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President of Russia Dmitry Medvedev: Colleagues,

Today’s meeting of the Commission is devoted to a very important issue that we have already addressed several times within the framework of the Commission, as well as at the meetings I held recently on energy efficiency in the Russian economy. We talked about this last September at the energy meeting in Omsk. Still, since this is a very important and complicated matter, these issues will be very important in the upcoming years. Their resolution will require the efforts of everybody present. That is why today’s discussion is not the first or the last conversation we will have on this issue. Today, I would like for us to analyze the measures being taken in this regard in the fuel and energy sector.

It is no secret that this sector has enormous innovation potential. It absolutely needs to engage in innovation, and unlike other sectors, it has the money to do so – in other words, the money necessary to develop corresponding technological solutions, as evidenced through many programmes, as well the technological upgrade projects already being implemented.

But on the other hand, people often talk about the conservative nature of the fuel and energy sector, which is supposedly stuck in its role, or is even seen as being part of or personifying a paternalistic mindset, which posits that nothing needs to be changed: “everything will be okay either way – we still have oil and gas, so we can continue to develop without technological improvements, and we certainly don’t need any strange innovations.” But that’s just not true. Incidentally, today I became certain of the industry’s good potential, which is already being realized, when I visited several facilities, including Surgutneftegaz and Rosneft. They are using new technologies to pump oil and creating new power plants that use accompanying gas: everything is done using the most advanced technological solutions. Without a doubt, this should motivate us to work on these issues.

Another issue – and let’s be honest here — is that a significant part of these technological solutions, just like the equipment being used, are foreign solutions; we are certainly using a great deal of foreign mechanisms and devices. Thus, our goal is to ensure proper localisation of such projects.

Nevertheless, we must also keep in mind our fuel and energy industry’s social responsibility, as well as its role in preserving the natural riches of our nation. For many years (perhaps even decades), the world’s leading governments have been working hard, working consistently to preserve their nations’ natural resources for future generations. And Russia, too, needs to be on a proper modern economic level in this area.

We have been talking and will continue to talk about the social dimensions of modernisation. The new technologies we are creating are no toys for eggheads; they are things that allow us to lower costs, increase companies’ incomes, and improve working conditions and environmental situation. Subsequently, they allow us to ensure better well-being in our nation. In other words, these are entirely practical results. Thus, the more advanced the technologies are – as obvious as this might sound, but we still have to remember this and act based on this knowledge, — the higher living standards, and ultimately, better social guarantees we can ensure.

I gave a series of instructions following our previous meetings, and they have already yielded some results. Last November, a Federal Law directly addressing energy efficiency came into effect. You recall our discussions: ultimately, this law was passed quickly. Incidentally, this good result serves as evidence that if we all perceive such projects as important and useful to our nation, we can overcome even inter-departmental disagreements, not just though pressure from the President or some kind of draconian orders, but simply because it is in all of our interests.

The Government has issued the first package of necessary regulations, and we have begun to implement six integrated pilot projects. We are seeing our first results, and I am counting on our Economic Development Minister, Ms Nabiullina, to tell us about it today. We are just about to begin our work to resolve this highly important challenge. We are at the very beginning of our journey, and it is therefore imperative for us to create a whole range of incentives to develop projects of this kind.

I would like to once again note that our fuel and energy sector holds the key to a significant part of our potential for improving energy efficiency, but in terms of new energy efficiency technologies, we are still far behind the global leaders. At our last meeting (admittedly, that meeting was not on energy efficiency – it was devoted to innovations from state companies, and later, private companies as well), we spoke about Russian companies’ research and development costs, and it turned out that across all companies, the figures were found to be quite modest. Granted, today, my colleagues told me that they are working with these figures, and the figures are improving, which I am happy to hear. Nevertheless, we must still aim toward increasing research and development spending.

In Omsk, we also noted that global energy does not stand still. Hydrocarbon production technologies that seemed exotic just recently are now – much to many people’s amazement – beginning to yield some very clear economic results. We dealt with these issues last time as well.

Today, our energy companies really are beginning to work on these issues. Still, we must do more than just use others’ solutions in this field or engage in licensed production of corresponding resources. We must also try to take a leading position, especially since a significant part of these opportunities are concentrated in our nation. Thus, we should be leaders in developing such technologies.

Today, amid the global crisis, there is a lot of talk about the economy. High technologies are indeed quite expensive; nevertheless, without this innovative component, we are unlikely to achieve anything. Thus, we must try to introduce this innovative component at every stage of energy generation, transportation and use, because unfortunately, we are highly ineffective in all of these areas. At the same time, this part of my speech, which addresses our own opportunities, should not lead anyone to believe that we can do everything entirely on our own. This is unproductive thinking and will significantly slow our development. Self-reliance is rarely a successful development strategy. Thus, we must seek to bring skilled and competent foreign specialists and corresponding businesses to Russia.

Today, we have invited representatives from several companies specialising in high tech services to attend this meeting of the Commission. We will listen to what they have to say on what should be done, because we are interested in this kind of cooperation. Indeed, I hope that everyone is interested – not just the government, but large companies as well, both domestic and foreign companies entering Russian market. We should all complement one another.

This is the agenda for today’s meeting. Before we begin, I would like to say a few words on a topic that is related to innovation and technological development, but which is not the topic of today’s meeting. You know, I was recently looking into the issue of finding a location for a new innovative centre. A decision was made to set it up in Skolkovo, as I have already informed everyone. Now, we need to move on to the practical work. We must not only create the facilities but also introduce an effective working system, because we are not doing all this just to build a certain number of houses or open laboratories and create a working environment. These things are, of course, important, but it’s still infrastructure. What’s most important is to bring people to this centre. And to make people come, we need to have a clear system of management in place, and this system depends on us.

Who should be responsible for coordination? Given the project’s scale and the fact that government institutions should not be the only ones interested in its implementation, I believe this is something Russian business might as well engage itself in. We held consultations on who, specifically, could carry out this kind of [coordination] work. I have made the decision that the Russian part of the coordination structure we plan to create will be headed by Viktor Vekselberg. Mr Vekselberg, perhaps later, you can tell us a little more about it.

We will also need a corresponding scientific advisory council, and bring in foreign partners, including well-known representatives from foreign scientific circles and companies. We will have more discussions on this issue, and after making our final decisions, we will invite specialists to participate in this process. I had some consultations on this matter with my colleagues, who are leaders of some foreign states, and they promised to help, at the very least with advice; this, too, is important. I think that this will be a rather important component in our work.

Finally, since we are about to move on to directly creating an innovation centre in Skolkovo, we already have a sense of how this process should be managed. I think that we must also decide on legal regulations for the work that will be done there. Most probably, this will not be yet another little facility that follows general laws. I think that we should consider creating special legal regulations for this kind of work. The specifics will be up for discussion. I am giving the Government Cabinet instructions to prepare suggestions on this matter. We have some chiefs and deputy prime ministers here, so I am asking you to look into this issue, but please don’t take too long, because we need to come up with a broad outline of a special legal regime within the next month. If this requires amendments to the legislation, we will pass them, in order to get going.

Let’s get back to our main topic, which is energy efficiency. I will now give the floor to Deputy Prime Minister [Igor] Sechin. I would like to make just one note: recently, the global trend for development of oil and gas companies, the energy companies in general, has been to focus not only on traditional core business areas, but also to expand into power industry and engage in alternative energy generation.

I think that our major companies should make a note of this as a potential direction of development, make it a part of their arsenal, because focused specialisation is no longer a successful strategy for large companies working, for example, with hydrocarbons.