VZCZCXRO8744
PP RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHVK RUEHYG
DE RUEHMO #0048/01 0101321
ZNR UUUUU ZZH
P 101321Z JAN 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6077
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZN/EST COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 MOSCOW 000048 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG SENV ETRD ECON TRGY RS
SUBJECT: GREEN STRUGGLES AGAINST BLACK GOLD IN RUSSIA 
 
Summary 
------- 
 
¶1. (SBU)  With its focus on oil, gas, and nuclear power, 
Russia has largely ignored the renewable energy sector.  The 
GOR has not yet established a comprehensive renewable energy 
strategy.  Instead, the GOR is targetting ways to reduce 
wasteful energy consumption.  Experts believe renewable 
sources such as wind, biomass, solar, and geothermal have 
considerable potential in Russia.  To date, however, the 
sector, apart from hydroelectric, has attracted minimal 
investment and political attention.  End Summary. 
 
Background 
---------- 
 
¶2. (U)  According to International Energy Agency (IEA) 
statistics, renewable energy sources in Russia, apart from 
hydroelectric, account for about 1% of electricity generation 
and 5% of heat generation.  The IEA says that Russia has the 
potential to replace up to 35% of energy that relies on oil 
and gas with renewables, especially for "low hanging fruit 
niche markets."  For example, some 10 million off-grid 
customers who may use gasoline or diesel generators could 
adopt more reliable and cleaner alternatives, such as 
wind-powered diesel systems, biomass-fired steam boilers, and 
small hydro. 
 
--Wind:  According to a recent report by the European Bank 
for Reconstruction and Development (EBRD), most of Russia's 
high wind energy potential is concentrated along the 
seacoasts, in the steppes, and mountains.  EBRD estimates 
that wind has the economic potential of 10 million tons of 
coal.  Regions most favorable for wind energy use include 
Northern Russia and the Far Eastern region, where many 
Russia's 10 million off-grid customers are concentrated. 
Currently, Russia has only 14 MW of installed wind energy 
capacity, according to the IEA. 
 
--Biomass:  About 22 percent of the world's forests are 
located on Russian territory, making fuel derived from 
combustible renewables an obvious source of alternative 
energy.  Biomass accounts for the majority of installed 
capacity for heat and electricity generation.  Burning 
firewood for heating and cooking purposes is common in rural 
areas and at dachas.  About 40 thermal power stations use 
biomass derived mostly from waste generated from the wood 
processing industry, and around 100 plants convert biomass 
and agricultural waste into biofuels. 
 
--Solar:  Solar energy provides only a nominal amount of 
energy, especially considering Russia's vast surface area 
compared to its installed solar capacity.  Despite Russia's 
land mass and experience with solar panel and collector 
developments during Soviet times, there is little prospect 
soon of investment in large-scale solar collectors. 
 
--Geothermal:  Russia possesses significant geothermal 
resources for electricity and heat generation.  Heat 
potential in Kamchatka and Chuktoka in particular is high. 
Areas containing thermal water fields with proven resources 
also include Chechnya, Dagestan, and Siberia.  According to 
the IEA, geothermal has 73 MW of installed capacity and has 
the potential to satisfy power and district heating needs in 
some rural areas. 
 
--Hydroelectric:  Total hydroelectric installed capacity in 
Russia is estimated to be 47,000 MW, or about 21 percent of 
total electricity generation capacity today.  Almost half of 
Russia's hydroelectric plants are located in the West; others 
are in Siberia.  EBRD estimates that total hydroelectric 
technical potential in Russia is about 2,400 billion kWh per 
year, the majority based on medium and large rivers. 
Scientists say that the focus in Russia today is moving away 
from big, Soviet-era scale hydroelectric power plants to 
smaller MW plants in more remote areas. 
 
Recommendations to the Duma 
--------------------------- 
 
¶3. (SBU)  Renewable energy has gained some attention recently 
in the State Duma.  In mid-November, United Russia Duma 
Deputy Valentin Ivanov chaired a hearing at the Sub-Committee 
on Renewable Power Sources.  The hearing focused on 
developments and applications of biofuels, such as biodiesel, 
and alternative fuels made from plants, rape-seed, and 
ethanol.  Ivanov underscored the need for Russia to tackle 
global climate change by substituting biomass, biofuels, 
wind, solar, and geothermal for carbon-emitting sources. 
 
MOSCOW 00000048  002 OF 003 
 
 
 
¶4. (SBU)  Ivanov noted that Russia had the technical 
infrastructure to make advances in renewable energy.  The 
main obstacles are Russia's weak legal system and an absence 
of wide-spread application of renewable technologies.  Ivanov 
and various International Science and Technology Center 
(ISTC)-sponsored participants at the Sub-Committee hearing 
identified key goals Russia should aim for in the near 
future, as follows: 
 
--improving the economic feasibility of new energy 
applications; 
--developing legislative and regulatory mechanisms to foster 
development of renewables; 
--promoting the development of an alternative energy 
industrial base and increasing investments into the projects 
related to power supply to the regions; 
--distributing information in the field of alternative energy 
and energy efficiency. 
 
