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RUSSIAN CONTEXT: energy strategy vs SDGs role of natural gas

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Page 1: RUSSIAN CONTEXT: energy strategy vs SDGs role of natural gas€¦ · Natural gas in Russia… 5 654.5 641.9 635.5 640.2 460 458.4 444.3 456.7 186.2 181.1 192.5 208.6 0 100 200 300

RUSSIAN CONTEXT:energy strategy vs SDGs

role of natural gas

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Russian Energy Strategy 2035 contains targets that are consonant to the UN goals

• Dmitry Medvedev, PM:Reduce energy intensity of Russian

GDP

Reduce dependence of the energy sector on foreign technology and equipment

Expansion of areas and formats of cooperation in energy; Diversification of energy exports in terms of geography and product structure

Promoting energy cooperation in Europe, Asia, BRICS, etc..

• Alexander Novak, Minister of Energy:Reduce Russian economy’s dependence on

hydrocarbons in the interest of climate change, through developing generation capacities by hydroelectric PP, NPP and renewable energy plants

Reducing Russian GDP energy intensity by factor of 1.6 by 2025

Facilitate access to Russian energy consumers, by expanding energy supplies to Asia-Pacific Region

Promote close cooperation with foreign partners and investors from around the world

2Source: Russian Government Source: Alexander Novak

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The role of energy sector in the Russian economy

3

20.00%

21.00%

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

28.00%

2014 2015 2016

Energy in GDP

Share of Energy in GDP

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2014 2015 2016

Energy in Federal budget

Oil&Gas revenues in Federal Budget

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

2014 2015 2016

Energy in Exports

Share of Energy in Exports

Source: Ministry of Energy; IEA

• The shares of energy in GDP, energy in the federal budget and energy in exports have all decreased (which is a good thing, since over-reliance of the economy on single sector is unsustainable)

• This is the result of conditions in international energy markets, but at the same time this means a more balanced role for the energy sector in the Russian economy

Page 4: RUSSIAN CONTEXT: energy strategy vs SDGs role of natural gas€¦ · Natural gas in Russia… 5 654.5 641.9 635.5 640.2 460 458.4 444.3 456.7 186.2 181.1 192.5 208.6 0 100 200 300

Fuel mix balance

• Nuclear, hydroelectric power plants and renewable energy sources produce over one-third of Russia’s electricity

• Almost 50% of electricity is produced at gas-fired power plants

• The European part of Russia (including Urals) relies primarily on natural gas + nuclear, while Siberia and the Far East use coal + hydro

• 84% of electricity is produced using clean sources of energy (if natural gas and nuclear are included)

• Fuel mix is unbalanced

4

51.20%

22.10%

16.40%

7.20%

2.00% 1.10%

TPES (2015)

Natural gas

Oil

Coal

Nuclear

Hydro

Biofuels/waste

50%

18%

15%

16%

1%

Electricity generation (2015)

Natural gas

Nuclear

Coal

Renewables (Hydro, Solar,Wind, Geothermal)

Others

Sources: Ministry of Energy; IEA

Page 5: RUSSIAN CONTEXT: energy strategy vs SDGs role of natural gas€¦ · Natural gas in Russia… 5 654.5 641.9 635.5 640.2 460 458.4 444.3 456.7 186.2 181.1 192.5 208.6 0 100 200 300

Natural gas in Russia…

5

654.5 641.9 635.5 640.2

460 458.4 444.3 456.7

186.2 181.1 192.5 208.6

0

100

200

300

400

500

600

700

2012 2014 2015 2016

Production Domestic Consumption Exports

Sources: Ministry of Energy; CIA factbook; BP

17.70%

82.30%

Share in world production

Russia Other

23.86%

86.14%

Share in world proved reserves

Russia Other

1st

47.8 trcm2nd

640.2 bcm

27.41%

72.59%

Share in global gas exports by pipeline

Russia Other

1st

192.5 bcm

4.29%

93.71%

Share in global LNG exports

1st Qtr 2nd Qtr

8th

14.5 bcm

… is so important, that any action in this sector has economy-wide effect

Page 6: RUSSIAN CONTEXT: energy strategy vs SDGs role of natural gas€¦ · Natural gas in Russia… 5 654.5 641.9 635.5 640.2 460 458.4 444.3 456.7 186.2 181.1 192.5 208.6 0 100 200 300

