Cover Image
close this bookThe Global Greenhouse Regime. Who Pays? (UNU, 1993, 382 p.)
close this folderPart III National greenhouse gas reduction cost curves
close this folder12 Carbon abatement in Central and Eastern Europe and the Commonwealth of Independent States
View the document(introduction...)
View the documentEnergy-environment nexus
View the documentScenarios for the future
View the documentCountry results
View the documentPolicy implications
View the documentConclusion
View the documentReferences

Country results

I estimated the energy efficiency potential by determining first the cost-effective energy efficiency measures in several selected activities. Nine broad categories were identified where energy efficiency potential and costs were estimated (see Table 12.1). If implemented, these selected energy efficiency measures alone can reduce carbon dioxide emissions in the countries of Central and Eastern Europe by more than 70 million tonnes of carbon from current levels. This amount represents over 20 per cent of current carbon dioxide emissions in the region, and is measured against current economic activity levels.

This estimate of energy efficiency potential in selected industries and the residential and transportation sectors was used in the EPA energy end-use model to determine the emissions levels in Central and Eastern Europe in the year 2025. Allowing for an annual GNP growth rate of 2.5 per cent, and structural changes in these economies, a combined strategy of energy efficiency and decreasing share of fossil fuels in electricity generation can reduce total carbon dioxide emissions in Eastern Europe by 250 million tonnes from the projected level in 2025 (see Table 12.2 and Figure 12.2). An assumption was made that the share of coal in electricity production would decrease from the current 69 per cent to 50 per cent in 2005 and 30 per cent

Table 12.1 Cost of CO2 emission reduction in Eastern Europe, selected energy efficiency measures

  Energy savings potential (PJ) Capital cost ($mill.) Levelized cost ($mill) Cost of conserved energy ($/GJ) Total carbon emissions saved (mill. tons) Cost of carbon emissions saved ($/ton)
Building insulation 850 2,781 305 0.35 18.5 -44.6
Boiler replacement 170 857 92 0.43 3.7 -41.5
Heating improvement 135 685 75 0.56 2.9 -36.1
Cogeneration 150 1,768 151 1.01 2.9 -11.1
Transmission and distribution losses improvements 500 6,071 588 1.15 10.9 -10.9
Existing industrial equipment improvement 700 8,928 980 1.40 13.5 7.7
Ferrous metals 363 5,250 576 1.59 7.0 16.8
New electrical motors in industry 400 11,071 950 2.38 7.7 54.8
Construction industry improvementsa 150 4,286 368 2.45 2.9 58.5

a Mostly cement production
Source Henel, Cabicar, and author.

Table 12.2 Carbon dioxide emissions in Eastern Europe, energy efficiency scenario (MTC)

  Buildings Industry Transport Total
1985 108 210 38 356
2005 120 146 36 301
2025 159 117 47 310

Table 12.3 Energy efficiency scenario for Eastern Europe electricity generation, 1987-2025(%)

