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Economy


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The state prefers homegrown food as agriculture gets a boost http://bit.ly/bw4Scj


Environment Will green energy contribute to a more productive Russian economy?


Red to Green: Russia Begins Energy Saving


Russia needs energy efficiency in order to improve its competitiveness. Government and businesses have projects in this sphere.


RACHEL MORARJEE BUSINESS NEW EUROPE


Every year, Russia wastes enough energy to power the French economy, but new evidence suggests that the Kremlin is de- termined to change its ways. The Russian government ap-


proved a $300 billion energy- efficiency program that will trim the fat from Soviet-era factories and buildings, signaling new ef- forts at a green energy revolu- tion. “The political winds have changed at the top, and there is a growing consensus that cli- mate change is happening and a will to change and build a more efficient economy,” said Kevin James of London-based investment adviser Climate Change Capital. He added that the forest fires


of the summer led to a realiza- tion that climate change may not be entirely positive for Rus- sia. (Prime Minister Vladmir Putin once famously quipped that global warming meant Rus- sians would need to spend less on fur coats.) President Dmitry Medvedev, however, has taken a much tougher line on the environ- ment, supported by a report from the World Bank, which said that improving energy efficien- cy will improve the country’s productivity and competitive- ness.


Russia is the world’s biggest


oil and gas producer, and cheap government-capped domestic energy prices have drained the motivation to conserve energy. Medvedev aims to make the country’s economy 40 percent more energy efficient by 2020.


Medvedev has introduced po-


litical initiatives to reduce Rus- sia’s dependence on oil, from phasing out the use of incan- descent light bulbs to state sup- port for billionaire Mikhail Prok- horov’s project to build a hybrid car plant in Togliatti (Russia’s domestic auto capital). Yet Russia lags far behind


China, which is already the world’s leading manufacturer of wind turbines and solar panels and is on track to produce the world’s first completely battery- powered car. However, Russia has an- nounced plans to build eight plants that will produce ener- gy-saving lamps. The first Rus- sian solar plant will likely break ground in the North Caucasus resort city of Kislovodsk next year. The $99 million plant is small, but more solar and wind plants are in the pipeline. Rostovteploelektroproyekt, a


Russian company specializing in the design of energy plants and equipment, said it also has plans to develop wind and solar power worth almost $300 mil- lion in the Krasnodar region. The wind project could start


as early as next year, pending necessary approvals. In addition, Russian energy giant RusHydro already has plans to build a


wind-power park in the city of St. Petersburg. Meanwhile, hydropower has


also gained ground. This June, Italian energy giant ENEL and RusHydro signed a cooperation agreement to work on renew- able power projects, including tidal and geothermal power projects, as well as in retail power sales. Biofuel development is mak-


ing similar progress. In June, pres- idential economic adviser Arkady Dvorkovich said the government should support small energy- generating projects that use bio- fuel by giving them tax breaks and subsidized interest rates. Russia’s Natural Resources and Environment Ministry also draft- ed a bill in August to promote recycling. The legislation would require factories to recycle the material they currently throw away. Pulp and paper factories could easily sell much of their waste to biofuel plants, result- ing in economic gains for them as well as reduced waste. NGOs say these moves mark


a shift in the right direction, but it would not be the first time the Russian government has drafted laudable plans but failed to act on them. Vladimir Chouprov of Green-


peace said there was “a big line of industrial companies want- ing to modernize their opera- tions and raise efficiency,” but that many at the top, includ- ing Vladimir Putin, remain skep- tical of climate change. “The government is not green, and many policies are anti-environ- mental,” he said.


Energy Shedding light on solar development in Russia


Harvesting the Sun's Northern Exposure


The use of solar energy, though still nascent, is considered a promising alternative energy source in Russia.


