2011 OECD Economic Surveys: Russian Federation 2011

image of OECD Economic Surveys: Russian Federation 2011

OECD's 2011 Economic Survey of the Russian Federation examines recent economic developments, policies and prospects; the business climate, the fiscal framework, monetary policy, and energy efficiency.

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Increasing energy efficiency as a means to achieve greener growth

Although energy use has declined substantially in absolute terms since the Soviet era, Russia still has one of the most energy-intensive economies in the world. The high degree of energy intensity, combined with relatively carbon-intensive energy use, results in Russia accounting for a disproportionately large share of global carbon emissions: it is the sixth largest economy in the world in PPP terms but the fourth largest emitter of greenhouse gases. Moreover, low energy efficiency contributes to poor air quality, and Russia has one of the highest rates of premature mortality attributable to air pollution in the world. The scope for profitable energy efficiency investment in Russia is huge, and indeed a good deal is already happening, but a number of constraints and market failures make this process slower than optimal. This means that improving energy efficiency should be a top priority for government policy in Russia. Ambitious official targets for energy efficiency gains have been established, but so far the policy measures identified appear insufficient to meet them. The clearest imperative is to remove government interventions that result in below-market prices and to introduce new policy instruments to ensure that negative externalities associated with fossil fuel combustion are reflected in prices. The installation of meters for energy use should also be speeded up, and there is scope for greater sophistication in tariff structures to allow marginal costs to be better reflected in prices facing consumers. A number of other complementary measures may be warranted, but should be subject to careful cost-benefit analysis.

English Russian, French

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