  1987 2005 2025
Coal 69 50 31
Natural gas 7 10 20
Oil 2 2 2
Non-fossil 22 38 48


Figure 12.2 Carbon dioxide emissions in Central and Eastern Europe, 1985-2025

Table 12.4 Selected Soviet energy efficiency measures, 7990-2005

  Annual energy savings in 2005 (EJ) Total capital cost 7990-2005 (Bill. R) Levelized cost (rubles) Cost of conserved energy (rubles/GJ) Total carbon emissions saved (mill. tons) Cost of carbon emissions saved ($/ton)
Shifting from harvesters to site threshing 0.3 0.2 0.19/0.22 7.32 5.83 -53.73
Switching small boilers to high-grace fuels 0.4 0.3 0.20/0.23 8.23 7.78 -52.94
Insulation of steam supply network 0.5 0.4 0.24/0.28 8.78 9.72 -52.47
Advanced technologies for industrial heating 0.2 0.2 0.22/0.27 10.98 3.89 -50.59
Insulation of cattle breeding buildings 0.2 0.4 0.42/0.42 21.96 3.89 -41.18
Automation of heating stations 0.2 0.4 0.52/0.59 21.96 3.89 -41.18
Efficient centralized boilers 0.6 1.2 0.47/0.55 21.06 11.67 -41.18
Change inefficient ovens to large boilers 0.3 0.7 0.53/0.54 25.62 5.83 -38.04
Regulated electric drive 1.4 3.7 0.7/10.82 29.02 27.22 -35.13
Control and measurement in energy use 0.5 1.7 1.11/1.41 37.33 9.72 -28.00
Low capacity multifuel boilers 0.7 3.3 1.09/1.27 51.76 13.61 -15.63
Reduction of electric transmission losses 0.2 1.3 1.85/2.29 71.37 3.89 1.17
Replacing wet cement clinker with dry method 0.2 1.4 1.93/1.86 76.86 3.89 5.88
Gas turbine and combined cycle plants 0.7 5.0 1.64/2.18 78.42 13.61 7.22
Efficient lighting 1.1 8.5 2.41/2.99 84.84 21.39 12.72
Improved brick production 0.1 0.9 1.80/1.80 98.82 1.94 24.70
Improved gas compressors in pipelines 0.3 4.7 3.38/3.95 172.01 5.83 87.44

Source Alexei A Makorov and Igor Bashmakov, Carbon Emissions Control Strategies Case Studies in International Cooperation, William U Chandler, Editor, World Wildlife Fund & The Conservation Foundation, Chapter 2 'The Soviet Union' (Washington DC 1990).

Cost estimates for energy efficiency measures through 2005 in the former Soviet Union have been developed by two leading Russian energy analysts, A. Makarov and 1. Bashmakov, (see Table 12.4). Almost 15 exajoules of energy, or approximately 25 per cent of current energy use, can be saved at net savings, that is below the cost of new energy supply. These energy savings translate into a reduction in carbon emissions of 250 million tonnes from current levels, that is 27 per cent of current carbon emissions in the former Soviet Union (see Figure 12.3). These measures span all sectors of economic activity, but, as in Eastern Europe, are concentrated in the industrial sector.

In spite of these reductions, however, the EPA energy end-use model projects that carbon emissions will increase absolutely in the FSU through 2025. Reducing reliance on coal, and increasing the use of natural gas and non-fossil energy sources, however, can further reduce carbon emissions by 400 million tonnes by 2025 (see Figure 12.3). Thus, fuel switching is necessary if the republics of the former Soviet Union are to reduce carbon emissions from current levels in 2025.

Economic restructuring

Economic restructuring is the most important aspect of devising policies for reducing energy use and carbon dioxide emissions in Central and Eastern Europe. The base case for each country assumes major changes in the economies of these countries. This restructuring implies that as income levels approach West European levels, demand for energy amenities also increases to that in Western Europe. Demand growth for energy services, therefore, was modelled in part as a function of income growth. For example, the number of cars per person and living area per capita in the region was assumed to increase approximately to the current West European average when East European per capita income reaches that of Western Europe (see Figures 12.4 and 12.5). The underlying assumption of economic restructuring is therefore the expectation that consumption as a share of gross national product will achieve current Western levels in Eastern Europe by the first quarter of the next century, and that structural change will significantly decrease the share of the industrial sector in total energy demand (see Table 2.5).


Figure 12.3 Carbon emissions in the former Soviet Union, 1990-2030

The East European economies have invested asymmetrically in heavy industry at the expense of services and consumer goods. This imbalance means, for example, that their economies are very steel intensive compared to Western nations. The former Federal Minister of Economy of Czechoslovakia, and now the Czech Republic's Minister of Industry and Trade, recently remarked that every citizen in his country can have a tonne of steel under his/her bed, but they cannot eat it or drive it. Indeed, Czechoslovakia produces one tonne of steel for every inhabitant each year, while the average in the OECD countries is less than half of that, and the European Community, a region with similar resource constraints as Czechoslovakia, produces only 40 per cent of the steel as Czechoslovakia on per capita basis.


