsome steps to increase energy efficiency.Presidential Decree No.889, ‘On measures toincreasing energy and environmental efficiencyof the Russian economy’ (June 2008) calls for 40%reduction of energy intensity by 2020 comparedwith 2007. A new draft law, ‘On energy efficiencyand improvement of energy efficiency’ waspresented to the State Duma in October 2008, asstipulated by the Decree, and was approved bythe Duma and the Federation Council inNovember 2009. There is a threat that anti-crisismeasures will now override energy efficiencymeasures in the government’s list of priorities,but the President’s address to the FederationCouncil in November 2009 made energyefficiency one of the key vectors formodernization, raising hopes that the issue willreceive due attention in the medium term.Rational long-term use of naturalresources is an important part of Russia’ssustainable development, helping to ensurequality of life for future generations.Forecasts of imminent oil reservedepletion worldwide or in a single country havebeen common currency for over a century, andhave proved to be exaggerated. Improvement ofextraction technologies and energy pricefluctuations, which make development of newfields economically feasible, move the depletiondate further and further into the future. It can beconfidently predicted that world oil productionwill not come to an end in 2050, as presentreserve statistics suggest, even taking account offorecast increase in oil consumption.However, the threat of depletion ofRussia’s proven and accessible oil resources in 20-30 years time has become a real threat, mainlybecause of inadequate exploration in the pastdecade and more difficult extraction conditions,which require work in remote regions with harshclimate. Even during the recent boom years(2002–2008) the depletion date came nearer(from 26.3 to 21.9 years) (Figure 1.8). Reservereplacement is progressing very slowly and thecrisis has clearly worsened the situation. Thesituation with natural gas reserves is better,mainly due to huge deposits, which are sufficientfor 70 years of production. But the expecteddepletion date for natural gas has moved closerby 9.4 years in the last decade, canceling outreserve replacement. It should be stressed thatthese trends were observed during the energyprice boom, when profitability of energy resourcedevelopment was at a high level.A development model based onextensive increase of traditional energy resourceproduction does not look sustainable for Russia.Significant investments are needed fordevelopment of new deposits and moreattention should be paid to use of renewablesources of energy. Russian use of renewables iscurrently extremely limited: the Ministry ofEnergy estimate for 2008 was less than 1% ofelectric power, not counting large hydro-electricstations with more than 20MW capacity.As a result of the economic crisis in the1990s and relatively energy-sparing recoverysince then, greenhouse gas (GHG) emissions inRussia have dropped by 34% compared with1990. But there has been little progress towardslow-carbon energy production, which couldsafeguard what has been achieved and obtainfurther emissions reduction. The share of coal,oil & gas in Russian energy consumption is stillaround 90%. The level is not much different in a24 National Human Development Report in the Russian Federation 2009
number of developed countries, including theUSA, but the main developed countries havemade a number of decisions supporting lowcarbonenergy production (e.g. the G8 ActionPlan for Energy Preparedness, signed inSt.Petersburg in 2006). Both the USA and the EChave recently adopted ambitious programs forgreater use of renewables, and this is also atarget of the Russian leadership, which has saidthat the renewables share should rise to 19-20% by 2020 (including large hydro-electricstations) 7 .Decisions taken by the government inJune 2009 suggest that Russia is not keen to leadthe way in meeting commitments on emissionreductions by 2020, which are to be agreed inCopenhagen in December 2009. The decision toput a -15% limit on reductions as compared with1990 leaves Russia room for maneuver, and evenallows it to return in the post-crisis period to thepower-intensive development path, whichseemed to have been abandoned in 1999–2008,though such a backward step looks very unlikely.The whole world is preparing for major shifts inapproaches to energy efficiency, but these shiftswill probably require much more time andresources than climate enthusiasts predict. Theprogramme of US President Obama and the EC’s20-20-20 programme are unlikely to beimplemented in the near future. Butdevelopments towards energy efficiency willcontinue and Russia, as a responsible country,will take part in this process.1.6. Summary and recommendationsThe important role played in Russia’seconomy by the energy sector means that anymodernization program must take specialaccount of its specific features.Firstly, modernization requires reductionof dependence on energy exports. Economicdiversification can be based on development ofpower-intensive industries and deeper levels ofprocessing. But added competitiveness due toenergy wealth tends to be undermined byinefficient energy use.Secondly, Russia needs a multi-sectoral,diversified programme for increase of energyefficiency. The large energy efficiency gapbetween Russia and developed countries cannotbe overcome by piecemeal measures. The world’sleading countries are already committed togreater energy efficiency, including promotion oflow-carbon technologies. The process has onlyjust begun, but Russia must avoid falling behind.Thirdly, minimization of rent-seekingbehavior by government and private businessesis vital for development of new sources ofindustrial development, in the high-tech sectoras well as the power-intensive semi-productsector. Overcoming rent-seeking behavior hasbeen a condition of success in countries withlarge natural rents. Modernization of theinstitutional environment is the key to success inthis task.The fuel & energy sector has specificneeds, which require special attention in themedium term. Faced with depletion of naturalresources, the sector must carry out investmentprojects to find and develop new fields, and tomake better use of existing fields.Finally, and most importantly, all of thechanges outlined above have to be focused onsustained, long-term development based onincrease of human potential. The actions, whichare taken, must stimulate both economic growthand investments in human development.Environmental efficiency of the economy as awhole and of the fuel & energy complex, inparticular, also have high priority.7http://minenergo.gov.ru/activity/vie/25
