Russian Economic Success Threatened by Energy Shortage
Russia has to improve its energy-efficiency soon or – surprising though it may seem – the energy giant will soon be confronted with energy shortages. More and more businesses that plan to start production in Russia in fact do not see bureaucracy or corruption as their major worries, but a possible lack of electricity, heat or gas.
| by Jeroen Ketting
Russia consumes roughly three to five times more energy per euro of GDP than its West European neighbors. This high level of consumption can be partly attributed to Russia’s harsh climate and energy intensive industry but it is largely the result of the low efficiency of generation, distribution and consumption of heat, electricity and gas. By any standard, such a relatively high level of energy consumption would merit drastic measures by government, business and consumers to put a halt to, or at least reduce, the squandering of energy. But in fact, very little action is being undertaken to remedy this situation.
Russia has an energy intensive economy which is dominated by heavy industry. More than 65% of Russian industrial output is generated by the most energy intensive industries like electricity generation, energy industry (oil exploration and refining, gas and coal), ferrous and nonferrous metallurgy and the chemical and machine building industries. Industrial companies consume 50% of electricity and 30% of heat generated in Russia and most of these industries continue using obsolete technologies and equipment. Almost 40% of Russian production assets date back to the period after WWII, whereas almost 45% was installed from 15 to 25 years ago. The energy consumption by these industries exceeds worldwide levels of energy consumption in analogous industries with 40% to 220%.
Interested? Read the full article in the European Energy Review via this link.