Belarus’ successes in reducing energy intensity praised by EDB

Belarus’ successes in reducing the energy intensity of the economy have been praised by experts of the Eurasian Development Bank (EDB), BelTA learned.

The press center of the Bank said that the EDB examined the measures to improve the energy efficiency measures in the countries of the Single Economic Space (SES) and Ukraine. The energy intensity of the SES countries and Ukraine is significantly higher than the world’s average and this impacts their competitiveness, reads the report “Improving Energy Efficiency in the SES States and Ukraine” by the EDB.

The report by the Bank’s Research Department points out to positive trends that have emerged in this area in recent years. However, the countries need further modernization and should renew equipment to improve their energy efficiency. The improvement of energy efficiency is part of national development policies in Belarus, Kazakhstan, Russia and Ukraine. These countries have the respective laws, programs and roadmaps, however not all initiatives in this area have not been yet adequately implemented.

Belarus is the most successful country in terms of improving energy efficiency. Since 2000 it has reduced energy intensity by 50% thanks to comprehensive policies in the area. With the adoption of the Law “On Energy Saving” the improvement of energy efficiency in the country was systematized and became the country’s priority.

Energy saving is extremely important in Kazakhstan, where energy losses exceed two thirds of the total energy produced. The Law “On Energy Saving” was adopted in 1997 to shape the state policy in this area. However not all of its provisions are working, experts say.

Russia’s energy intensity remains above the developed economies’ average, although it achieved certain progress in 2000-2008. In 2008 the Presidential Decree “On Measures to Improve Energy and Environmental Efficiency of the Russian Economy” was adopted with the aim to decrease the country’s energy intensity by at least 40% by 2020 as against 2007. Back then the country launched a large-scale and systematic effort to fulfill the objectives stated in this document.

The energy intensity of Ukraine’s GDP is 2.6 times higher than the developed countries’ average, however since 2000 this gap has been gradually decreasing. Ukraine’s potential for energy saving is estimated at 42-48%. The Energy Strategy until 2030 was adopted in 2006 to tap this potential.

The report states that the SES countries and Ukraine have legislations that incorporate general energy saving principles. Yet, the legislative framework still misses a whole range of issues. In particular, the laws lack provisions on the control and monitoring of approved energy saving programs and this makes them less effective.

EDB experts believe that in order to improve their energy efficiency the countries should focus, first of all, on raising awareness and on the development of instruments which will ensure easier access to long-term financing for energy saving products. This will improve the demand for energy efficient technologies.

In addition, the countries need to determine the quickest and low-cost ways to improve energy efficiency. The top priorities usually include a reduction in energy losses, including by means of eliminating technical losses of electricity and heat, and administrative measures aimed at saving and controlling energy consumption. “Enterprises easily decrease their overall energy consumption by 5-10% by introducing zero-cost or low-cost energy saving measures,” the authors state.

The report also analyzes possible sources of financing for the efforts to improve energy efficiency and a wider use of renewable energy technologies. The Bank’s experts emphasize that energy saving measures require stable and predictable funding. International experience suggests that energy saving projects can be financed from various sources, but the government plays the key role in creating conditions to attract investment. The forms of finance range from direct investment to compensations through financial institutions. The latter are deemed to be the most efficient option, which, however, requires a high level of coordination between the government, businesses and the population.

The report is part of a series of EDB research papers that study integration processes in the sectors of the countries of the region. All reports are available at the EDB website.

Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.