Energy efficiency potential in SPECA countries

1. ESCAP United Nations Economic and Social Commission for Asia and the Pacific UNECE United Nations Economic Commission for Europe Energy efficiency potential in SPECA countries Workshop on Energy Efficiency Opportunities in Central Asia, including SPECA countries 18-21November 2008 Almaty, Kazakhstan Report by V. Kasymova

2. Energy efficiency potential in SPECA countries • Energy saving potential is estimated at 35-40% of the total energy consumption; • high energy intensity of GDP in the countries of Central Asia; • increase in emissions of CO2 and deterioration of environmental situation in the region; • high degree of deterioration of equipment and facilities of power and heat companies; • imperfection of technology and a high level of energy losses in production, during transporting and use of energy; • low use of renewable energy sources

3. GDP energy intensity analysis for 2000-2005 The most rapid growth rates: • 3 times in Kyrgyzstan, from 0.56 toe to 1.7 toe/1000 USD; • in Tajikistan from 1.22 to 2.24 toe; • in Turkmenistan from 1.78 to 2.95 toe; • in Kazakhstan from 1.74 to 2.01 toe. Reduction of the rate • double reduction in Uzbekistan from 4.18 to 2.62 toe/1000 USD; •               in Azerbaijan from 2.87 to 1.65 toe • The world in general from 0,30 to 0,32 toe • Asia from 0.59 to 0.65 toe

4. Emissions of CO2 to TER for the period of 2000 - 2005, (t CO2/toe) Decreased • in Kazakhstanfrom 3.14 to 2.96 Increased • inKyrgyzstan from 1,88 to 1,95 • in Uzbekistan from 2,29 to 2,34 • in Turkmenistan from 2,47 to 2,54 • in Tajikistan from 1,52 to 1,64 • in Azerbaijan from 2,2 to 2,26 • World in general from 2,32 to 2,37 • Asia from 1,92 to 2,01

5. Emissions of CO2 to the GDP for the period of 2000 - 2005(kg CO2/1 USD) The most rapid growth rates • in Turkmenistan from 4.78 to 7.15 • in Tajikistan from 1.86 to 3.68 • inKyrgyzstan from 1.05 to 1.85 • in Kazakhstan from 5.46 to 5.95 The rates decreased in • in Azerbaijan from 6.94 to 3.73. • in Uzbekistan from 9.57 to 6.14 Remained unchanged • World as a whole 0.69 -0.69 • Asia 1.25 -1.25

6. Emissions of CO2 per capita for the period of 2000-2005, (t CO2 per person) Intensive growth rates • Kazakhstan from 8.26 to 10.8 • Turkmenistan from 6.59 to 8.59 • Azerbaijan from 3.51 to 3.53 • Kyrgyzstan from 1.05 to 1.06 • Tajikistan from 0.72 to 0.87 Decrease in • Uzbekistan from 4.64 to 4.24 т • World as a whole from 3.89- 4.22 • Asia from 1.13 -1.25

7. Challenges in using the energy saving potential Economiccaused by: • a surge in energy costs; • increase of the energy component in the cost structure of products; • lack of investment from the state, and consumers, • lack of partnership mechanisms between the state and the private sector in energy saving, • high bank rates on loans • low paying capacity of consumers • poor economic incentives for energy-saving measures; • almost a absent funding scheme based on best practices of investments in energy conservation: leasing, third party financing, production of energy-saving bonds, etc. • poor diversification of fuel and electricity sources

8. Challenges in using the energy saving potential • Informational - dueto the lack of access to databases and the use of information services and energy consulting and auditing companies, manufacturers of energy-efficient and energy-saving equipment. • Lack of large-scale information campaigns in the media to raise awareness in all segments of society and the public about the benefits of efficient use of energy and the impact of wasteful consumption and theft. • A number of unresolved issues on inter-state level, concerning the formation of common energy market in Central Asia and facilitated access of private enterprises into it.

