Cities of Russia on the Way to Energy Efficiency

KAZAN, June 29-30, 2010 - Ministry of Regional Development in cooperation with the World Bank organized a conference, entitled “Energy Efficient Russian Cities: Preparing, Financing and Implementing Municipal Energy Efficiency Programs.” The event aimed to share information, international experiences and best practices in the preparation and implementation of energy efficient programs and plans at the municipal level.

Given the recent energy crisis and international efforts to combat climate change, the issue of energy efficiency has gained a special importance in Russia. It has received its manifestation in the advent of Law #261 “On Energy Efficiency” along with several supplementary regulations in late 2009.

According to a 2008 report prepared by the World Bank Group, energy savings in Russia could reach 40-45% - an impressive figure comparable to annual energy consumption of France. Residential buildings and public institutions at the municipal level are especially energy-inefficient since municipalities often possess older building stocks and lack  the technical and economic capacity to implement energy efficiency measures.

To realize these savings, however, the country needs to invest hundreds of billions of dollars.  But such investment will not just fall from the sky.

“In order to make the government money work and private investment come, a favorable environment must be established and some barriers must be removed, including economical, organizational, informational, as well as behavioral. In fact, the barriers in Russia are no different from those that other countries are facing. Therefore, the objective of the event is to share experience and see how other cities negotiated such obstacles, how they managed to promote such investment”, stressed Yuriy Miroshnychenko, the World Bank’s Country Sector Coordinator for Russia.

The conference discussed potential energy savings for Russian cities as well as prospects for implementing Law #261 with 100 representatives of the housing and utilities sector from 40 cities of the Volga Federal District in attendance. The event was timely since local governments are obligated to provide full metering of buildings, conduct energy audits, and develop and implement energy efficiency plans.

The conference specifically targeted municipalities. Irina Bulgakova, Director of Housing and Utilities Sector Department of the Russian Federation Ministry of Regional Development, said, that “in reality, all transformations described in the legislation occur at the city level. Thus, until such new laws have been tested, they remain just on paper. Only efforts of the people present here today can ultimately produce the energy efficiency we seek and give us a possibility to live more comfortable and higher quality lives.”

In the course of sharing global experiences, the World Bank’s experts, such as Jas Singh, Energy Sector Management Assistance Program (ESMAP), presented various tools and approaches developed by the World Bank to help cities assess their energy performance, design better cities, and implement and finance energy savings projects.

Peter Johansen, Senior Energy Specialist presented the Bank’s experience in several Eastern Europe in addressing energy efficiency in retrofitting existing buildings using energy performance contracting, whereby building owners can essentially pay for the upgrades from the resulting energy cost savings.

Experts from Germany, Poland and Ukraine also shared their technological, financial, managerial solutions used for energy efficiency interventions by municipalities in their countries.

While the impetus for energy efficiency within Russia is clear, a number of key issues were also discussed in terms of implementing the Law, namely cities often have substantial dilapidated building stocks (many of which require rehabilitation before energy efficiency measures can be made), limited borrowing capacity of home owner associations and the challenges with consensus-based decision making, and an infant energy efficiency product and service industry. Further, the Law has set several very ambitious deadlines (e.g., full metering in residential buildings by January 1, 2012, annual 3% reduction in energy use from 2010 from 2009 levels for five years, banning of 100 W incandescent bulbs by January 1, 2011).

In discussing energy efficiency, the organizers intended to use the conference as a stage in further decision making process towards enhancing of energy efficiency in the Russian cities.