Natural gas consumption varies significantly by region

6Source: Russian Gas Matrix pp. 395-397 (based on Rosstat data)

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Access to energy services in Russia

7

Access to electricity

Yes No

100%

Access to natural gas

Yes No

67.2%

5,865

5,400 5,600 5,800 6,000 6,200 6,400 6,600 6,800 7,000

Million RUB

Investments in gas infrastructure

2016 2011-2015

Source: Ministry of Energy Russia; BP

• Access to electricity in Russia is universal, according to stats

• Access to natural gas is not universal at 67,2% as of 2016 (compared to 53.3% in 2005)

• Solutions: Facilitating natural gas access in Eastern Siberia and Far East (Eastern Gas Program) + Gasification Program

• In 2017, already RUB 25,7 bn invested, construction of 3,700 km gas pipelines is in progress

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Energy efficiency improvement

0.13

0.14

0.15

0.16

0.17

0.18

0.19

0.2

0.21

0.22

0.23

0.24

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2035

Energy intensity of Russian GDP (toe/th.USD-2011(PPP))

BP IEA Rosstat Projection(ESR35)

8Source: Ministry of Energy Russia; Enerdata; Bashmakov

• Central planning in Russia contributed to increased levels of energy efficiency

• In 1998-2008, Russia managed to reduce GDP energy intensity by 42%. Reduction was driven by structural shifts and capacity load factor, while technological factor contributed only 1%.

• Since 2009, policies and mechanisms have been introduced such as: energy management standards, EE building codes and standards, improved energy statistics, R&D, incentives

• ERS to 2035 sets ambitious goal of 40% reduction

0

0.1

0.2

0.3

0.4

2006 2007 2008 2009

World EI of GDP by koe/$05pfrom 2006 to 2009 (PPP)

EU-27

OECD

Russia

USA

China

World

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Conclusions

• Even though Russia is not making public statements about reaching SDG7, Russian development is in line with them:• Access to modern energy services is universal in regards to electricity; while natural gas

access in improving• Renewables in the energy mix besides hydro have the potential to increase; there are

targeted actions by some companies to increase the use of solar and wind power to solve efficiency and improve access

• Energy efficiency improving trend, as energy intensity of the Russian economy decreases overall

• Clean energy (technology and cooperation): international cooperation is focused on grid interconnection and supporting additional generation based on renewables

• Clean energy (investment): there are significant problems with investment climate in Russia, and this is not unique for the clean energy segment.

• Overall characteristic feature for Russia is central role of the natural gas sector, since it not only provides noticeable (albeit decreasing) shares in GDP, export volumes and budget revenues, but also provides half of the Russian fuel mix

9

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Thank you!

Maxim TitovExecutive Director

ENERPO Research Center

+7 921 912 [email protected]

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Source: UN 1130.10 - 02.11.2017 UNECE EE Expert Group Meeting

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Introduction on SDGs: when, where, why?

• The 17 Sustainable Development Goals were introduced during the 70th UNGA held in New York in September 2015. They are the building blocks of the 2030 Agenda for Sustainable Development

• Main aims:

• Eradicating poverty in all its forms and dimensions

• Tackling global economic, social and environmental challenges 12

2015

Millennium Development Goals (2000–2015)

Supported by all 191 UN member states

2030 Agenda for Sustainable Development

Universal steps towards shifting the world on to a

sustainable and resilient path

2000 20301972

The right of healthy and productive environment

World Commission on Environment and Development

1983 1992

Agenda 21

UN Conference on the Human Environment

Earth Summit, Rio de Janeiro

70th UNGA, New York Millennium Summit, New York

Source: UN30.10 - 02.11.2017 UNECE EE Expert Group Meeting

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SDG 7: Affordable and Clean Energy

