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The Energy Strategy will be reworked

“Energy Strategy for Russia till 2035” should facilitate import-independent and well-balanced energy model: Prime Minister Medvedev gave instructions regarding amendment to the document.  NGO representatives believe that low-carbon development with a priority to energy efficiency and renewable energy should become the major landmark for the new Energy Strategy.  . 

The new text oft he RF Energy Strategy till 2035 states that reconsideration oft  he document wasstipulated by the “geo-political crisis which started in 2014 and introduction of financial and technological restriction s against Russia by a number of countries, changes in the dynamics of world energy prices, acceleration of the science and technology progress and the beginning of noticeably fiercer global competition for the resources and markets.” Inrelationtothat, the new document has adjusted and corrected priorities, tasks and indicatorsof realization, and forecast scenarios adopted in the previous edition. 

 

Initially, it was supposed that EnergyStrategyfor Russia till 2035 and integrated in it general development plans for the oil and gas industries would be approved before the end of 2014. However, its clearance was postponed for several reasons including sanctions of Western countries regarding Russian oil and gas companies and the collapse of oilprices.

 

Speaking about the new Energy Strategy, Prime Minister Medvedev pointed out, that one of the serious problems of the Russian Energy Complex is the high energy consumption of the Russian industry.  “RF GDP energy intensity is higher than in developed economies, while the potential of energy consumption reduction amounts to one third of the current power consumption and by some data, it is even higher,” the Prime Minister said.  “This means that every third kilowatt-hour, cubic meter of gas, kilogram of coal, ton of oil is spent, in the essence, on nothing.” 

 

According to Dmitry Medvedev, despite the work carried out on the reduction of GDP energy intensity, its output is far from high: in the period from 2007 to the end of 2015, the total reduction amounted to 8.13%. This concerns not only the fuel and energycomplex (FEC) whichhasvast possibilities for optimization of resource utilization, but the economy as a whole; all the more so that our enterprises are already quite active in producing energy-saving equipment,”  Medvedev said. 

 

“The Energy Strategy should have systematic measures on energy efficiency enhancement ingrained in it,” the Premiere reminded.  Hepo inted out that the fuel and energy complex provides form or ethanone fourth of the internal product; more than half of the federal budget’s revenues are generated here. Presently, Russian FEC remains dependent on foreign technologies and equipment, even despite all measures on import-replacing; on a number of positions this dependence is still quite critical.  “If Russia wants to have competitive power industry, then the state and business must invest in innovations.”  According to Medvedev, in 20 years, after realization of the Energy Strategy, the quota import production in purchases of FEC enterprises will amount to no more than 10-15%.

 

Describing the actual Energy Strategy till 2030, First Deputy Minister Alexey Teksler claimed that the present document became obsolete as it had been adopted in the middle of the economic crisis of 2008-2009.  According to the Deputy Minister, Russia proved to be not ready for re-orientation of the global trade from raw materials export and import to sales of new technologies and services. This is exactly what should be taken into account in the new document along with the on-going stagnation of the Russian economy which brought to reduction of growth rates of the internal demand on energy resources and partial freezing of the investment programs of FEC development.  According to Teksler, to overcome the problem of sanctions introduced, the new strategy foresees accelerated development of domestic energy equipment and technologies, as well as diversification of the Russian energy resourceexport directions. 
 

However, both in the old and new Energy Strategies the key proprietyis given to hydrocarbon production.  According to the latest draft of the Energy Strategy-2035, the optimistic scenario foresees oil extraction in RF at the level of 555 million tons per yearby 2020, while prices are expected to fluctuate in the corridor of $50-65 per barrel.  Upto 2035, theforecast oil extraction in RFamounts to 555-560 million tons with prices at the level of $95-105 per barrel.

 

Representatives of public environmental organizations agree that the time has come for Russia to updates its Energy Strategy. Nonetheless, they believe that the documents hould first of all put no-carbon energy production as its top priority. “We support redirection of subsiding fossil energy sources in favor of RES sand energy efficiency (providing support to vulnerable social groups and creating “green” jobs)”, representatives of the Russian Social Ecological Union wrote in their Position. They pointed out that energy efficiency and renewable energy sources should become priority directions of the low-carbon development of Russia.  This requires enhancement of state support and development of a roadmap for RF subjects regarding RESs.  This should be the base of the long-term strategy of the low-carbon development for the period till 2050.  Its hould not include any increase oft he NPS sand major HPSs quotain the country’s energy balance, nor foresee exploitation of CCS (CO2 capture and storage), but it should clearly follow the global way of transit to no-carbon power engineering by the middle of the 21st century.