IRINA FILATOVA THE MOSCOW TIMES


Russia may be associated more with long, dark winters than sun-drenched days, but that does not stop private compa- nies from tapping into a grow- ing market for solar energy. “There was an opinion that


it’s better to use solar energy in countries where there’s a lot of sun,” said Marat Zaks, chief ex- ecutive of Solar Wind, a Krasn- odar-based solar panel manu- facturer. “But the fact is that


there’s a lot of sun in Russia as well. Germany is the world’s number one solar energy con- sumer. But is Germany a sunny country?” Solar Wind produces panels


mostly for export but hopes to see the domestic market grow. “If we get an order from a


Russian customer, we try to com- plete it quickly to aid the mar- ket development in the coun- try,” Zaks said. A number of Russian private companies are creating joint ven- tures with Rusnano, the state technology corporation, to ad- dress local needs. Solar Wind is starting a $160


million project, with Rusnano as a partner, in which it will make


double-sided solar panels for do- mestic use. These are panels that collect solar energy from both sides. Zaks said there are only a few companies making such panels. The plant, which may start working at the end of this year or in the first quarter of 2011, will have an annual manufactur- ing capacity of 30 megawatts at the start, and will eventually ramp up to 120 megawatts per year. The volume of Solar Wind’s domestic sales is still much small- er compared with exports, Zaks said, though he declined to name the percent. He said pri- vate firms and regional govern- ments are his customers locally,


and the company exports solar panels to more than 22 coun- tries, including Germany, Britain and the United States. Industry insiders said solar en-


ergy could become a real alter- native for traditional energy sources in a number of the coun- try’s regions. “The Krasnodar region and


most parts of Siberia have inso- lation levels [average exposure to the sun’s rays] comparable to the south of France and central Italy, where solar energy is cur- rently booming, while the Za- baikalsky region gets more solar energy than Spain,” said Vasily Malakha, head of the environ- ment monitoring department at the Electricity and Energy Coun-


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BUSINESS IN BRIEF


Aeroflot Sponsors New Jersey Nets


The Russian tycoon Mikhail Prokhorov, who owns the New Jersey Nets, said that the team had signed a sponsorship agreement with the Russian air carrier Aeroflot. It is the first time a Russian state airline sponsored a U.S. sports team. The Nets, currently based in Newark's Prudential Center, landed the contract for two years. The agreement was announced just three weeks after the team and vodka company Stolichnaya signed a contract with Barclays Center in Brooklyn, N.Y., where the Nets will start play- ing in 2012. Nets official Brett Yormark expressed his hope that the agreement with Aer- oflot will be maintained even after the team moves to the Barclays Center. During his last visit to Rus-


Some eco-friendly families place solar panels on their country homes (Novosibirsk Region). Tycoon Prokhorov’s Hybrid Car


sia, Yormark arranged meet- ings with representatives of more than 30 companies and said he expects more spon- sorships in the near future. One of Russia's richest oli- garchs, metals magnate Prok- horov purchased controlling interest in the team in Sep- tember 2009. He also owns Snob Magazine, which was launched stateside last month.


Trillions Needed For Oil Sector


REUTERS/VOSTOCK-PHOTO


cil of the Commonwealth of In- dependent States. The Krasnodar region started


paying attention to solar energy after it launched an energy-effi- ciency target program in 2006. The region is using solar panels not only for electricity pro- duction but also for heating water. The roof of the central hospital in Ust-Labinsk, a town northeast of Krasnodar, is being covered by 300 solar panels. The installation will heat water


for the hospital’s daily needs year- round, said Alexander Kiselyov, deputy chief doctor of the hos- pital, adding that the solar pan- els would heat a daily water sup- ply.


Solar energy use has a future


in Russia, but this kind of ener- gy should be used only in com- bination with other renewable energy sources, said Brigitte Schmidt, a board member of Eu- rosolar Deutschland, the German division of the European Asso- ciation for Renewable Energy. Solar energy has not become popular in Russia because of its focus on oil exports, she said by telephone from Germany.


Another obstacle is the high


cost of solar power station con- struction, compared with tradi- tional power stations, experts said.


