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INTERVIEW WITH ANTON YURYEVICH INYUTSYN, DEPUTY MINISTER OF ENERGY OF THE RUSSIAN FEDERATION, FOR THE ENERGY LAW FORUM JOURNAL ON CURRENT ISSUES IN ENERGY EFFICIENCY AND ENERGY SAVING

Anton Yuryevich Inyutsyn, Deputy Minister of Energy of the Russian Federation, Senior Lecturer of the Energy Law Department of Kutafin Moscow State Law University (MSAL), Candidate of Legal science

Anton Yuryevich, what are strategic goals and objectives in energy efficiency and energy saving? What are today’s major problems in this field?

— Between 2000 and 2013, energy intensity of the Russian economy decreased by 34%. This is more than in other industrialized countries: for example, energy intensity in the USA in the same period decreased by 16%, in Germany and China – by 12%.

With the use of production capacities, growth of energy efficiency slowed down, but we are still able to develop it as planned – in no small part due to implementation of the State Program measures. For example, the GDP energy intensity decreased by 5% over the last three years, with 2% falling on the past year alone. In this respect, the branches coordinated by the Ministry of Energy saw even higher rates of energy intensity decrease – about 2.5%.

Nevertheless, we still have a great potential for development of energy efficiency. For example, as regards electric power transmission, the difference of energy efficiency key indicators in comparison with the top foreign companies is 30-50%, in terms of efficiency of condensing gas-fired power plants – 20-30%, in terms of oil recovery factor – 15-30%, in terms of oil-refining complexity index – 20-200%. As for public utility services, when compared to the countries with similar tariffs for energy sources, Russia’s households consume twice as much energy as Canada’s, and three times as much as America’s.

According to our estimates, by 2020, for instance, energy intensity of the public sector in Russia could be reduced by 16%, motor transport – by 26%, railway – by 19%. And this is true for all economic branches.

In this regard, we are aware that a lot of measures aimed at enhancement of energy efficiency are quite painful and associated with prohibitions and poorer state support. Basically, there are there mechanisms involved: funding and improved availability of financing, when investing into the best available technologies; increments to market prices for energy sources; measures of technical and environmental regulation.

At this point, it is important not to go too far. The EU countries’ experience demonstrates that raising prices to the European level along with taking tough regulation measures can lead to partial loss of industries.

For example, the European legislation aimed at reducing  emissions and increasing the share of renewable energy comes at a high cost for energy-intensive industries. The subsidies included in energy prices led to shutdown of 11 of 27 electrolyzers at aluminum plants in Europe, the region lost 40% of aluminum production in seven years. And, despite positive market price trends, the aluminum branch in Europe continues to yield its positions. The reason for closing plants relates to the combination of low market prices for aluminum and high energy prices. Aluminum production is extremely energy-intensive, the electricity share in the product cost is about 40%. Electricity prices in the EU are boosted by green energy subsidies and compensations for  emissions, which are included in the tariff. It creates a certain impasse: while prices in the wholesale energy market are low, ultimate prices for the industry are very high. According to Antonio Tajani, Vice-President of the European Commission, electricity prices for the EU industries are twice as high as those in the USA and Russia, and 20% higher than in China.

As we can see, there are real risks of restricted supplies of energy-efficient imported equipment to the country in different branches. And these are not only risks of the fuel-and-energy complex, these are risks of the whole economy and social sphere.

For example, today’s share of import in procurements of fuel-and-energy equipment makes about 35% for extraction branch, and about 33% for transportation branch. The share of imported equipment in the power-grid complex makes over 50% and in the supergrid complex (220 kV and more) – about 70%.

International experience shows that we need to consolidate funds to develop prototype models (development activities) and ensure state coordination, without which it will be difficult to solve this problem quickly. Perhaps, it makes sense to reflect on target R&D acquisitions in fuel-and-energy branches. This only refers to those technologies, without which there are significant risks of reduced hydrocarbon production or electric power supply.