Figure 12.4 Automobile ownership, country comparisons, 1985 and 2025


Figure 12.5 Living area per capita in Eastern Europe, 1985 and 2025

This concentration of heavy industry represents a structural imbalance in each of these economies deriving from the nature of central planning.

Just as demand for consumer goods was assumed to increase with growing incomes, demand for basic materials per unit of economic output was assumed to decline toward Western levels. The rates of decline assumed were also based on the expert judgements and recommendation of the case study participants, and vary from country to country. In the model, these changes were implemented through income elasticities of demand for each particular product or industry (see Table 12.6).

The industrial sector

On average, the industrial sector in Eastern Europe uses more than twice the energy to produce one dollar of output than do industries in the United States. Because of the large share of industrial production in the gross national product, high industrial energy intensity is a dominant factor in the overall high energy intensity of those economies.

Table 12.5 Energy demand in Eastern Europe, 1985 and 2025 (exajoules)

  Industry Buildings Transport Total
1985 Demand 10.78 5.20 2.30 18.28
2025 Base case 13.66 12.46 4.99 31.11
2025 Energy efficiency 7.69 7.62 3.43 18.74

Includes Bulgaria, Czechoslovakia, former East Germany, Hungary, Poland, and Romania.

Table 12.6 Structural change in Eastern Europe, 1985 and 2025

  Eastern Europe European Community United States
GNP per capita ($1985)
1985 5,482 10,507 16,494
2025 16,189 - -
Industry share in GNP (%)
1985 39.6 - 26.2
2025 30.0 - -
Steel production (kg/$1000 GNP)
1985 66.0 34 18.6
2025 28.2 - -
Chemicols production (kg/$1000 GNP)
1985 14.5 4.4 3.9
2025 10.8 - -
Living area (sq. metres/cap)
1985 15 38 55
2025 37 - -
Persons per automobile
1985 7.0 2.8 1.7
2025 3.0 - -

a Production of nitrogen- and potassium-based fertilizers only

In the model, base-case industrial energy intensity (energy requirement per dollar of output) declines between 1990 and 2025 by 1 to 1.5 per cent in individual countries. This relatively high energy intensity reduction rate is due primarily to structural changes in each economy, and to a lesser extent to an assumed decrease (0.1 to 0.5 per cent per year) in the technical energy intensity of industrial production caused by capital turnover (see Table 12.7).

Industrial energy efficiency policy is assumed to increase the rate of energy intensity reduction beyond that of our Base Case - that is, beyond structural change - and will average 2.4 per cent per year for Eastern Europe as a whole (see Table 12.8).

The rate of energy intensity reduction will depend on the level of energy intensity in each country and on the relative costs of energy efficiency measures. The estimate is based on cost studies performed in Poland, Czechoslovakia, and Hungary. To provide an approximation for Eastern Europe as a whole, those results were extrapolated to Eastern Germany, Romania, and Bulgaria. Separate analysis was developed for the Common wealth of Independent States (formerly the Soviet Union) by experts in Moscow.

Table 12.7 Energy intensities, base case and efficiency case, 1985-2025 (% average annual change)

  Residential Commercial Steel Chemicals Manufacturing Transport
Czechoslovakia            
BCS 0.2 0.2 -0.3 -0.3 -0.5 -0.3
EES -1.2 -1.2 -1.1 -0.5 -3.0 -1.3
Hungary            
BCS 0.0 0.0 0.0 -0.1 -0.5 -0.5
EES -1.0 -1.0 -1.4 -1.9 -1.5 -1.5
Poland            
BCS 0.6 0.6 0.0 0.0 0.0 0 0
EES -1.5 -1.5 -2.0 -2.5 -2.0 -1.0
Romania            
BCS 1.0 1.0 -0.1 -0.4 -0.3 0.0
EES 0.0 0.0 -2.6 -3.1 -3.9 -1.3

BCS = base case scenario
EES - energy efficiency scenario

Industrial energy efficiency holds the most promise, simply because industry is the largest energy consuming sector in Eastern Europe. Despite major growth in the residential and commercial sectors - to match current West European energy use patterns - industrial energy use will continue to dominate the energy supply and demand picture in Eastern Europe and the former Soviet Union well into the twenty-first century. Compared to the base case, almost 6 exajoules of primary energy could be saved in the industrial sector in Eastern Europe by 2025 (see Table 12.5).

