“Funding for energy efficiency programmes in Russia has been cut tenfold”

Photo by: SergeyVButorin / iStock

In 2010, Russia adopted an energy saving and energy efficiency programme. It has been implemented quite successfully for several years. But during the crisis in 2014, funding problems arose.

This programme was the first to fall under sequestration: the funds were used to organise the 2018 FIFA World Cup. As a result, the 5.5 billion rubles per year that were allocated to the subjects from the federal budget to improve energy efficiency simply stopped coming to them. And taking into account the money reported by the regions, municipalities, and private companies, that was a pretty penny. You might recall the film Operation Y, when Georgy Vitsin pulled the lowest one out of a huge pile of pots, and they all went down.

This is what happened with the energy conservation program: after the changes at the federal level, regions, municipalities, and private companies started allocating much less money for this purpose. As a result, the amount of financing fell by about 10 times. Consequently, Russia is still in the last ten countries in terms of energy intensity. This inevitably affects the competitiveness of businesses, as foreign competitors have a lower share of energy costs in the cost of production.

Meanwhile, there are quite a few incentives for energy efficiency. In the industrial sector, there are mechanisms such as white certificates, long-term agreements on energy efficiency levels between governments and associations in the iron and steel, fertiliser, cement and pulp and paper industries. There are also standards for certain types of equipment, tax incentives and subsidy systems in various sectors.

For example, in order to actively work on energy efficiency in the housing sector, we need to spend 1 rouble from the budget for every 4 roubles received from tenants. And a metallurgical factory must in no way be compared with an apartment block. The smaller the facility, the more co-financing is needed to motivate the owner to improve its energy efficiency.

Cover photo: blinow61 / iStock