Page 1 and 2: National Human Development Reportin
Page 3 and 4: National Human Development Reportin
Page 5 and 6: ACKNOWLEDGEMENTSThe authors express
Page 7 and 8: Dear Reader,You have before you the
Page 9 and 10: PREFACEThis is the 13 th National H
Page 11 and 12: country’s fuel & energy regions r
Page 13 and 14: environmental degradation and enhan
Page 15 and 16: Chapter 1The Energy Sector,the Econ
Page 17 and 18: By 2008 Russia had increased its sh
Page 19 and 20: the share of energy in the national
Page 21 and 22: exported, increased. However, this
Page 23 and 24: elimination of structural and terri
Page 25: • Establishment of competitive me
Page 29 and 30: Although the United Nations Climate
Page 31 and 32: industrial region of the Urals - Sv
Page 33 and 34: 2.2. Budget capacityand structure o
Page 35 and 36: (the Federal State Statistics Servi
Page 37 and 38: Immigration by young and highly ski
Page 39 and 40: energy regions exacerbate the incom
Page 41 and 42: Khanty-Mansi and Yamal-Nenets Auton
Page 43 and 44: the Ministry for Regional Developme
Page 45 and 46: various other long-term problems in
Page 47 and 48: is also associated with the fuel an
Page 49 and 50: Republic of Mordovia 8051 0.732 68.
Page 51 and 52: Legislative control of impact audit
Page 53 and 54: Chapter 3Personal Incomes, the Ener
Page 55 and 56: than any other sources of income -
Page 57 and 58: Are wages now the main instrument f
Page 59 and 60: comparison of month-on-month develo
Page 61 and 62: • The unemployed, people who aree
Page 63 and 64: Employment in the energy sector acc
Page 65 and 66: The share of household expenditures
Page 67 and 68: subsidization practices in the regi
Page 69 and 70: in power use between regions now de
Page 71 and 72: Electricity prices for households h
Page 73 and 74: • Steady decrease in the percenta
Page 75 and 76: 1. The number of graduates with eng
Page 77 and 78:
As well as requiring better fuelcom
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Box 4.1. The village of Kolvain Uss
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continue to use solid fuel for a lo
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Box 4.3. Ambient air pollution andp
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either by large power generating fa
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Box 4.6. A city at riskNovocherkass
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In order to assess impact of thesee
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generation facilities through safer
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achieved in developed countries. So
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equires 2-6 times more capital inve
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government) should set targets and
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networks. In 2007 government budget
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enhancement is also important. Ener
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energy efficiency of the transport
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Box 5.1. Programme of the Ministry
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educational and informational suppo
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mechanism for using national quota
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Figure 6.2Share of electricity gene
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One of the major benefits of renewa
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odies; outdoor air; rocks and soil;
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Design and construction of geotherm
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Box 6.3. Prospects for nuclear powe
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consists of out-dated equipment at
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ConclusionThe world’s nuclear pow
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7.1. Impact of the fuel& energy sec
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Table 7.5Solid waste from productio
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Table 7.7Areas of disturbed and rec
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nature of the impact (atmospheric e
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Further, the economic cost ofenviro
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trends continued the damage would a
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What the government needs to do ino
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Figure 7.2.1Specific atmospheric em
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money value of industrial output) c
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Figure 7.2.4Trends in specific atmo
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Chapter 8The Energy Industry and Su
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eing equal) it only reflects that p
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(MDGs), issued by the UN in 2000. T
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8.4. The energy factorin integral i
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Canada, the USA and Great Britain h
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Box 8.2. Energy efficiencyindicator
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Box 8.4. Energy efficiency rating o
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41 Penza Region 116.0 -35.2 -4.542
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Appendix to Chapter 1Table 1.1. GDP
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Attachment to Chapter 4Table 4.1Rus
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Attachment to Chapter 4Volga Federa
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Attachment to Chapter 4Belovo Belov
Page 169 and 170:
The previous National Human Develop
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