Thursday, April 22, 2010

The Outlook for Energy in Eastern Europe and the FSU

Lights Out? The Outlook for Energy in Eastern Europe and the Former Soviet Union

This new report has been recently published by the World Bank. Download the pdf version to read the full Lights Out? The Outlook for Energy in Eastern Europe and the Former Soviet Union paper. A short excerpt:


Before the current economic crisis hit the Europe and Central Asia (ECA) region in 2008, energy security was a major source of concern in Central and Eastern Europe and in many of the economies in the former Soviet Union. Energy importers were experiencing shortages
leading to periodic brownouts and blackouts. An energy crisis seemed imminent.

  • Emerging Europe and Central Asia, the region made up of the countries of Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS), is a major energy supplier to both Eastern and Western Europe. However, the outlook for both primary and derivative energy supplies is questionable, with a real prospect of a significant decline during the next two decades.
  • Western Europe is heavily dependent on energy imports from this region. It will therefore be affected by declines in primary energy supplies. But Western Europe has the financial capacity to secure the energy supplies it needs (albeit at the expense of others). In contrast, the region’s energy-importing countries are caught between Western Europe, which has increasing import needs, and the region’s exporters, whose exports will likely decline. These countries face the prospect of being squeezed both financially and in terms of energy access.
  • This difficult prospect is compounded by the deterioration of the region’s energy infrastructure, including power generation and district heating. Although the public sector will have to finance a portion of these investments, it will not have the capacity to meet the full investment needs. It is therefore essential that countries in the region move quickly to put in place an enabling environment to support investment in the sector.
  • Overlaying all of this are environmental concerns, in particular concern about climate change. Member states of the European Union (EU) and those with EU ambitions will need to meet the challenging EU greenhouse gas emissions targets. At the same time, a number of countries in the region will face the temptation to use environmentally unfriendly technology to meet their immediate energy needs.
  • Policy responses need to emphasize demand-side management and the use of energy efficiency measures. The Russian Federation, as the region’s major energy exporter, needs to direct additional resources to energy production over the longer term if export levels are to be maintained. Incentives need to be devised and implemented to encourage countries to avoid environmentally unfriendly solutions.
[via The Oil Drum's daily Drumbeat news]

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