Unfurling green energy revolution to make economy competitive

Every year, Russia wastes enough energy to power the French economy, but new evidence suggests that the Kremlin is determined to change its ways.

The Russian government recently approved a $300 billion energy efficiency programme that will trim the fat from Soviet-era factories and buildings, signalling a green energy revolution in the making. “The political winds have changed at the top and there is a growing consensus that climate change is happening, and there is a will to change and build a more efficient economy,” said Kevin James of London-based investment adviser Climate Change Capital. He added that the raging forest fires of the summer have only sharpened the realisation about the need for more vigorous steps to combat global warming.

Russia is the world’s biggest oil and gas producer and cheap, government-capped domestic energy prices have sapped the motivation to conserve energy. That's why President Dmitry Medvedev has taken a tough line on the environment, supported by a report from the World Bank, which said that improving energy efficiency will improve the country’s productivity and competitiveness. Declaring the target of making the economy 40% more energy efficient by 2020, Medvedev has taken political initiatives to reduce Russia’s dependence on oil, from phasing out the use of incandescent light bulbs that use more electricity than energy-efficient bulbs.

Although Russia lags far behind China, the world’s leading manufacturer of wind turbines and solar panels, the government has announced plans to build eight plants that will produce energy-saving lamps. The first Russian solar plant, estimated at $99 million, will likely light up the North Caucasus resort city of Kislovodsk next year. More solar and wind plants are in the pipeline.

Rostovteploelektroproyekt, a Russian company specialising in the design of energy plants and equipment, is planning to develop wind and solar power worth $300 million in the Krasnodar region. The wind project could start as early as next year. Russian energy giant RusHydro has plans to build a wind-power park in St Petersburg.

Hydropower is another focus area. Italian energy giant ENEL and RusHydro signed a pact in June to work on renewable power projects, including tidal and geothermal power projects, as well as in retail power sales. Biofuel development is making progress. In June, presidential economic adviser Arkady Dvorkovich said the government should support small energy-generating projects that use biofuel by giving them tax breaks and subsidised interest rates.

Russia’s Natural Resources and Environment Ministry, too, has turned serious and has drafted a bill in August to promote recycling.

Many NGOs have commended these laudable plans, but point out lacklustre delivery. “The government is not green and many policies are anti-environmental,” says Vladimir Chouprov of Greenpeace.

Russia is getting into the hybrid car business. At the start of this year, multi-billionaire Mikhail Prokhorov said he would launch the mass production of inexpensive electric cars, with a project that has Putin’s personal backing. The first 3 prototypes of the $12,000 car are due to roll off the production line in December.

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