Therefore, when forming a state policy in energy saving and enhancement of energy efficiency, we should take a balanced approach to ensure development of our country’s economy and social sphere.

— Anton Yuryevich, Federal Law “On Energy Saving and Enhancement of Energy Efficiency and on Amending Certain Legislative Acts of the Russian Federation” was adopted in 2009. Since its adoption, this law has been significantly amended, inter alia, in 2014. What was the reason for the amendments? What matters do they concern?

— To improve quality of energy inspections, Federal law dd. November 23, 2009 No. 261-ФЗ “On Energy Saving and Enhancement of Energy Efficiency and on Amending Certain Legislative Acts of the Russian Federation”[1] was amended in the following way:

• requirements to energy inspections and their results were established;

• an energy performance certificate made by the results of energy inspection of an energy inspection target (hereinafter referred to as the energy performance certificate) shall be prepared and filled in on a basis of the data specified in a report made by the results of energy inspection of the relevant facility (hereinafter referred to as the report);

• the report shall be prepared and filled in on a basis of the processed and analyzed data received through collection of information on the energy inspection target, its tool inspection and visual examination;

• requirements to the report prepared by results of energy inspections were approved;

• procedure of registration of energy performance certificates in self-regulatory organizations was regulated;

• concept of joint responsibility to the energy inspection consumer was introduced to enhance responsibility of energy auditors and self-regulatory organizations to energy inspection consumers; besides, for self-regulatory organizations established anew the minimum indemnification fund was increased and amounts to RUB 2 Mio;

• rules for sending a copy of energy performance certificate prepared by the results of mandatory energy inspections were approved.

To reduce the financial load of bodies, for which, pursuant to Federal law dd. November 23, 2009 No. 261-ФЗ “On Energy Saving and Enhancement of Energy Efficiency and on Amending Certain Legislative Acts of the Russian Federation” energy inspections are mandatory, if these bodies’ cumulative costs associated with consumption of natural gas, fuel oil, heat energy, coal, electric power, except motor fuel, do not exceed relevant energy sources volume in value terms amounting to RUB 50 Mio for a calendar year, an opportunity is given to provide information on energy saving and enhancement of energy efficiency to an authorized federal executive agency responsible for energy inspections instead of conducting a mandatory energy inspection.

To standardize for further analysis, unified requirements to the form of programs in energy saving and enhancement of energy efficiency for government-linked or municipality-linked organizations and organizations engaged in regulated types of activities, and to reporting on their implementation were established.

We introduced methods of calculation of target values in energy saving and enhancement of energy efficiency achieved through implementation of regional and municipal programs in energy saving and enhancement of energy efficiency[2].

We produced and sent to regions a recommended list of target values in energy saving and enhancement of energy efficiency included in sectoral regional programs in health care, education, housing and public utilities, industry, agriculture and transport.

We developed new Rules of Granting Federal-Budget Subsidies to Budgets of Constituent Entities of the Russian Federation for Implementation of Regional Programs in Energy Saving and Enhancement of Energy Efficiency meant to encourage business entities to attract their own funds in implementation of measures (projects) in energy saving and enhancement of energy efficiency[3]. We designated a federal executive agency responsible for monitoring and analysis of efficient implementation of the state policy and statutory regulation of energy saving and enhancement of energy efficiency. We designated a federal executive agency responsible for preparation and distribution of the annual state report on the status of energy saving and enhancement of energy efficiency in the Russian Federation as prescribed by the Government of the Russian Federation.

To increase production, infrastructure and use of alternative motor fuel, we expanded the range of used fuels to shift vehicles with a view to easy use, proximity to natural gas sources, gas mixtures, electric power, other alternative motor fuels and economic feasibility of such replacement.

We ruled out the need to install meters for consumers of natural gas used only for cooking to reduce the financial load on household consumers of gas.

— Anton Yuryevich, what are the most challenging issues of law-enforcement practice in energy saving and enhancement of energy efficiency?

