Report - UNDP Russia

achieved in developed countries. So Russia hasnot been able to significantly reduce itstechnology gap with developed countries since1990. The speed of technology upgrading needsto rise by 2-2.5 times in order to reduce theenergy efficiency gap.Resource support by the federalgovernment in 1992–2008 for improvement ofenergy efficiency was completely inadequate forthe challenges faced. Some steps for greaterenergy efficiency were taken after passing ofFederal Law No.35, ‘On energy saving’, dated April3, 1996. But the issue of energy efficiencyreceived less and less attention after the 1998crisis and government policy was reduced tofragmentary actions. The administrative reformof 2004 almost completely excluded energyefficiency from the scope of responsibilities of thefederal government. Current statutes governingfunctions of federal executive bodies onlymention energy efficiency as a responsibility ofthe Ministry of Economic Development. Somepositive examples of federal government actionin this field are: changing heat technologystandards in construction (2003) andimplementation of an energy efficiencyprogramme by the Ministry of Education in1999–2005.Enduring energy intensity of Russia’seconomy entails major risks:• Lower energy security and slower economicgrowth;• Threat to Russia’s geopolitical role as anenergy supplier on international markets(Figure 5.2);• Difficulties in implementation of nationalprojects;• Inability of Russian industry to competeinternationally;• Faster inflation;• Increasing burden of housing utility costs onmunicipal, regional and federal budgets,reducing their financial stability;• Obstacles to overcoming poverty;• Threats to the environment.Russia’s future prosperity depends onreduction of energy intensity. So the attitude ofFigure 5.1Energy intensity of Russian GDP compared withother countries in 2000 and 2006t. of oil equivalent / USD 1000 (PPP in 2000 prices)1.401.201.000.800.600.400.200.001 11 21 31 41 51 61 71 81 91 101 111 121 131 141Number of countriesSource: Calculations based on IEA dataFigure 5.2The ‘gas scissors’: forecast extraction andconsumption of natural gas up to 2050million m 3120000010000008000006000004000002000000Gas productionGas exportGas consumption20002005201020152020202520302035204020452050Source: Calculated by CENEfRussia 2006Russia 2000Most probable production rangeLeast probable production rangeConsumption: the ‘innovation’scenario with rapid growth ofenergy efficiencyConsumption: the ‘innovation’scenario with modest growth ofenergy efficiencyProduction at existing fieldsfederal government towards energy efficiencyneeds drastic revision. There needs to be a newfederal law on energy saving and efficiency aswell as a system of legal acts to ensureimplementation. The federal government mustdevelop and implement a policy for greaterenergy efficiency. The government shouldcreate an integrated system to manage theprocess of energy efficiency, assigningresponsibilities and ensuring efficientinteraction between federal, regional and localexecutive government, businesses and thegeneral public.Almost the sole means of managingenergy efficiency, available to the federalgovernment in recent years, has been energyprices. A much wider range of instruments isneeded, including design of a state programmefor increasing energy efficiency, and setting of91