Structural Economic Changes and Energy Efficiency

In 1999 Russia's industrial sector accounted for about 55 percent of the country's carbon emissions; this share has been nearly the same over several years. Since carbon emissions per Russian industrial output are about three times higher than in the rest of the economy, even minor changes in the industrial share of GDP could lead to notable changes in CO2 emissions.

The carbon intensity of production among industrial sectors is, however, quite diverse. Therefore, structural changes in industry during the economic crisis, along with an increase in the industrial share of GDP, were the most important factors in decoupling GDP and carbon emissions. The highest share of

Figure 10-2. Carbon Emissions, Carbon Intensity, and GDP as Percent of1992 Levels, Russia, 1990-2004

Figure 10-2. Carbon Emissions, Carbon Intensity, and GDP as Percent of1992 Levels, Russia, 1990-2004

Year

CO GDP * Intensity

Year

CO GDP * Intensity

Source: Based on data from U.S. Energy Information Administration (www.eia.gov/environment.html).

Figure 10-3. Carbon-Intensive Industries, Share in Total GDP, Russia, 1990—2003

Figure 10-3. Carbon-Intensive Industries, Share in Total GDP, Russia, 1990—2003

Fuel industry ■Ferrous metals

Nonferrous metals ■Machinery ■Timber, pulp, and paper

1990 1992 1995 1998 1999 2000 2001 2002 2003 Year

Fuel industry ■Ferrous metals

Nonferrous metals ■Machinery ■Timber, pulp, and paper

1990 1992 1995 1998 1999 2000 2001 2002 2003 Year

Source: Author's calculations based on Roscomstat data.

most carbon-intensive industries was reached in 1998, when the carbon intensity of GDP was the highest (figure 10-3).

During the recovery period, further reductions in carbon emissions by industry were an important factor in determining overall carbon emissions. After 1998 the share of these sectors gradually declined. Therefore, in 1999-2004 the carbon intensity of industrial production dropped from 11.4 to 9.7 tonnes of CO2 per U.S.$1,000 market exchange rate, while in other sectors carbon intensity declined from 4.3 to 3.1 tonnes of CO2 per U.S.$1,000, or about an 18 percent decline in the industry sector (versus a 40 percent decline in other sectors). At the same time, the industry's share in GDP decreased slightly. This decline, along with the structural changes within the industrial sector, was one of the important factors in the further decoupling of carbon emissions and GDP growth. In other words, the tendencies that determined the increase of carbon intensity of GDP during the crisis reversed during the recovery period. As a result, two types of decoupling have been in play in the dynamics of GDP and carbon emissions.

During the recovery period there was a slight improvement in carbon efficiency in most economic sectors (figure 10-4). Although the contribution of this factor to overall carbon emissions was not as significant as the structural changes discussed earlier, nevertheless the combined effect of efficiency and structural changes allowed for the avoidance of a significant amount of emissions. If the

Percent

Figure 10-4. Metric Tonnes of CO2 Emissions per U.S.$1,000 ofGDP, Russia, 1999-2004

Tonnes per $1,000

Figure 10-4. Metric Tonnes of CO2 Emissions per U.S.$1,000 ofGDP, Russia, 1999-2004

Tonnes per $1,000

Source: Author's calculations based on Roscomstat data.

GDP structure and carbon intensity both held on the 1999 level, then 2004 emissions would have been about 2,130 megatonnes instead of actual emission estimates of 1,610 megatonnes. Thus if structural changes and carbon intensity dynamics in the industrial sector as well as the rest of the economy accounted for 520 megatonnes of avoided CO2 emissions in 2004, then CO2 emissions could have been 1,680 megatonnes. Thus only 70 megatonnes of avoided emissions would have been attributed to efficiency improvements, while 450 megatonnes of avoided emissions were a result of structural changes in GDP, namely the substitution of less carbon-intensive sectors for energy- and carbon-intensive industries.

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