CoD: IFC research on energy saving

Recent research by IFC suggests that Russian enterprises are not ready to invest into energy saving technologies yet. Energy accounts for 13% of their costs, the survey said. They also believe that they can reduce no more than 5% of energy costs can be cut by these measures.

Russian enterprises are characterized by two main features.

First, as they were build in the times when engineers were not concerned with limitation of resources. That said, all technologies are low efficient, with high rate of wastes, low output per KWh ratio.

Second, they tend to highly underestimate possibilties of modern cost-cutting technologies. Especially, energy cutting measures are very simple (e.g. switches that cut energy at night, lamps that use lower energy etc.) and can reduce energy costs dramatically - but most enterprises are simply ignorant of them.

From this perspective, two issues are required.

1. Russian business community must recognize that period of low prices for resources is over. You cannot introduce efficiency at the government level, it must be raised from below. Introduction of gas price increase schedule was a compromise between Gazprom's greed and authorities' pressure for appropriate national policies - but it was a necessary measure. Some industries (coal, steel, etc.) are already living international prices. So the proper pressure is being created.

2. Russian authorities could help national competitiveness by increasing business awareness of resource economizing. Information flows have to be established, that support this process. National institutes, research programs and competence centres can be established. Educational and training programs for industry people can be launched, that will take them abroad for learning. Energy saving pilot projects can have attention for spillovers. Economizing attitude can be promoted in state-owned mass-media. National awards can be set up. etc. etc.

The issue of resource efficiency is an issue of national competitiveness, especially in the view of WTO joining. Low attention to this issue is surprising.