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Kyoto relations RF-NL

 
  • Presentation by Geert Greving
  • IRT Coordinator Energy Task Force
  • Amsterdam 24 October 2005
  • Environment of Energy Efficiency Projects

Energy dialogue RF-EC and spin-off

  • The present dialogue has incorporated a business consultation round (Lisboa approach)
  • Governmental lead Thematic Groups.
    • Energy Efficiency/Saving (EE)
    • Energy Trade regime
    • Investments
    • Transmission
  • Supported by IRT experts from:
    • Eurogas
    • Euroelectric
    • OGP
    • Europipe,
    • AEB, the European Russian entrepreneurs, etc
  • Running consultation 2005-2006

ASSOCIATION OF EUROPEAN BUSINESSES IN THE RUSSIAN FEDERATION
The Voice of European Business in Russia

ENERGY EFFICIENCY

Rationale for Energy Efficiency in Russia

  • Energy intensity of the Russian economy
  • Inefficiencies in the entire energy cycle from generation to end user
  • Rising energy tariffs
  • Energy sector and communal housing sector reforms
  • Increasing energy deficit in Russia
  • Subsidized internal Russian energy tariffs (public service obligation!!!)

And thus:

  • Large EE potential in Russia and increasingly large potential for financial savings (potential is quite high, but how to deal with it, quite difficult)
  • New area of business opportunities in liberalizing market (Russian style)
  • There is a good market opportunity for projects with 3-year payback under conditions of increasing energy prices and thus increasing margins for savings (priority on industrial projects)
  • But the investment needs are enormous (no real guarantee, own risk !)
  • Basis for EU-Russia EE relations:

    • EE has specific European character as EU is leading in the area of EE technologies.
    • Russia needs to become more energy efficient whereas EU needs security of energy supply. Good basis for EE projects with reciprocal character in the form of matching raw energy supplies by Russia to EU and EU technology supplies to Russia.
    • Kyoto protocol.
    • Whereas on the supply side, increases in the capacity of energy generation and distribution require considerable political will and substantial investments, changes on the demand side require control of consumption, individual will and relatively modest investments.
    • Direct economic and strategic interests are relatively minor compared to Oil, Gas and Electricity related interests.

    Recommendations

    • Establishment of investment fund for energy efficiency.
    • Creation of guarantee / insurance mechanisms addressing no\-commercial risks.
      • - Previously discussed "arbitral award guarantee fund" (EBRD initiative)
    • Creation of a mechanism of reciprocity of EU EE investments in Russia
      • EU supplies know how, technologies, funding
      • Russia supplies energy to EU as a % of achieved savings
    • Creation of institutional framework for dealing with projects under Kyoto Protocol.
    • Further liberalization of the market (a Russian versus a European way !).
    • Law on concessions recently passed 2nd reading in Duma but requires adoption and additional legislation in order to function. Process should be speed up. (Concession proved to be a good way to attract private sector investors in the EU. In addition the monitoring of the good implementation and compliance with the terms, can easily be done by the consumer himself.)
    • Creation of fiscal incentives at consumer level and of legislative framework favoring EE and E saving in the entire energy value chain.
    • Industry assessment of "projects of common interest" and assistance in promoting financing via EU- Russian industry "investment committees".

    IRT-Summit event London Oct 2005

    • Entrepreneurs view is clear: action no debate anymore (improve dialogue into partnership).
    • Focus on;
      • RF sub-soil legislation;
      • Security of Transmission (oil, gas and power),
      • PPP framework legislation
      • Optimal reform of EC and RF energy sectors.
    • Long term commitments and
    • EE funds to improve the PPP environment (EIB).
    • But NO result !!!!!!
    • Lets go bilateral and eagerness on Governmental side to take the lead on EE issues, we will see !

    Some remarks RF and NL

    • The residential pilot in Russia; Gazprom with E-on has full German backing.
    • PSO with Gazprom, not possible, given Dutch procedure.
    • Country risk, none commercial risks are not taken till now.
    • Dutch focus on Russia is an energy bridge within an EC framework.
    • Dutch energy bridge should be considered, lifting Kyoto related projects.
    • EE is a Governmental issue, not an entrepreneurs issue of priority.
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