— The work on energy saving and enhancement of energy efficiency includes both sectoral and inter-sectoral components.

There are a lot of complex issues in both spheres. For example, it can be said that the legislative framework in power industry development is not completely in line with the current market situation. The mechanisms of state control over implementation of investment programs and tariff regulation seemed to be insufficiently balanced with the mechanisms of territorial development in view of economic slowdown and reduced demand.

There is a strong conflict between tasks to enhance energy efficiency in heat supply and social tasks to control tariffs.

Federal law dd. November 23, 2009 No. 261-ФЗ “On Energy Saving and Enhancement of Energy Efficiency and on Amending Certain Legislative Acts of the Russian Federation” should be adjusted with regard to management of partially government-owned companies engaged in regulated types of activities. We should consider expanding powers of sectoral ministries and introducing sectoral rather than unified program standards.

We will have a lot to do to promote introduction of energy efficient lighting and development of energy service.

In inter-sectoral practice, we have a certain imbalance in the system of public administration. For example, the amendments to the Budgetary Code introduced in 2013 and stipulating that regions are independent in forming state programs are not sufficiently effective in view of reduced programs of federal-budget subsidies.

Not long ago, we adopted and put into effect Federal Law dd. April 5, 2013 No. 44-ФЗ “On the Contract System in Procurement of Goods, Works and Services to Meet State and Municipal Needs”[4]. This Law was supposed to ensure greater consideration in government procurements of not only the price of goods at the time of purchase, but also the need to consider maintenance costs of goods throughout their entire life, including costs of energy sources. However, this rule is hardly applied in practice, and in some cases its application is generally impossible in procurements for state needs. Due to the fact that, pursuant to the above Law, lamps and lighting devices are, as a rule, procured through requests of quotation or electronically at public auction, the price of goods becomes virtually the only criterion forchoosing a supplier.

A great potential lies in improvement of the environmental regulation law package. But at this point we have just started collaborating with its initiators – the Ministry of Natural Resources and Environment and the Ministry of Industry and Trade.

— Anton Yuryevich, is there any progress in international legal cooperation in energy saving and energy efficiency?

— Since 1999, the IEA database (Policies and Measures Database) provides access to regulatory legal instruments adopted or planned to be adopted on greenhouse gas emission reduction, energy efficiency and renewables. The IEA member countries can update the said database twice a year. Despite the fact that Russia is not a member country of the IEA, information thereon can also be found in the database[5].

The Secretariat of the CIS Electric Power Council arranged monitoring of information on implemented energy-efficiency policies in the CIS member states, including issues associated with law-enforcement practice in state energy-saving and energy-efficiency policies, availability of national programs and other documents in energy saving and energy efficiency and data on their implementation.

The document database of the North and Central Asian countries “Rational Use and Renewables” was created and operates at the expense of a voluntary contribution of the Russian Federation. The database contains over 1,200 documents from six countries – Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan and Azerbaijan[6].

At the initiative of Ministers of Energy of the Group of Eight countries, the International Partnership for Energy Efficiency Cooperation – IPEEC – was founded in 2009. The IPEEC is an international forum, which includes 16 states, major producers and consumers of energy sources, including the Russian Federation and the European Commission.

The IPEEC’s activities include a number of key areas, where the countries work on close cooperation, share information, inter alia, on regulatory legal instruments adopted in the countries on certain topics. The key areas are energy efficiency in buildings, energy efficiency in industry, improvement of energy efficiency indicators and educational initiatives in energy efficiency.

The Committee on Sustainable Energy of the United Nations Economic Commission for Europe conducts a lot of studies, inter alia, at the expense of contributions of the Russian Federation, to analyze the best experience in energy saving and enhancement of energy efficiency, including legislative experience, in the UNECE member countries.

— Anton Yuryevich, what are the topical issues of state regulation of energy efficiency and energy saving?

