|
(Last updated: 3 Feb 2012)
Trends and opportunities
The market
Blessed with vast energy resources (one-third of the world natural gas reserves, 10 per cent of oil reserves, 20 per cent of coal reserves and 14 per cent of uranium reserves) – Russia plays an important role in global energy market. Russia is the world’s largest exporter of both oil and natural gas. In recent years, the energy sector has provided a solid platform for the country’s economic development as well as supporting domestic and external policy direction.
According to the Russian Ministry of Energy estimates, in 2009 approximately 72 per cent of electricity was generated by thermal power plants (52 per cent of total generation use natural gas as a fuel, 18 per cent - coal and two per cent - oil), 17 per cent by hydro and 10 per cent by nuclear power plants. Renewables-based generating capability is less then one per cent.
The main document that defines Russia's energy development policy is the Russian Government’s Energy Strategy to 2030. It established an array of aims across four major areas:
- Energy security
- Energy efficiency in the domestic economy
- Economic efficiency of energy sector
- Environmental impact of the energy sector
Energy efficiency
Increasing the energy efficiency of the Russian economy is considered one of the top priorities for the Russian Government. The European Bank for Reconstruction and Development (EBRD) estimates Russia’s energy intensity (consumption per unit of economic output) is about three times that of European countries or the US and two times that of China. Experts say that energy efficiency programs could lead to a 45 per cent reduction in consumption of energy resources from 2005 level.
The Russian Government has set a target to increase energy efficiency by 20 per cent by 2020. It is also plans to produce 4.5 per cent of energy from renewable sources by 2020.
EBRD says that since 2006 its energy efficiency-related investments in Russia amounted to more than €755 million. The total project value of the Bank’s energy efficiency projects in Russia so far (including the part not funded by the EBRD) is more than €3.7 billion.
EBRD says that since 2006 its energy efficiency-related investments in Russia amounted to more than €755.2 million. The total project value of the Bank’s energy efficiency projects in Russia so far, (including the part not funded by the EBRD) is more than €3.7 billion.
Sberbank was appointed by a 2009 decree of the Russian Government as the primary institution for the implementation of Kyoto-based Green Investment Scheme (GIS) and Joint Implementation (JI) projects. Sberbank has a mandate to negotiate with institutions and organisations to define the main parameters of the GIS/JI project framework, and to provide flexible financial structures for project implementation using the Kyoto Protocol mechanisms.
In summary, in the energy sector Russia has its own developed resources base as well as efficiency issues recognised by the government. Although some steps have already been made to address these problems, there is still a long way ahead to develop appropriate financial infrastructure (with effective instruments and mechanisms) to support these initiatives and actually update industry to a new technological level.
Opportunities
Opportunities for Australian exporters and investors
One of the current challenges that Russia is facing is the declining base of low-cost natural gas reserves, which makes it necessary to reconsider the share of coal in the country’s energy balance. It highlights the importance of implementing clean coal technologies (including underground coal gasification).
Another area of opportunity lies in energy saving and energy efficiency technologies; while the market is at an early stage of development it offers good potential for the international companies that are able to get support from local officials and government.
Russia’s vast oil and gas sector presents opportunities for Australian suppliers of niche technologies and services. While little is known in Russia about Australia’s capabilities, Australia’s impressive record in implementation of liquefied natural gas (LNG) projects provides strong credentials for promoting world-class technologies and services.
|