Translated material
Energy efficiency
Russia does not find money to save natural resources
The implementation of the main provisions of the law “On Energy Saving” adopted at the end of last year is under threat. It is unlikely that it will be possible to interest businesses in the transition to energy-saving technologies with economic incentives: for this, the costs of raw materials and fuel in the final price of the product are too low. And the state is not ready to provide real financial preferences to business. The only real mechanism for increasing the energy efficiency of the Russian economy remains the tightening of standards and the introduction of new administrative prohibitions. This conclusion could be drawn based on the results of a discussion that took place recently at the British Embassy in Moscow as part of a seminar on fiscal measures to stimulate energy efficiency.The Center for Research on Budgetary Relations (CIBO) found that only five Russian regions have developed and approved the regional legislative and regulatory framework that is needed for the federal law “On Energy Saving” to actually work. In another 50 regions, the necessary regulations have been prepared, but have not yet been adopted; 28 territories have just begun this work.
Meanwhile, the law requires that by August 1, 2010, regional and municipal energy saving programs be approved in the constituent entities of the Russian Federation. Only 50 regions did this on time, and only a third of the programs fully comply with the requirements set for them by the government. “There are examples of programs on four sheets. It turns out that formally there is a program, but in reality there is nothing in it. Achieving the goals set out in the law will require significant amounts of funding. With the current dynamics of raising funds, it is no longer possible to fit into the established time frame,” concluded senior CIBO analyst Vitaly Dementyev.
Let us recall that the law on energy conservation not only introduces a ban on incandescent light bulbs of 100 watts and above from January 1, 2011 and requires that all residential premises be equipped with meters for water, gas, electricity and heat by 2012, but also implies a reduction in resource consumption in the public sector by 3% annually. However, the legally required energy efficiency surveys of buildings and equipment have been completed by no more than 15%. At this rate, it will take four to five years to complete this work. Electricity meters are installed in 90% of buildings and structures on the balance sheet of budgets of all levels. Only 55% of public sector buildings are equipped with water meters, 40% with heat meters, and 30% with gas meters. Meanwhile, in the public sector, the law requires 100 percent consumption of resources by metering devices as early as January 1, 2011. The situation in the residential sector is no better. Here, too, 90% of consumers pay using electricity meters, but only 25% have water and heat meters, and 20% have gas meters.
“It is not surprising that resource consumption in the public sector remained virtually unchanged in the first half of 2010,” notes Mr. Dementyev. “The only exception is water, the consumption of which has become slightly less.” However, in accordance with the law, the budget allocations to these institutions for the next year will be reduced to reflect an estimated three percent savings in utility resources.
At the seminar, it became clear that not only ordinary citizens, but also officials of the Federal Ministry of Energy are not ready for the transition to metering resource consumption. The head of the department for monitoring the implementation of energy saving programs and projects of this department, Anatoly Gordukalov, admitted that he is in no hurry to equip his apartment with meters. “I understand that this needs to be done. But tariffs would not increase in the future for consumers with meters,” the official fears. In addition, he is used to getting up very early in the morning, and he has to drain cold water from the hot tap for a long time before even warm water comes out. The Ministry of Energy official does not want to pay for it according to the meter as if it were hot. The speaker was warmly supported by the project director of the British company Carbon Trust, David Vincent: he also encountered the same problem in Russian hotels.
The seminar participants tried to understand the reasons for the slowdown in the implementation of resource-saving technologies. “Business is very reluctant to allocate funds to modernize production in order to increase its energy efficiency,” Mr. Vincent shared his British experience. “Its resource costs tend to be a small portion of expenses.” Therefore, the UK takes a comprehensive approach to solving this problem. On the one hand, the state is gradually tightening environmental standards. On the other hand, businesses receive tax preferences. For example, the costs of purchasing highly efficient equipment can be fully written off as expenses in the first year (in Russia this can be done with a maximum factor of 2, so depreciation of expensive equipment can take years). Accordingly, business property tax payments are reduced.
In addition, understanding the conservatism and caution of entrepreneurs when accepting everything new, the British government created the Carbon Trust, which allows commercial companies to calculate the effectiveness of investments in modernizing their equipment in order to convince them from their own experience of the benefits of resource conservation. Through this state-owned company, budget funds are provided to small and medium-sized businesses in the form of loans. Only now, when their number has reached 4 thousand and data on non-payments and other risks associated with this type of lending have been obtained, work on its commercialization is beginning.
For the state, this is not only concern for the environment. This is also an increase in production efficiency, its competitiveness, and the preservation of jobs, Mr. Vincent noted.
Russian participants in the discussion emphasized that before saving on resource consumption, it is necessary to invest significant funds in modernizing production. “The specific energy intensity of the Russian economy is two to three times higher than in other countries,” stated Anatoly Gordukalov from the Ministry of Energy. - But there is no necessary investment in Russia. Other countries and foreign companies have them.” He invited foreigners to “introduce energy-efficient technologies here at their own expense.” And in order to interest foreign investors in investing in the modernization of Russian production, he recommended that they take advantage of the undeservedly forgotten government decree No. 1046 of 1999, which provides significant benefits, in particular on VAT, for supplies of humanitarian aid to Russia.
The oil and gas sector is the most important for the Russian economy, as it provides up to 50% of budget revenues. Therefore, this is exactly the area where energy-efficient technologies should be implemented first, Andrei Sukhov, tax manager at the Shell oil company, is convinced. But while giving benefits in one area, the Ministry of Finance takes away significantly more money through other innovations. Thus, he recalled that Transneft estimates its losses from the upcoming cancellation of property benefits for infrastructure facilities at $1 billion per year. The expert has no doubt that through the tariff they will be passed on to consumers: “This is a much more significant issue than a three-year property tax break for energy-efficient equipment.”
Another example of the disincentive role of Russian legislation, in his opinion, is the experience of a small joint project of Shell and Gazprom Neft - Salym Petroleum Development, at whose production facilities a power plant operating on associated gas was installed. However, Russian legislation makes it possible only for Russian companies to take advantage of the provisions of the Kyoto Protocol and convert greenhouse gas emission quotas into real money. Salym PD, which had the opportunity to earn up to $15 million a year in this way, is formally a Dutch company.
Referring to Deputy Minister of Finance Sergei Shatalov, Andrei Sukhov said that the government is currently discussing the idea of increasing fines for flaring associated gas. It is assumed that they should make the inflated tariffs that Gazprom charges its competitors for the use of its own gas transportation infrastructure profitable for companies. “Oil producing companies will be forced to collect associated gas not to make additional profits, but to minimize losses,” Mr. Sukhov is indignant.
“Without strict requirements, no benefits will be earned,” Evgeniy Gasho, a specialist at the Center for Energy Modernization, is convinced. Studying, using the example of foreign experience, mechanisms that could stimulate energy saving in a variety of sectors, the center’s employees unexpectedly found out that 54% of them relate to strict regulatory requirements, procedures, standards, and prohibitions. Tax benefits account for only 34% of them. Mr. Gachot attributed another 7% to propaganda.