Russian energy efficiency projects: lessons learnt from Activities Implemented Jointly pilot phase

Russia needs to improve the efficiency of energy. Failure to do so will retard the economic recovery of the country, but the energy sector is lacking both domestic and foreign investments. JI projects could provide the underfinanced Russian energy sector with additional investments. AIJ pilot project experiences provide an overview of the potential difficulties for future JI projects. Institutional problems were the most important category. Most of these problems remain, and the lack of ratification of the Kyoto Protocol by Russia has formed a new very significant barrier. Implementation level problems caused some problems to AIJ projects, but they are likely to have less impact on the better prepared JI projects. The character of funding-related problems has changed: for AIJ projects the main problem was that emission reductions could not be credited, whereas future JI projects will experience more competition in the Kyoto market where the overall investment climate and the availability of local cofunding are more relevant. Therefore, the unfinished economic and energy sector reforms currently discourage JI investments. The project experiences so far have been dismal, and if Russian policy-makers cannot improve this performance, only few JI projects can be expected in the future.