— We are not alone in our search of recipes for improved energy efficiency. As I already mentioned, we rely on international experience, which includes proactive measures of technical and environmental regulation.

For example, one of challenging but also most promising tasks is reduction of energy intensity of housing and public utilities. The residential building sector alone consumes 21% of the total energy consumption in Russia, and in terms of heat – over 40%.

We clearly see that state regulation lags behind the needs.

For instance, so far there are no requirements to energy efficiency for buildings, structures and constructions, though the term of their approval expired as early as April 2011.

Pursuant to cl. 18 of Resolution of the Government of the Russian Federation dd. January 25, 2011 No. 18 “On Approving the Rules for Establishing Requirements to Energy Efficiency for Buildings, Structures and Constructions and Requirements to the Rules for Rating Energy Efficiency of Apartment Houses”[7], since January 1, 2016 there should be a transition to the second stage of requirements to energy efficiency, which stipulates reduction of specific consumption of energy sources by 30% as compared to the basic level. It is now clear that taking into account terms of investment cycle in the construction industry, this is surely not going to happen.

For the same reason – lack of basic (rated) energy consumption level – the Rules for Rating Energy Efficiency of Apartment Houses approved by Order of the Ministry of Regional Development of the Russian Federation dd. April 8, 2011 No. 161 “On Approving the Rules for Rating Energy Efficiency of Apartment Houses and the Requirements to the Energy Efficiency Class Sign of an Apartment House Placed on the Apartment House Facade”[8] are still ineffective.

These requirements – stage-by-stage toughening of energy efficiency indicators – shall be supported by the relevant change of sectoral documents – Construction Rules and Regulations. However, in recent years sectoral documents in Russia have been not only remained unrevised with a view to stiffen requirements to energy efficiency, but even slightly lowered the standard (owing to changes in methods of calculation of climatic parameters (HSDD)).

Why would builders still apply energy efficient technologies, if housing affordability and construction volumes indicate the overall performance of regional authorities in housing construction? Builders benefit from cost cutting, and consumers is not yet used to place their own demands on residential energy efficiency . This is also in no small part due to the current utility prices.

Under such circumstances, we need to improve requirements to energy efficiency of newly constructed buildings, to establish stricter requirements to energy efficiency of major overhaul.

One of the most actual issues associated with enhancement of energy efficiency is prohibitions to use outdated technologies. By all means, these measures will be implemented step by step with a view to the state of economic branches and certain productions. Reference books of the Best Available Technologies (BAT) for different industries will be the basis for stage-by-stage implementation of prohibitions to use energy-consuming technologies. Their preparation is now coming to an end, we can already read a reference book on major power plants. Based on these data, the Ministry of Energy studies proposals to introduce, since 2018, a prohibition to use condensing power units with actual efficiency less than 26% for coal-fired power units and less than 28% for gas-fueled power units. Importantly, the level of introduction of the Best Available Technologies will now be one of target values of energy efficiency in sectoral subprograms of the State Program “Energy Efficiency and Development of the Electric Power Industry”.

This work gained new impetus in view of last year’s adoption of the environmental regulation law package. The Ministry of Natural Resources and Environment and the Ministry of Industry and Trade of Russia play a leading role in this matter.

The state procurement sector also has a great potential. Pursuant to Art. 26 of Federal Law dd. November 23, 2009 No. 261-ФЗ “On Energy Saving and Enhancement of Energy Efficiency and on Amending Certain Legislative Acts of the Russian Federation”, goods, works and services procured to meet state and municipal needs shall ensure maximum possible energy saving and energy efficiency. However, the requirements aimed at enforcement of this standard and established by Resolution of the Government of the Russian Federation dd. December 31, 2009 No. 1221[9] and orders of the Ministry of Economic Development are considerably outdated and in need of revision.

In general, each energy-intensive branch has to improve its own regulation measures, and sectoral ministries are responsible for development and introduction of such  improvements.