The construction cost of a solar


power station ranges from $10,000 to $17,000 per one kilo- watt of installed capacity, Malakha said. In comparison, a kilowatt of installed capacity at a nuclear power station costs up to $3,000, while the figure for a hydroelectric power station is just $1,000. That makes building solar


power stations less effective for Russia’s economy than con- struction of traditional power stations, said Yevgeny Nadezh- din, of UNESCO’s Sustainable Energy Development Center, adding that hydroelectric and biofuel energy generation are the best options for the coun- try. Building solar electric power stations around Russia is un- likely to be economically viable over the coming 30 years, Na- dezhdin stated.


Originally published in The Moscow Times


Keeping up Russia’s oil output will cost $292 billion, accord- ing to Prime Minister Vladimir Putin. He called for that level of investment over the next de- cade to maintain crude oil pro- duction levels at 500 million tons a year. Putin admitted that tax re-


gimes needed to be reformed before new reserves can be ex- ploited fully in the vital re- source sector. An agreement on develop-


ing Russia’s oil sector was reached in Samara and antic- ipates a small increase of 2.2 percent in oil production until 2020, largely by involving ex- isting production regions, Ve- domosti reported.


Expat Red Tape Simplified, Again


ITAR-TASS


American Venture Capital on the Volga CONTINUED FROM PAGE 1


Gov. Arnold Shwarzenegger's visit to Russia last month with representatives from Google, Microsoft and Oracle, represent- ed a reservoir of hope and good- will. The governor called Presi- dent Dmitry Medvedev a "great visionary" and said Russia was a "gold mine of opportunity" while the Kremlin continued to push its development of the Skolkovo innovation city. The American Chamber of Commerce in Russia organized the visit to break the ice, fol-


lowed by trips to California by Russian delegations. But a rep- resentative of the Chamber of Commerce cautioned that American venture capital deals in Russia will take time. No one knows this more that


White, a Russia veteran who is cautiously optimistic. “There are almost no people


in Russia who would be pre- pared to invest in projects in the initial stage,” White said. “For the huge country, there are just 10 to 15 angel investor clubs, up to 10 people in each of them, at the most. This is


nothing compared to the Unit- ed States, where we have 270,000 such clubs, with total annual investment worth $30 billion.” He said that there has been progress, however. "The presi- dent and the government are not just speaking of innovations, but they are also creating the necessary infrastructure to sup- port them. Perhaps some new institution is needed to carry out independent expert examina- tion in universities, selecting in- teresting projects. The Skolkovo project is very promising, but


only if it is modeled on Silicon Valley. In the United States, you can see a millionaire investor sitting in the company of uni- versity students. Skolkovo needs the same kind of openness,” White said. It is very difficult to persuade


Russian company owners to in- vest in innovation, White said. Many owners, who often act as general directors of their busi- nesses, cannot imagine any out- siders joining the capital of their company, and they cannot grasp why they should cede some control over their inter-


ests. “The problem is that peo- ple in charge of large plants, especially in the regions, often cannot understand the reason behind investing in innovation since their companies already monopolize the respective mar- kets. They don’t see any point in modernizing to enhance their competitiveness, as there is no competition as such. And these people are taken by surprise when transnational corporations come to regional markets. If this happens, it is too late, the mar- ket is already lost,” he said. Innovation in Russia is infor-


mal, he concluded: "If you take two guys from Nizhny Novgorod and give them a software as- signment, they will lock them- selves up in a room, smoke like chimneys and stop shaving for days, but when they finally emerge, you will get a much deeper solution than you could imagine. This creativity should be leveraged. I think Russia’s rev- enues from the sale of natural resources will be declining, one way or another, and soon we will see the new generation of self-made people emerging in this country."


Expats’ lives in Russia could be- come easier following a new measure to reduce bureaucra- cy, Vladimir Pligin, State Duma deputy, told Russia Now. The families of highly qualified for- eign specialists working in Rus- sia will no longer have to go through a cumbersome visa process, and the expatriates will face simplified registration procedures upon arriving in the country. Finally, expats will be able to apply as highly qual- ified specialists via their local Russian embassy, and their in- formation will be stored in a special database available to Russian companies. The bill faces three readings in the State Duma before it becomes law.


RUSSIA AND CHINA HOW DO TWO OF THE


WORLD’S LARGEST EMERG- ING MARKETS COMPARE?


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