Transcript Igor Bashmakov Russian GDP Doubling, District Heating and Climate Change Mitigation UNFCCC Workshop Climate Change Mitigation: Vulnerability and Risk, Sustainable Development, Opportunities and Solutions June 19, 2004, Bonn,

Igor Bashmakov
Russian GDP Doubling, District Heating
and Climate Change Mitigation
UNFCCC Workshop
Climate Change Mitigation:
Vulnerability and Risk, Sustainable
Development, Opportunities and
Solutions
June 19, 2004, Bonn, Germany
Does Russia sells its economic growth for
Kyoto or does Kyoto opens a window of
opportunity for Russian economic growth?
The evaluation of potential impact of Kyoto protocol ratification on
Russian economic growth requires answering the following 7
questions:
1. What are possible levels of energy production and what portion of
Oil and Gas revenues are needed to keep those levels?
2. How much oil and gas revenues (own investments deducted) are
needed for Russia to buy the doubling GDP?
3. How much energy would then be available for domestic use?
4. What GDP doubling means for two sectors: Oil-Gas sector and NonOil-Gas sector?
5. Can Russia support the required growth of Non-Oil-Gas GDP with
sufficient energy services when energy export to finance growth is
deducted ?
6. How far Russia can go with the energy efficiency revolution?
7. What are sustainable economic growth rates for Russia before 2012
and how much GHG emissions sustainable growth generates?
If Russia doubles GDP with present high energy
intensity the capacity to export oil and gas expires in
2010!
1200
1000
mtoe
800
600
400
200
0
GDP 2002 GDP 2010 Oil and Gas- Oil and Gas Oil and Gas Oil and Gas
2002 - stable 2000 - moderate
intensity intensity revolutionary
decline
intensity
decline
Oil and Gas sector
Non-oil and gas sector
Low production scenario
High production scenario
Net oil and gas export
Russia needs energy export
revenues to “pull” its NOGGDP
growth, so aggressive energy
policy is vital!
To keep 2002 oil and gas export
levels, while doubling GDP, Russia
needs to sustain annual energy
productivity growth by 4,8%!
If Russia is only able to keep
rates of energy productivy
improvements achieved in 20002003 (2,3%), then achievable GDP
growth in 2002-2010 is in the
range of 50-70%.
Law of energy efficiency:
the sustainable way to economic prosperity goes along the
energy efficiency arch!
Central planning makes every economy irrespective of climate and
size pregnant with large energy inefficiencies!
Transition back to a market economy allows decoupling of economic
growth and energy consumption. Poland managed to increase its GDP
by 45% in 1990-2001 with the decline of TPES by 9,3%!
Russia reduced GDP energy intensity by 2,3% annually in 2000-2003!
1
TPEC/GDP (PPP), toe/00095 US$ PPP
0,9
DPR of
Korea/S.Korea
Russia E
0,8
Persian Gulf oil exporting countriesUkraine/Germ any
0,7
0,6
Bulgaria/Italy
Russian Energy Efficiency indicators:
back to 1990 level
0,5
Austria/Czeck R.
China
0,4
140%
120%
Russia/Canada
0,3
100%
0,2
80%
Estonia/Finland
60%
0,1
1
2
3
40%
4
5
6
7
8
9
20%
0
0
South Korea
10
Energy intensity exoresed er GDP PPP ratio for 2001
20
30
GDP PPP per capita 000 US$ PPP/capita
40
50
0%
1990
1995
1996
1997
1998
En/GDP
1999
2000
2001
El/GDP
2002
2003
Russian District Heating



Is regularly ignored when Russian energy and GHG mitigation
policies are discussed and determined, but
Accounts for about 45% of all domestic energy consumption, and
for over 50% of fossil fuel use and
Is the largest single product market in Russia split into over 50000
local markets with:
– 30 US$ billion annual sales, and
– 50 US$ billion efficiency improvement investments potential, but with
only 500 US$ million annual investments (100 year to release the
potential);
– at least 20% nation wide fossil fuel consumption and GHG emission
reduction potential;





