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Kari Rissa: Enormous potential for more efficient energy usage in Russia

Industrial production and ageing buildings in Russia consume incredible amounts of energy. Consequently, they also contain an enormous saving potential. The challenge is lack of funding.

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Industrial production and ageing buildings in Russia consume incredible amounts of energy. Consequently, they also contain an enormous saving potential. The challenge is lack of funding.

Today, energy production in Russia relies almost entirely on coal, natural gas, oil and nuclear power. The heavy mining and metal industries in particular are extremely energy-consuming. Nevertheless, Russian energy consumption is lower today than in the Soviet era, mainly as a consequence of the decline in industrial production and, in some sectors, its total collapse. Some of the country’s oldest power plants have also been shut down. In recent years, there has been more talk in Russia about more efficient use of energy and even renewable sources of energy. The Nordic Environment Finance Corporation, NEFCO, has estimated that, with practical measures, Russia would be able to cut its current energy use by about 45 per cent. Saving energy would also be quite profitable.

The repayment period of investments is often short, especially when outdated production and heating technologies are replaced with modern systems. Moreover, the conditions needed for improvement are there, as new Russian legislation supports investment in energy efficiency and saving. For Finnish experts, the modernisation of the outdated industry and energy production in Russia could offer numerous business opportunities.

Industry holds the keys

When it comes to eco-efficiency and energy saving, the big industrial companies hold the key. They are still fighting problems that started several decades ago. It is, however, possible to bring about significant improvements to old facilities and production processes. Many investments would also generate economic benefit.
The best effects for the environment are generated by paying attention to energy efficiency when building new industrial facilities and power plants. For instance, combined production of electricity and heat saves both money and the environment. Considerable potential for saving energy is also found in buildings owned by the state or municipalities, such as schools, day-care centres and hospitals. Some of them have already fixed their heating systems and started replacing pipes and insulation. They have also installed thermostats for their radiators.

Municipalities and hospitals used to receive no-strings-attached funding from, for example, NEFCO. Now the subsidies have been replaced by loans. At the same time, the Russian public administration in some places seems to have lost interest in saving energy.
In many cities and towns there are newly established energy efficiency centres which give advice on, for instance, how to insulate walls and pipes, and how to get the best heating effect in an environmentally friendly way. Many civic organisations have also become active promoters of eco-efficiency and use of renewable energy sources.
Yet, even a short tour to a few Russian cities reveals that energy saving still has a long way to go. There’s a lot that still needs improving. A major challenge is the energy-consuming old building stock that has been neglected for the past few decades. Some of the heating plants have also come to end of the line.
The main stumbling block regarding maintenance is usually the chaotic administration of the housing associations. No one is prepared to assume the responsibility for the heating equipment or energy issues. The housing associations’ greatest problem in replacing the heating systems is, however, the shortage of funding. 

Potential of renewable sources

It seems quite certain that energy production in Russia will continue to be based on fossil fuel, primarily oil and coal. Still, experts believe that the use of emission-free, renewable energy sources will gradually increase. Research in the Murmansk area aims at establishing how, for instance, bioenergy, wind power and tidal energy could be used on a wider scale than today. Wind power in particular is expected to have great possibilities in the remote coastal villages where electricity transfer is both difficult and expensive. In the Komi area, there is research being carried out on increasing the use of bioenergy and using it more efficiently for the heating of buildings. The task is challenging, as in addition to forest resources, the region also has considerable oil, natural gas and coal reserves. In the cold Komi region, next to the Ural Mountains, significant energy saving could easily be achieved also by improving the insulation of buildings and pipes.

According to experts, the use of renewable energy sources might increase if Russia were to introduce a sufficiently high feed-in tariff. Pricing could also be utilised to encourage energy saving.

Today, Russia lacks investors that might want to invest substantial sums in renewable energy forms and eco-efficiency. But there is foreign loan funding available from, for instance NEFCO and the Nordic Investment Bank NIB. Kari Rissa Freelance journalist specialised in environmental issues, M.Soc.Sc. The writer visited Russia in August, acquainting himself with energy issues on, among other areas, the Kola Peninsula and in the Komi region.

Kari Rissa
Freelance journalist specialised in environmental issues, M.Soc.Sc.
The writer visited Russia in August, acquainting himself with energy issues on, among other areas, the Kola Peninsula and in the Komi region.

Topic

Russia

Russia is the most rapidly growing market in Finland’s adjacent regions and remaining on the side-lines would be a strategic mistake. The Russia Programme (2004–2007) forged economic ties and opened business opportunities in Russia.

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