9. Challenges in using the energy saving potential • Environmental – caused by affecting the environment by energy facilities during the production, recycling, transportation and use of energy by end-users; • Scientific and technical problems – connectedwith the reduction in funding of research work in the field of energy efficiency and conservation, low efficiency of the mechanism of scientific and technological developments implementation. • Legal - the majority of energy conservation laws are the laws of indirect action, requiring a significant number of regulations. • Insufficient introduction of advanced energy efficiency standards, regulations, energy accounting and monitoring. • Institutional - due to the persistence of administrative approaches to the management of energy, inadequate authority or an absence of a public body which would be implementing the energy policy.

10. Recommendations to handle the challenges • Strengthen the government support and empower the energy efficiency structures until the establishment of energy efficiency institutions; • Improve the legal and regulatory base for energy saving; • Introduceeconomic and financial incentives to enhance the investment activities of producers and consumers of energy, and potential investors, • Reinforce liability for violation of relevant rules, standards and regulations, etc.; • Strengthen the control over compliance with legislation in the sphere of energy efficiency.

11. Recommendations to handle the challenges • Improve the system of accounting and control over the energy consumption; • Improve the pricing and rating policy for energy to become the critical economic incentive for energy saving; • Support the R&D and the ROC on energy efficiency and organize pilot projects; • Organize targeted information campaigns for different categories of consumers; • Organize effective training on energy efficiency and conservation

12. What policy is required Policy of energy efficiency and energy saving for: • energy excessive countries - Kazakhstan, Uzbekistan, Turkmenistan and Azerbaijan - to preserve exports; • energy deficient countries - Kyrgyzstan and Tajikistan, Afghanistan - to reduce imports. Through the following urgent measures: • Development of state energy efficiency strategy and introduction of action program to improve the efficiency of energy use; • Establishment of energy efficiency institutions and public funds and their divisions on regional and local level; • Preparation and organization of energy audit in order to implement the legislative and regulatory rules on energy efficiency; • Diversification of energy consumption structure and development of alternative energy sources.

13. What institutions are required: • - Agencies (commissions or committees)on energy saving and respective structures in the state, regional and local governments, public funds and so on. • The Energy Saving Agency should be the Competent Authority in forecasting the demand for energy, implementation of integrated energy-saving programs, assessment of energy saving potential, segregated by sectors, services and communities, taking into account the impact of energy saving to the environment. • Regulatory functions of the Energy Saving Agency should become a powerful tool for implementation of energy efficiency policies’ improvements. • One of the main tasks of the Energy Saving Agency should be – development and facilitation of local implementation of the most appropriate regulations and standards for energy consumption, providing the customers with technical assistance required to implement energy saving measures in the production, importation and usage of new energy-saving technologies, equipment, technical means and materials.

14. Functions of the State Energy Saving Authority • Allowing the energy consumers the possibility to participate in investments to energy-saving projects with the most favorable conditions; • Attracting investment into the energy saving sector from banks and other interested ministries and departments; • Issuing licenses for the production of energy-saving equipment and implementation of sustainable energy-saving technologies; • Organizing demonstration projects on energy conservation; • Organizing energy audits, preliminary studies, as well as providing consulting on inspections in the area of energy consumption and energy conservation; • Development of economic instruments and incentives for various players involved in the process of improving the energy efficiency; • Organizing the examination to determine the impact of energy efficiency measures to the environment; • Mobilizing and attracting partners for research and development to develop and implement new energy-saving technologies.

15. What programs have to be developed • Concept of energy efficiency and sustainable development of Central Asian Region and on its basis, the interstate Plan of Action for implementation of energy policies in Central Asian countries until 2020; • National Programs on Energy Efficiency of Economies for the period up to 2020

16. Barriers and risks in implementation of Energy Efficiency Concept for SPECA countries • The slow progress of integration processes in resolving water and energy issues, in creation of a single energy market, etc. • Disagreement of Parties in the adoption of Inter-state Instruments, prepared by EurAsEC, which could occur at the level of governments in Central Asia at the time of theirconsideration. • Disagreements of Parties that may arise during harmonization of regulatory energy frameworks, and in developing the common Concept and the Program for introduction of energy saving and improvement of energy efficiency of economies of Central Asian States

17. Barriers and risks • there is no coherent system of interrelated indicators of energy saving, covering all levels of real sector of the economy and services, • there are no comparative performance evaluation of energy and other resources saving indices, and therefore there is no criteria saying “What should be saved in the first place”; • energy consumption of GDP is not being determined on macroeconomic level, there is no balanced accounting and compilation of indicators between the real economy sectors, • energy consumption of production is not being determined at the industry level, its decrease and the satisfaction of growing needs in energy from its saving is not measured, • only the norms of decreasing the average rates of energy consumption for the production are set, resulting in a complete exclusion of the structural factor between the products and industries, with the statistical reporting forms covering only a portion of production – the product and technological levels; • energy savings from energy-saving measures is not the sole source of all energy savings in material production.