• Targets by 2030:• Ensure universal access to affordable, reliable and modern energy services

• Increase substantially the share of renewable energy in the global energy mix

• Double the global rate of improvement in energy efficiency

• Enhance international cooperation to facilitate access to clean energy research and technology, including:• renewable energy

• energy efficiency

• advanced and cleaner fossil-fuel technology

• Promote investment in energy infrastructure and clean energy technology

Source: UN 1330.10 - 02.11.2017 UNECE EE Expert Group Meeting

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Analysis matrixbased on SDG 7 targets

Universal access to

energy services

Renewables expansion in

the energy mix

Energy efficiency

improvement

Clean energy: Research and

technology

Clean energy:

Investment

1430.10 - 02.11.2017 UNECE EE Expert Group Meeting

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I Universal access to energy services

Definition

Universal access to energy services means a situation when modern energy services are provided for the entire global population, including:

• Household access to electricity and clean cooking facilities (IEA)

• Access to pipelines, electricity and heating networks (Russian Energy Strategy)

Measurement methods

• Percent of population with access to electricity

• Percent of population with access to natural gas for heating and cooking

• Percent of population with primary reliance on clean fuels and technology (Agenda 2030)

15Sources: UN (2030 Agenda), Sustainable Energy for All30.10 - 02.11.2017 UNECE EE Expert Group Meeting

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II Renewables in the energy mix

DefinitionRenewable energy is energy derived from natural processes, which regularly re-occur. Renewable energy sources include:

• Hydro (excluding pumped storage)

• Traditional renewables: solid biomass

• Modern renewables: wind, solar, geothermal, tidal and wave energy

• Some of other sources: biogasoline, biodiesels, other liquid biofuels, biogases, renewable fraction of municipal waste

Measurement methods

• Share in total primary energy supply

• Share in total final energy consumption

• Share in electricity generation

16Sources: IEA Energy Statistics Manual, OECD

30.10 - 02.11.2017 UNECE EE Expert Group Meeting

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III Energy efficiency improvement

Definition

Energy efficiency improves when a given level of service is provided with reduced amounts of energy inputs or services are enhanced for a given amount of energy input.

Energy intensity is measured by the quantity of energy required per unit output or activity, so that using less energy to produce a product reduces the intensity.

Measurement methods

• Energy intensity / national level assessment: • Primary energy consumption per unit

of gross domestic product• Primary energy consumption per

capita

• Energy intensity / sectoral level assessment:• Decomposition analysis (IEA)• Policy progress index (IEA)

17Sources: IEA Energy Statistics Manual, Byers 2017 Source: IEA Energy Efficiency 201730.10 - 02.11.2017 UNECE EE Expert Group Meeting

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IV Clean energy: Research and technology + international cooperation

Definition

Energy itself (mechanical, thermal, kinetic, electric …) cannot be ‘clean’ or ‘not clean’.

‘Cleanliness’ of an energy source is a characteristic that assesses the impact of this energy source on the environment as it is being consumed.

Measurement methods

• Carbon intensity / national level assessment:• GHG emissions per unit of GDP• GHG emissions per capita

• Ways to decrease carbon intensity:• Switching to alternative fuels• Energy intensity reduction• Carbon Capture and Storage /

Carbon Capture and Use

1830.10 - 02.11.2017 UNECE EE Expert Group Meeting

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V Clean energy: Investment

Definition

Investment as such is placing capital with the expectation of future revenue

Clean energy investment is the type of investment that goes in infrastructure expansion and technology upgrade for supplying modern and sustainable energy services

Measurement methods and indicators:

• Mobilized amount of United States dollars per year

• Investments in energy efficiency as a percentage of GDP and the amount of foreign direct investment in financial transfer for infrastructure and technology to sustainable development services

1930.10 - 02.11.2017 UNECE EE Expert Group Meeting