OREANDA-NEWS. Energy efficiency is “invisible fuel,” which helps to reduce the cost of products and improve profitability in the real sector.

Almaty, 1 October 2014. Programmes to improve energy efficiency in the industrial sectors of Belarus, Kazakhstan, Russia, and Ukraine can promote reduced energy consumption and stability in the context of growing tariffs. This is the conclusion suggested in the Invisible Fuel report prepared by Eurasian Development Bank (EDB) and EY (former Ernst & Young).

The report analyses changes in energy efficiency rates for each country, industrial sectors, and separate enterprises. In particular, it calculates and reviews energy consumption ratios for sectors that consume the largest amounts of energy resources: metallurgy, fuel and energy extractive industries, electricity, gas and water production and distribution, oil products manufacture, and pulp and paper production. In addition, the report describes some successful projects aimed at reducing energy consumption through the improvement of energy efficiency, the creation of automated monitoring and accounting systems for energy sources, and the implementation of energy management systems at enterprises.

In terms of energy intensity of GDP, Belarus, Kazakhstan, Russia and Ukraine lag behind the global average significantly. In all the four countries the domestic energy balance is shifted towards the transport and services sectors, which increase their energy consumption. At the same time “historically” energy intensive industries have not demonstrated considerable improvements in their energy efficiency. This may be due to the high share of energy intensive production, which has not been reformed in a cardinal fashion, and the low added value of products on the whole.

The majority of companies surveyed (almost 90%) plan to reduce their energy intensity over the next five years. According to them, the main barrier to implementing investment projects to improve energy efficiency is the difficulty in raising finance. Other significant barriers highlighted by respondents include:

administrative barriers: difficulties in obtaining approvals and permits, the lack of support on the part of the state, and the outdated legislative framework; and

technical barriers: complicated technical solutions, and the lack of experience in planning and implementing successful energy efficiency projects.

“The main peculiarity of our report is that it is practical and focused on the real sector and that it provides many examples of completed projects,” says Vladimir Yasinsky, Member of the Management Board and Managing Director for Research at EDB. “Our recommendations are also practical. They will help to improve profitability of enterprises by reducing product costs, improving stability despite the growth in tariffs, and decreasing maintenance costs through the replacement of ineffective equipment. Being a development bank, EDB proposes finance for programmes and projects aimed at improving energy efficiency.”

“We view energy efficiency not only as a modern challenge, but also as a means to raise profit. For this reason we believe that our report will be useful, in the first place, for management at industrial enterprises. It will help to devise an individual approach to improving the energy efficiency of companies, taking into account their technological peculiarities and the conditions they function in. In addition, our analysis of energy consumption trends and ratios will help to set correct goals to improve energy efficiency in the industrial sectors of the four CIS countries under review,” says Kseniya Leschinskaya, Partner and Head of Climate Change and Sustainability Services in the CIS at EY.