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President of Russia Dmitry Medvedev: Colleagues,

I would like to say a few words regarding the topic of this State Council Presidium meeting.

As you know, a Presidential Commission for Modernisation and Technological Development of Russia’s Economy was established recently. This Commission has identified five priorities that I will be monitoring directly. Energy efficiency is one of these priorities, number one, to be exact, and it is also the main topic of our meeting today.

Energy efficiency needs to serve as a foundation, with other development priorities based on it. To put it differently, energy efficiency must support all the other priorities for technological modernisation.

A year ago, I issued an executive order requiring a 40 percent reduction in the energy-output ratio within the Russian GDP by 2020. This decision was followed by other steps, including taking on international obligations in regard to environmental issues.

Today, we must focus on most specific problems that need to be resolved within a clearly defined timeframe. Still, to initiate action, certain legislation is required.

The State Duma has already had a first reading of the Federal Law On Energy Saving and Energy Efficiency Improvement. Further to this law, special norms and rules, new technical regulations and a system of environmental standards should be approved, and current construction requirements must be revised.

I believe that we need to address this issue as prescribed by the documents regulating legislative process, i.e. the State Duma should endeavour to pass this law as quickly as possible, while the Government should submit relevant bylaws. The law goes into effect as of next year with some provisions taking effect at an even later stage, and much like many of our other existing laws, it cannot function on its own without detailed bylaws. Bylaws on these issues are especially important, therefore the federal law and the bylaws approval processes should be synchronised.

I hereby instruct the Government to give this matter special attention. Naturally, the amended law and new regulations and standards must be such as to ensure that our targeted energy efficiency rates are met. Furthermore, these results must be achieved by the deadlines set for particular industries and meet the specific criteria.

Energy efficiency is a topical and a cumbersome issue, so addressing every aspect of it is very urgent, as we seem to be falling behind in every respect.

I think that to a certain extent, we are falling behind not only because of the difficulties we faced in the 1990s and even earlier, but also because of our mindset, because we have never tried to save energy. We always believed that we were entirely self-sustaining when it came to energy.

It is true that we are the world’s leading nation in terms of energy resources. This does not mean, however, that we should consume these resources irresponsibly. For many years now, it has been well known how particular energy products should be used, and why petroleum should not be used for heating. But unfortunately, we continue to heat with petroleum, thus literally and figuratively heating up our planet.

So, we must improve energy saving in every area, but I would like to particularly single out the situation in the public utilities sector. All of the governors here today are well-aware that energy is used in an atrociously inefficient way when it comes to heating and public utilities. Our buildings and our overall housing infrastructure are a kind of black hole that sucks in enormous amounts of energy resources.

Losses within the heating supply system can go as high as 60 percent, and in reality, they may be even higher. Electric power lines are absolutely outdated, and coupled with outdated illumination devices, they cause immense energy waste.

Ultimately, inefficient energy consumption is damaging for municipal and regional budgets and brings about extra costs for the people. Furthermore, the social compensations that we pay to the households have to be borne by budgets at all levels. Thus, we should openly recognise that housing and utilities are our most expensive and ineffective sector in terms of energy.

We are observing the way that other countries are developing in energy. As you know, some places have special buildings that do not use any external energy, where energy consumption matches energy generation. It should be in the interest of any property owner to rebuild his or her property to ensure efficient energy saving, or to design and build new property on an entirely different technological foundation.

But for now, our property owners either cannot or do not want to do this. Energy efficiency first appeared on the agenda shortly before the crisis. But now, with lack of funds, many have halted these improvements. Still, I think that it may well serve our goals if government anti-crisis assistance to the industries and manufacturers is conditional on the submission of a specific plan for reducing energy consumption. Otherwise, we will simply continue to foster bad energy management.

Government companies and organisations are equally wasteful. A state that declares and promotes energy efficiency as to be a priority should first set an example for others and improve energy saving in government-owned companies and in government-financed organisations.

Here, we also have enormous potential. We should set strict energy efficiency standards and requirements, and effectively monitor their observance. In order to significantly improve energy efficiency, tangible financial incentives should be used.

While dealing with the problems of today, the challenges of the future must be addressed as well, so we also need to think about the kind of energy resources that will ultimately be the staple of the future power industry. Currently, this does not seem like a problem that is relevant now or in the near future, but we must nevertheless analyse how alternative sources of energy may be introduced. We need to promote these alternative sources of energy, because sooner or later, they will replace today’s traditional hydrocarbons, as sad as that may sound to us.

Even today, despite being the leading hydrocarbon producer, we must think about tomorrow, and the day after. Clearly, a major change will not happen overnight, but we know how history always pans out: once or even twice every century, we see a revolutionary development in energy generation, with the introducing of oil, gas, electricity, nuclear energy.

There is no doubt that the goal of producing efficient hydrogen fuel will one day be achieved. Some nations spend billions of dollars on research in order not to buy our oil and gas. Thus, we must respond to this challenge.

Improving energy efficiency is a major macroeconomic challenge. To maximise its effects, cuts in consumption of energy resources must be supplemented by the launch of new, innovative processes and the implementation of frontline technological solutions.

Of course, we will address all of this, and we also need to create the necessary conditions for our businesses to cultivate energy efficiency. We must use regulations to encourage them by employing financial incentives as well as sanctions. Both are needed in order to get things moving.

I believe that the topic of this State Council Presidium meeting is most essential. Now, I will pass the microphone over to my colleagues, who will discuss these issues in more detail.

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