Russian Member Committee

The Russian National Committee of the World Energy Council was established as a non-profit organisation at the end of 2000. It is an active member of the World Energy Council, its technical committees and working groups, and participates in events organised by the World Energy Council as well as hosting and organising other World Energy Council-related events. The Committee aims to collaborate with countries and continents to solve global energy issues. The unique nature of the World Energy Council as an "umbrella" organisation for each international committee makes the Committee a unique organisation in Russia's energy sector, with a great deal of national and international influence.

Mr. Alexander Novak, born August 23rd, 1971 in the Donetsk region of the Ukranian SSR, is currently serving as Russia's Minister of Energy.

From 2000 to 2002 he was Deputy Mayor of Norilsk on financial and economic issues and First Deputy Mayor of Norilsk.

In 2002 – 2007 Mr. Novak was Vice-Governor of the Krasnoyarsk region, Head of the Main Financial Directorate of the Krasnoyarsk region administration.

From July 2007 to September 2008 he was the First Vice-Governor of the Krasnoyarsk region and from July to September 2008 he was also the Chairman of the government of the Krasnoyarsk region.

From September 2008 he was the Deputy Minister of Finance of the Russian Federation and from October 2008 a member of the board of the Russian Ministry of Finance.

He is a graduate of the Norilsk Industrial Institute and the Moscow Lomonosov State University (MSU).

Mr. Novak has held the position of Minister of Energy of the Russian Federation since 2012.

Has been the head of the Russian National Committee of the World Energy Council since September, 2016.

Energy in Russia

russia, critical uncertainties, action priorities

In this year iteration of the Issues Monitor, the three key critical uncertainties for Russia are: United States Policy, Digitalisation and Economic Growth. Russian energy leaders consider that the continuing growth in US oil and gas production could be detrimental to the Russian economy due to its dependence on fossil fuel exports. In terms of Digitalisation and Artificial Intelligence in the energy industry, Russian oil and gas companies are developing their own digital technologies due the sanctions. Moreover, Russian energy leaders are concerned that due to a highly competitive environment, lower than estimated demand from Asian countries may affect Russian gas projects.

The three key action priorities for Russia are Energy Subsidies, Nuclear Power and China. Subsidies still play an important role in the Russian electricity market. There are 8 types of premiums that commercial and industrial consumers pay in addition to their electricity bill. Some of them are aimed at developing new technologies such as renewable energy, innovative nuclear stations. But the mechanism itself requires more precise and targeted approach. In terms of nuclear power development, Russian explorations and achievements are at the forefront of nuclear power technologies. As a feasible energy source providing sustainable, affordable and safe generation, Russian nuclear cutting edge solutions stand its ground on a global scale with a current portfolio of 36 nuclear power plants under construction worldwide which sets an ambitious unrivalled challenge to tackle in the 21st century.

US Policy and Commodity Prices: The US continuing growth in oil and gas production will likely keep oil and gas prices low in 2019 as the result of low-cost reserves. The oil production growth in the US (avg. 6.3 mmbbl/day in 2018 (+1.4 mmbbl/day y-o-y)) alone will cover the increase in global oil demand. It can be detrimental to the Russian economy due to its dependence on exports of fossil fuels. In this context, Russia became an active member of the OPEC Plus in 2015 to contribute to the stabilisation oil prices. Moreover, rising shale gas production and LNG export capacities of the US will most likely provide tough competition to Russian gas on the European market.

Digitalisation: Digital technologies are expected to positively impact US and Chinese GDP growth. Nevertheless, in the case of Russia, due to international sanctions, Russian companies are developing their own digital technologies. The investments in the energy sector are not still determined. However, the total investments in Russian digital economy are estimated at RUB100 bln (USD1,5 bln) annually.

Economic Growth: For the Russian energy sector, the Asian market is a major export destination. China topped the list of oil importers from Russia in 2017 (59,7 mm tons) and together with South Korea and Japan – made up to a quarter of Russian export. The new “Power of Siberia” gas infrastructure facility will open Chinese gas market as well. The “Yamal LNG” project is also aimed at covering growing Asian demand for energy resources. Russian energy leaders are concerned that due to a highly competitive environment, lower than estimated demand from Asian countries may affect Russian gas projects.

Energy Subsidies: Cross subsidisation still plays a significant role in the Russian electricity market. In addition to the business-to-households’ mechanism, other mechanisms have been developed to support the electricity systems of Kaliningrad, Crimea and Far Eastern regions. Additional mechanisms focus on technology, aiming at supporting renewable energy, new generation construction and maintaining safety standards at the nuclear stations. In 2018 the overall cost of such subsidies was estimated to reach RUB480 bln (USD7 bln) and made up to 30% of the end-user bill. These subsidies send false market signals and provoke market participants to sacrifice the longterm vision for short-term benefits.

Nuclear: Nationally, nuclear energy is one of the key actors to meet 2030 national determined contribution (NDC*) target on the basis of the reconsideration national energy mix by reducing fossil fuel share; the state focus on the nuclear sector development in the long term; the traditional general public support of nuclear energy; the low CO2 emissions level. Globally related milestones included in the Russian energy strategy 2030: active technological development, modernisation and upgrade of present nuclear power plants (NPP) with a certain focus on the global market; technological verification, completion and deployment of closed fuel cycle as a transition towards two-component nuclear energy system (based on Fast Neutron and PWR reactors’ combination) with an underlying solution of SNF global stockpiling; further elaboration of prospective technologies providing an expansion of nuclear capacity range to ensure small modular reactors technology (SMRs technology) commercial supply to meet emerging market demand; active international collaboration in nuclear fusion global development projects; R&D dynamic scale-up is expected on the listed directions with a solid groundwork formation..

Despite the dominance of fossil fuels in Russia’s energy mix, energy leaders have been increasingly focusing on greater renewable energy investment. Companies such as Rosatom and Rostech are investing in RES development. The government’s official energy policy document up to 2035 is likely to see RES share growth by 2-3% of installed capacity by 2030, with the exclusion of hydro. Russia remains at the forefront of hydrocarbon production and export. However, the country has taken important steps towards the development of renewable energy projects, reconsideration nuclear energy prominent impact and digitalisation of the energy sector. Moreover, existing renewable energy capacity agreement mechanism is oriented to locate production of main equipment and the development of local technologies and R&D in the field.

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