18. Methods to overcome the barriers • There is a need to develop and use a single methodological basis for calculation of energy efficiency measuring indicators and indicators for sustainable energy use and energy saving; • There is a need to use all existing possibilities for integration, • There is a need to advance in all international conventions, protocols and initiatives on energy efficiency and related environmental aspects; • In accordance with the Baku initiative there is a need to focus on the following seven aspects: • Strengthening legislative support (base); • Increasing the involvement of stakeholders; • Development of minimum performance standards; • Strengthening institutional support; • Providing support for research and development; • Dissemination of best working practices; • Increasing public awareness.

19. Institutional arrangements on international level The basic organizational and economic activities in the field of energy supply include: • drafting and ratification of Intergovernmental Treaty “On the Development and Implementation of the Interstate Concept and National Programs on Energy Efficiency and Conservation until 2020” within the EurAsEC with periodic revisions to define the priorities for the nearest future; • establishment of working groups to develop Interstate Concept and the National Program for energy efficiency and energy saving until 2020; • drafting and ratification of Intergovernmental Treaty on introduction of mandatory energy labeling of electrical appliances and their energy consumption certification; • transition to conduction of systematicenergy surveys among business entities, as well as product energy consumption certification and the introduction of progressive norms system for fuel and energy consumption;

20. Organizational measures • gradual alignment of prices and tariffs for energy in line with actual costs of production and transportation for all categories of consumers; • development of new and improvement of existing economic mechanisms that promote the improvement of efficient products and services; • joint creation by the Central Asian countries of the favorable investment climate to attract both domestic and foreign investments; • introduction of state examination of energy efficiency of designing solutions aiming to assess the compliance with applicable regulations and standards in the field of energy and to determine the adequacy and justification for the measures of energy conservation; • Joint development and introduction of a common minimum energy efficiency standards for major types of electrical appliances and energy labeling by energy efficiency grades

21. Organizational measures • On Interstate level - establishment of functioning institutional structures (EESEA Commission) with adequate authority, harmonization of regulatory framework and formation of investment base for energy-saving. • On state level - adoption of regulatory legal acts of direct action and creation of appropriate institutional and financial and economic management schemes. • On regional level – development of target energy conservation programs, creation of funding sources and adoption of regulatory legal acts. • On municipal level - preparation and implementation of action plans to introduce energy-efficient sustainable technologies and equipment in industry and community services, organization of sustainable consumption of energy by the entire infrastructure of the city (district). • At the level of economic entities - implementation of activities in view of general economic interests

22. Partners on international level • International organizations - as the CIS and EurAsEC, etc. - to prepare legal instruments and in other organizational matters; • World Bank, EBRD, ADB, EC, the UNECE, UNESCAP and several other international organizations that provide support in funding and technical assistance to SPECA.

23. Partners within CA states Partners within the CA states may be: • all concerned ministries, departments; • municipalities; • local authorities, • research, design and consulting centers; • energy companies, industrial enterprises, services, budget organizations; • various Associations of energy and water consumers; • private legal entities and individuals, • NGOs, social movements and foundations

24. What is the role of regional cooperation and its advantages • improving the investment attractiveness of SPECA countries to international financial organizations and investment funds; • ensuring transparency of information on measures taken and results achieved, which would promote the mutual trust and establish best practices; • increasing the responsibility of States for implementation of the commitments accepted to improve the energy efficiency of economy and related environmental aspects; • reducing transboundary pollution and the vulnerability of ecosystems to the impacts of energy production and consumption; • recovery and reducing poverty of population in all states; • promoting a more successful move towards sustainable development in SPECA countries.

25. Thank you for your attention and support!