INTERVIEW - EBRD Pushes Energy Efficiency for Economy, Climate
Date: 22-May-06
Country: UK
Author: Sujata Rao
Experts at the European Bank for Reconstruction and Development estimate the ex-communist states of east Europe and the former USSR use up to seven times more energy than western Europe to produce one unit of Gross Domestic Product (GDP).
The record -- a legacy of days when the Soviet Union's bottomless well of oil and gas provided cheap energy to its satellites -- is worst in countries like Ukraine and Uzbekistan.
Not only is this wasteful and bad for the environment -- only the United States and China emit more greenhouse gases than these countries taken together -- it is also bad business and poor strategy for the future, the bank's experts told Reuters.
"There is an incentive for energy security... By saving they reduce import requirements and reduce demand on power grids," said Josue Tanaka, EBRD corporate director for energy efficiency and climate change. "And it's cheaper to save a unit of energy than to have to generate it."
WASTE
Old leaky infrastructure, uninsulated homes, wasteful power generation, outmoded industrial technologies and subsidised heating and electricity bills all contribute to the waste, ensuring the countries use far more energy than they need to.
The issue shot to the forefront at the start of this year when Russia cut off gas supplies to neighbouring Ukraine in a row over prices, causing shortages as far west as Austria.
"What happened between Russia and Ukraine led countries to realise how dependent they are on energy imports, and from there comes the issue of how they use that energy," Tanaka said.
Higher prices were a bitter pill for Ukrainian factories but they did hammer home the need to cut energy waste. Efficient use could halve Ukraine's gas imports, the EBRD estimates.
Some businesses took action even before the crisis. In one case, the Mittal-owned Kryvy Ryh steel plant cut energy use by up to 40 percent with the help of an EBRD loan.
Set up in 1991 to guide the newly-independent states towards a market economy and democracy, the EBRD has announced plans to exit more mature central European economies in 2010, to focus on the poorer eastern and southern states.
"Transition has been progressing quite well, and as you move through the agenda we are able to deal with issues like (energy efficiency) in more depth and scope," Tanaka said.
LARGE INVESTMENTS
The EBRD will invest up to 1.5 billion euros in energy efficiency projects in the next three years, with about 5 billion euros in associated investments -- more than double the amount committed in the 2001-2005 period.
This will fund projects to cut energy use in business, local government and housing, promoting carbon trading and renewables -- investments the EBRD says can easily be recovered as savings.
The Ukraine episode highlighted Europe's energy dependence on Russia at a time when stretched supplies and growing demand have boosted oil and gas prices to record highs.
And as economies grow, the EBRD projects transition states' energy needs to rise 60-80 percent in the next 20 years.
Energy savings will leave more to go around, including for export to Western Europe. Russia at present consumes over 40 percent of its gas output at home.
"Russia could save over 30 percent of its gas consumption, they could increase their export capacity substantially," said Jan Willem van de Ven, an associate banker for the programme.
"And the more energy Russia saves, the more carbon credits it can sell on international markets, so it is a win-win situation for everyone."