— Anton Yuryevich, what would you like to wish those who study and are going to examine problems of legal support of energy efficiency and energy saving?

— The economy-wide work on energy saving and enhancement of energy efficiency has a very complex background.

On the one hand, a lot of aspects are of a sectoral nature, and you need to have a solid grasp of a certain branch, its technological and economic components, operation of the markets.

On the other hand, prerequisites for achievement of targets comparable to the leading countries’ results include extensive reforms of the economy and regulatory framework, which facilitate updating of fixed assets and help attract large-scale investments. This work implies a broad outlook and special qualification.

Both areas (sectoral and inter-sectoral) require proficient knowledge and many years of work.

I would like to mention specifically that the system of statutory regulation becomes more complex in view of establishment of the common economic area. A growing number of important issues having a direct or indirect impact on energy efficiency fall within the competence of international bodies. For instance, issues of energy efficiency of low-voltage equipment (i.e. household appliances, elevators, etc., over 15 items) will be settled by the technical regulations of the Customs Union.

I would like to wish those who have just started examining this area to choose a field of interest to their liking. Everyone will find a scope of work beneficial to the country and own career!

 

The interview was done by

V.V. Romanova,

Editor-in-Сhief of Energy Law Forum,

International Scientific and Practical Journal,

Doctor of Law



[1] Federal Law dd. November 23, 2009 No. 261-ФЗ “On Energy Saving and Enhancement of Energy Efficiency and on Amending Certain Legislative Acts of the Russian Federation” // Collection of Legislative Acts of the Russian Federation, 2009, No. 48, Art. 5711 (in Russian).

[2] Order of the Ministry of Energy of the Russian Federation dd. June 30, 2014 No. 399 “On Approving the Methods of Calculation of Target Values in Energy Saving and Enhancement of Energy Efficiency, Inter Alia, in Comparable Conditions” // Rossiyskaya Gazeta, August 22, 2014 (in Russian).

[3] Resolution of the Government of the Russian Federation dd. July 31, 2014 No. 754 “On Granting Federal-Budget Subsidies to Budgets of Constituent Entities of the Russian Federation for Implementation of Regional Programs in Energy Saving and Enhancement of Energy Efficiency and Invalidating Acts of the Government of the Russian Federation” // Collection of Legislative Acts of the Russian Federation, 2014, No. 32, Art. 4524 (in Russian).

[4] Federal Law dd. April 5, 2013 No. 44-ФЗ “On the Contract System in Procurement of Goods, Works and Services to Meet State and Municipal Needs” // Collection of Legislative Acts of the Russian Federation, 2013, No. 14, Art. 1652 (in Russian).

[5] URL: http://www.iea.org/policiesandmeasures/energyefficiency/

[6] URL: http://www.ecoway.ru/extsearch.php?lid=ru&country=7&dspherem=&dsphere=10&docstate=&doctype=&years=&npa=&q=

[7] Resolution of the Government of the Russian Federation dd. January 25, 2011 No. 18 “On Approving the Rules for Establishing Requirements to Energy Efficiency for Buildings, Structures and Constructions and the Requirements to Rules for Rating Energy Efficiency of Apartment Houses” // Collection of Legislative Acts of the Russian Federation, 2011, No. 5, Art. 742 (in Russian).

[8] Order of the Ministry of Regional Development of the Russian Federation dd. April 8, 2011 No. 161 “On Approving the Rules for Rating Energy Efficiency of Apartment Houses and the Requirements to the Energy Efficiency Class Sign of an Apartment House Placed on the Apartment House Facade” // Rossiyskaya Gazeta, June 3, 2011 (in Russian).

[9] Resolution of the Government of the Russian Federation dd. December 31, 2009 No. 1221 “On Approving the Rules for Establishing Requirements to Energy Efficiency of Goods, Works and Services in Procurements to Meet State and Municipal Needs” // Collection of Legislative Acts of the Russian Federation, 2010, No. 5, Art. 525 (in Russian).