Over 50% of district heat is consumed by buildings;
Industrial consumption went down by 35% in 1995-2001;
The future for large CHPs in Russia is not bright. Market for large
CHPs is squeezed by the competition vise;
With the shortage of metering heat in Russia is still traded in the
mystery of heat quantities and costs.
Large business recently moved into heat market.
Russian District Heating Indicators
Indicator
Units
Volume
Combined heat and power plants
Units
485
Including RAO EES Rossi CHPs
Units
242
Large boilers
Units
>190000
Indiv. heat generators and boilers
Units
>600,000
Heat generation
Million Gcal
2,300
Own use
Million Gcal
74
Network losses
Million Gcal
442
Heat networks
1000 km
183.3
Final heat consumption
Million Gcal
1,784
Average fuel efficiency
%
71.5
Million toe
323
Total en. inputs to heat generation
Heat tariffs, average
$/Gcal
14
Heat tariffs, range
$/Gcal
8-300
Heat sales
$ billion
30.0
Potential savings from efficiency
improvements
$ billion
10.0
Russian large CHPs heat in a
competition vice
CHP heat in competition vice
3000
2500
10^^Gcal
CHPs supply 30% of district heat:
Wrong system designs and blind tariff
policy makes decentralization attractive;
Industry built own large and small CHPs
and boilers;
Consumers started heat metering and
consumption reduction;
CHP generation declined by 35% in
1990-2001;
Sales reduction escalates costs and
pushes more clients to decentralization;
Public utility CHPs design capacities are
loaded only at 40-45%.
2000
1500
1000
500
0
1
2
3
4
5
6
7
8
9
years
Own heat generation CHP heat generation Demand reduction
10
Heat losses in the 190 Russian DHSs as a
function heat load rarefaction
100%
90%
80%
heat supply losses, %
Marginal heat
supply
centralization
efficiency zone
High heat
supply
centralization
efficiency zone
70%
60%
Effect of low heat
supply networks
maintenance
quality
50%
40%
30%
20%
10%
0%
0
100
200
300
400
500
600
700
800
900
reverse indicator of heat load density
Real losses estimates by CENEf
Normative losses estimates
1000
Some Russian DHS efficiency indicators


Average efficiency for all heat sources – 71,5%;
Heat only boilers:
– for 64% municipal boilers efficiency is below 80%,
– for 27% - below 60%,
– and for 13 % - even below 40%

Heat supply networks: average heat losses are in the range 20-25%:
– Actual losses in 70% of heat supply systems are in the range of 20-70%;
– Due to excessive centralization in 75% of DHSs costs to transport heat
accounts for about 50% of total DHS costs;
– Low replacement rates lead to critically low level of heat networks physical
reliability and high frequency of failures – 0.6-4 accidents/km/year;
– High leakages ratio, lack and low quality of insulation, failure to provide
required hydraulic regimes and temperature schedule.


Buildings are as a rule either overheated or under-heated and consume
20-50% as much heat and hot water as potentially needed;
New building build on the basis of new Building codes are twice as heat
efficient as existing ones, to modernize which a lot efforts and
investments are required.
Regional EE Building Codes development and
enforcement system timetable (Russia): 10 years to
develop and 10 more years to get effects
Implementation
Developed federal performance based EE Buildings
Codes
Adopted 43 EE Regional Building Codes
2002-2012 effects:
Energy savings
770000 TJ;
Emissions reduction
10 million t CO2
per year;
Energy cost savings
1650 million $US
Establishment of building design control system
Adopted new EE Building Codes for Moscow
Developed new concept for Regional Building Code
Established certification of construction goods and
service system
1990
Source: Developed based on Yu. Mat rosov (2003)
1994
1998
2002
2006
2010
Private Russian business is moving to DHS: with
limits of purchasing power they have to reduce
costs and improve efficiency to pay back
investments
Bashmakov’s wing
120%
collection rate
100%
80%
60%
Threshold 1:
collection rate
starts
declining
40%
20%
Threshold 2: rigidity
of collecting
payments actions
brings no results
0%
0
2/1
4/2
6/3
8/4
10/5
12/6
14/7
communal and housing (numerator) and energy expenditures
(denominator) as percentage of family income (%)
16/8
Doubling Russian GDP and GHG Emission
Mitigation Policy Synergy. Major conclusions

Kyoto commitment is just half way on the road to GDP doubling;

Absence of clearly stated federal energy efficiency policy and
institutions limits the energy productivity growth and so limits the
potential economic growth;
Addressing this problems trough Kyoto is equivalent to setting for
Russia country-wide energy efficiency improvement target which
should correspond to desired rates of economic growth;
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– To reach Kyoto targets Russia needs an effective energy efficiency
policy;
– To double GDP to the year 2010, Russia needs revolutionary energy
efficiency policy!
So ratifying Kyoto for Russia means:
– a stamp on the decision to pull country out of the energy inefficiency
swamp to the sun of economic growth;
– open window of opportunities: gives push to use major Russian
undeveloped energy resource – energy efficiency improvements.