No GOR Policy for Renewables 
---------------------------- 
 
¶5. (SBU)  There is still much skepticism, however.  Oleg 
Pluzhnikov, who heads the Department on Environmental and 
Energy Efficiency at the Ministry of Economic Development and 
Trade, admitted to us that the GOR has no renewable energy 
policy.  He added that although the GOR funds R&D for 
renewable technology, the lack of market incentives means few 
Russian consumers and industries are likely to switch soon to 
cleaner forms of energy. 
 
Conservation 
------------ 
 
¶6. (SBU)  According to a 2003 Russian Ministry of Industry 
and Energy report, a top priority in Russia's energy strategy 
up to 2020 is to reduce waste in energy consumption and 
production by improving efficiency and competitiveness.  As a 
proponent of energy efficiency, Pluzhnikov believes Russia 
should modernize aging infrastructure, replace obsolete 
production and delivery systems, and install better 
insulation for heating.  Russia can do this using existing, 
cost-effective technologies.  He estimated that Russia could 
recover up to 50% of its current level of energy consumption 
by improving efficiency alone.  This could render unnecessary 
more costly and ambitious nuclear energy initiatives (Note: 
Rosatom's plans to expand Russia's reliance on nuclear power 
generation from 16% to 25% over the next twenty years. End 
note). 
 
Export Market Negligible 
------------------------ 
 
¶7. (SBU)  Pluzhnikov downplayed the possibility that a 
growing Western European market for renewable energy sources 
could prompt Russian industries to export alternative energy 
products, such as biofuel and wood pellets for industrial 
use.  He noted that pellet manufacturers do exist in Russia, 
but the market for them in the West is still too small. 
Pluzhnikov was also dismissive about enhancing domestic 
consumption of renewable sources since consumers still have 
to rely on Russia's inefficient electricity grid.  Major 
improvements would have to be made in electricity regulation 
and infrastructure.  Pluznikov told us that the theme of 
energy efficiency would be addressed in a GOR energy strategy 
paper to be presented in March 2008. 
 
"Toys and Monkey Tricks" 
------------------------ 
 
¶8. (SBU)  With vast revenues pouring in from oil and gas 
exports, Russia has not taken renewable energy seriously, 
Vladimir Chuprov, head of the energy section at 
Greenpeace-Russia, told us.  To Russian policymakers, biofuel 
and alternative energy technologies are simply "toys and 
monkey tricks," with no economic viability, he said.  The 
ecological advantages of green energy technology have little 
resonance.  He predicted Russia would continue to focus on 
gas and oil and build costly nuclear power plants while 
ignoring warnings about the dangerous and unsustainable 
build-up on its territory of radioactive waste. 
 
Renewable Energy as a Career 
---------------------------- 
 
¶9. (SBU)  Although the GOR has no separate renewable energy 
policy, last fiscal year it provided 217.9 million rubles (or 
about 9 million dollars) to fund research and development in 
 
MOSCOW 00000048  003 OF 003 
 
 
renewable energy and fuels as part of its climate change and 
emissions reduction technology development programs.  Dr. 
Igor Tyukhov, an expert on solar energy and photovoltaics at 
the All-Russian Research Institute for Electrification of 
Agriculture, told us he regarded that sum as paltry.  He 
maintained that renewable energy technologies have potential, 
but GOR financial support for scientists in this field is 
almost non-existent.  He said many of his students in his 
solar energy lab struggle to make ends meet.  Many choose to 
abandon the renewable energy field and apply their scientific 
know-how in the private sector, where salaries are much 
higher and opportunities greater.  He told us state funding 
is barely adequate to support the main scientific institutes, 
let alone provide incentives to attract new students and 
professors into research on renewable energy. 
 
Comment 
------- 
 
¶10. (SBU)  Apart from the traditional use of hydroelectric, 
the GOR has not woken up to the significant potential for 
renewable energy in Russia.  While the GOR promotes nuclear 
power development as a way to liberate oil and gas for 
export, it has not viewed renewable technologies in the same 
way.  With little Russian R&D taking place in the field, the 
opportunity exists for U.S. firms to capitalize on the 
largely untapped potential in Russia for wind, solar, 
biofuel, and geothermal power.  Opportunities also exist for 
U.S. firms to partner with Russian scientists and institutes 
studying practical applications of renewable technologies. 
As the GOR pushes for domestic energy prices to rise to 
market levels by 2011, economic incentives to realize the 
potential for renewable technologies in Russia should 
increase. 
RUSSELL