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October 12, 2022

Modernization of the Housing and Utilities Sector as a Means to Reduce the Energy and Carbon Intensity of the Russian Economy

Key conclusions

Russia’s housing and utilities sector is increasing its investment attractiveness, but the key role is still with the government 

“Back in 2015, banks were saying that it was impossible to invest money in this industry. During the time that Decree No. 1451 [On Providing Financial Support from the State Corporation – Fund for Assisting the Reform of the Housing and Utilities Sector to Modernize Public Infrastructure Systems, – Ed.] has been in effect, banks have also learned a lot together with us, including how to finance this sector,” Olga Serdyuk, Deputy General Director, Housing and Public Utilities Reform Support Fund. 

“The role of public funding will in any case prevail. Because as far as small non-metropolitan cities are concerned, the financial model does not stand up to these conditions. There simply will be no opportunity for any of the private operators to go with more than 15% of their funding. The role of private operators needs to increase because public money has to be managed wisely,” Alexander Vilesov, Deputy General Director for Commerce and Development, T Plus. 

Support for the housing and utilities sector in Russian regions increases every year 

“This year, thanks to the infrastructure menu, we have taken on a new role. Whereas before we were giving out subsidies, we have become the financier through the Sovereign Wealth Fund. We had to provide 20 billion by the end of the year. But we have already been able to provide 19.5 billion and we will clearly provide more than 30 billion by the end of the year, because the industry needs money,” Olga Serdyuk, Deputy General Director, Housing and Public Utilities Reform Support Fund.


Problems

Russia loses big money due to low energy efficiency in apartment buildings 

“In fact, 50% of the existing housing is now exploited inefficiently. This is a loss for the state in terms of resources and in terms of subsidising residents, because we have quite a lot of subsidised citizens. The more [energy with high losses, – Ed.] they consume, the more the state spends on subsidising them,” Ekaterina Kvasha, Vice President, Head of the Energy Efficiency Center, Center for Strategic Research. 

“First of all, we need to reduce the energy intensity of apartment buildings. That is why we are adopting new requirements today, new construction standards and regulations for buildings under construction. It is important not to build something that has to be modernized the next day,” Irina Bulgakova, Head of the Housing and Utilities Commission of the Public Council of the Ministry of Construction, Housing and Utilities of the Russian Federation.

“Another area that we have completely forgotten is the area related to buildings. I am not talking about in-house systems. I am talking about building entrances and the energy that goes through the central heating system – we need to work it out and make it so that the residents could get both heat and hot water supply comfortably. We believe that substantially more funds are required [for the modernization of heating supply]. The Housing and Utilities Fund has announced the money for the coming years [RUB 0.75 trillion, – Ed.] This figure should be equal to 7 trillion, in my opinion,” Alexander Vilesov, Deputy General Director for Commerce and Development, T Plus.

Solutions

Comprehensive approach and synchronizing all programmes and plans in the housing and utilities sector 

“A comprehensive approach is needed for energy efficiency in the housing and utilities sector. It is necessary to change the situation from generation to consumption of these resources,” Ekaterina Kvasha, Vice President, Head of the Energy Efficiency Center, Center for Strategic Research.

“Before the [gas, heat, water supply, – Ed.] schemes are drawn up, which must be linked and synchronized within the development programme, we must see socio-economic forecasts, plans for commissioning capital construction facilities and plans for the capital repair programme, which will allow us to assess the consumers. It is important to us that we do not invest money in the modernization of communal infrastructure, which then will not be in demand, or will not be in full demand. Our task is the comprehensiveness. It is the task for the Ministry of Construction especially, so that this appears in their policies,” Irina Bulgakova, Head of the Housing and Utilities Commission of the Public Council of the Ministry of Construction, Housing and Utilities of the Russian Federation. 

“One of the biggest successes of the fund is the programme to involve residents in our work, in the work to improve energy saving. A little bit is needed, somewhere around 15 billion is needed to continue this programme. Then the potential for complexity will work on a completely new basis,” Olga Serdyuk, Deputy General Director, Housing and Public Utilities Reform Support Fund.

Low-carbon development targets will accelerate energy efficiency in the country 

“One of the big elements of the [low-carbon development strategy of the Russian Federation, – Ed.] and its operational plan is the state energy saving and energy efficiency programme, which should lead, according to our preliminary estimates, to a 35% reduction in the energy intensity of the gross domestic product of the Russian Federation,” Ekaterina Kvasha, Vice President, Head of the Energy Efficiency Center, Center for Strategic Research.

“Sakhalin Region is working as an experiment to reduce the carbon footprint. We started working on it two years ago, and that was when we first heard the term 'climate programme'. Sakhalin Region has adopted it. This is a comprehensive document, it includes all the measures aimed at reducing our carbon footprint and 80% of all the measures are in the housing, utilities and energy sectors. I hope that together with you we will come to the point where we count all our emissions, manage them efficiently, and maybe this will be one of the sources of income for the housing and utilities sector,” Irina Bulgakova, Head of the Housing and Utilities Commission of the Public Council of the Ministry of Construction, Housing and Utilities of the Russian Federation. 


For more information, visit the Roscongress Foundation’s Information and Analytical System roscongress.org and the official Forum website rusenergyweek.com.