EDB studies energy efficiency and measures for its improvement in the SES and Ukraine

Almaty, 10 July 2013. The energy intensity of the Single Economic Space (SES) countries and Ukraine is significantly higher than the world’s average and this impacts their competitiveness. This is stated in Eurasian Development Bank’s (EDB) report Improving Energy Efficiency in the SES States and Ukraine.

The report by the Bank’s Research Department points out to positive trends that have emerged in this area in recent years. However, the countries need further modernisation and should renew equipment to improve their energy efficiency.

The improvement of energy efficiency is part of national development policies in Belarus, Kazakhstan, Russia and Ukraine. These countries have the respective laws, programmes and roadmaps, however not all initiatives in this area go as far as they should.

Belarus is the most successful country in terms of improving energy efficiency. Since 2000 it has reduced energy intensity by 50% thanks to comprehensive policies in the area. With the adoption of the Law On Energy Saving the improvement of energy efficiency in the country was systematised and made the country’s priority.

Energy saving is extremely important in Kazakhstan, where energy losses exceed 66%. The Law On Energy Saving was adopted in 1997 to shape the state policy in this area. However the authors of the report state that not all of its provisions are working efficiently.

Russia’s energy intensity remains above the developed economies’ average, although it achieved certain progress in 2000-2008. In 2008 the Presidential Decree On Measures to Improve Energy and Environmental Efficiency of the Russian Economy was adopted with the aim to decrease the country’s energy intensity by at least 40% by 2020 compared to 2007. A large-scale and systematic work was began in the country to fulfil the objectives stated in this document.

The energy intensity of Ukraine’s GDP is 2.6 times higher than the developed countries’ average, however since 2000 this gap has been tending to gradually decrease. Ukraine’s potential for energy saving is estimated at 42-48%. The Energy Strategy until 2030 was adopted in 2006 to tap this potential.

The report states that the SES countries and Ukraine have legislations that incorporate general energy saving principles. Yet, the legislative framework still miss a whole range of issues. In particular, the laws lack provisions governing the control and monitoring of approved energy saving programmes and this makes them less effective.

EDB experts believe that in order to improve their energy efficiency the countries should focus, first of all, on awareness raising and on the development of instruments which will ensure easier access for energy saving projects to long-term financing from financial institutions. This will improve the demand for energy efficient technologies.

In addition, the countries need to determine the quickest and low-cost ways to improve energy efficiency. The top priorities usually include a reduction in energy losses, including by means of eliminating technical losses of electricity and heat, and administrative measures aimed at saving and controlling energy consumption. «Enterprises easily decrease their overall energy consumption by 5-10% by introducing zero-cost or low-cost energy saving measures,» the authors state.

The report also analyses possible sources of finance for the efforts to improve energy efficiency and ensure the saving of resources and a wider use of renewable energy technologies. The Bank’s experts emphasise that energy saving measures require stable and predictable funding. International experience suggests that energy saving projects can be financed from various sources, but the government plays the key role in creating conditions to attract investment. The forms of finance range from direct investment to compensations through financial institutions. The latter are deemed to be the most efficient option, which, however, requires a high level of coordination between the government, businesses and the population.

The report is part of a series of EDB research papers that study integration processes in the sectors of the region’s countries. It may be of interest to specialists in the areas of energy, economy and marketing or to students studying the respective disciplines. All reports are available free of charge at the website.

Additional Information

Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.

Read more about EDB at https://www.eabr.org