The reader is once again reminded that this potential is in addition to the energy savings embodied in the base case and therefore does not reflect the impact that economic reform will have on the energy intensity of national income. Economic reform in the region will result primarily in structural changes in each economy. Many experts in Czechoslovakia today, for example, call for reducing the production of steel from 15.5 to 7-8 million tonnes per year. Even more dramatic cuts have been recommended for nonferrous metallurgy and chemicals production. The structural change assumptions, embodied in both the base case and in the energy efficiency case, are based on the case studies completed in Poland, Hungary, and Czechoslovakia, and on consultations with experts in Romania and Bulgaria.

The major effect of structural changes in Eastern Europe will be a reduced role for industry in producing national incomes, and conversely, in the increased role of services. This outcome will have profound consequences on standards of living in Eastern Europe and will best be manifested in the increased living area per capita, currently less than one-half of the West European average (see Figure 12.5).

Buildings

In the buildings sector, I assumed that as Eastern European incomes grow to match Western levels, so will living area per capita - and with it, energy demand in buildings. On the average, East European living area per capita will grow from 15 square metres today to over 37 square metres by 2025 (see Table 12.6).

Income growth will significantly increase the use of household amenities in Eastern Europe, including air conditioning. In all countries, except Hungary, base case energy intensities in the residential sector rise by between 0.2 per cent in the former Czechoslovakia to 1.0 per cent in Romania (see Table 12.7).

In the energy efficiency scenario, technical energy intensities of the residential sector vary considerably again among countries, from 0 per cent change in Romania to -1.5 per cent per year improvement in Poland. Because of the currently very low energy consumption in Romanian residences, no decline in energy intensity per square foot is expected in Romania, even if substantial energy efficiency measures are implemented. In Poland, coal of inferior quality provides the vast majority of the heat in residential dwellings, and replacing it with better quality coal or natural gas will account for a significant part of the high rate of energy intensity improvement. Carbon dioxide emissions will be reduced by an even greater rate than energy intensity, due to the lower carbon content of natural gas.

Energy consumption in buildings in Eastern Europe, unlike in industry, will increase even in the energy efficiency scenario, and will do so by nearly 50 per cent (see Table 12.5). Compared to the base case, however, energy efficiency measures in the residential and commercial sector can save nearly 5 exajoules of primary energy in 2025. These measures include, roughly in order of importance, building insulation, space heating efficiency improvements, and coal quality improvements.

Transportation

Energy service demand levels for transportation in Eastern Europe in 2025 are assumed to approach those in Western Europe today. Passenger and freight transport will increasingly employ private cars and large trucks, and on average, the rate of car ownership per capita is expected to more than double (see Figure 12.4). Air travel in Eastern Europe is assumed to increase at a rate ten times the increase in miles travelled by buses, but railroads will remain important for both passenger and freight travel.

Table 12.8 Eastern Europe final energy demand, 1985 and 2025 (exajoules)

    Base case Efficiency case
  1985 2025 2025
Residential      
Coal 2.03 3.47 2.57
Oil 0.19 0.45 0.29
Gas 0.26 1.23 0.48
Electricity 0.40 1.23 0.65
Commercial      
Coal 0.37 1.00 0.64
Oil 0.10 0.23 0.15
Gas 0.15 0.36 0.22
Electricity 0.14 0.38 0.25
Iron & steel      
Coal 0.90 0.66 0.39
Oil 0.10 0.07 0.04
Gas 0.32 0.20 0.12
Electricity 0.19 0.15 0.10
Non-ferrous metals      
Coal 0.01 0.01 0.01
Oil 0.01 0.01 0.00
Gas 0.05 0.03 0.02
Electricity 0.07 0.06 0.04
Chemicals      
Coal 0.19 0.24 0.18
Oil 0.11 0.10 0.05
Gas 0.42 0.44 0.22
Electricity 0.31 0.53 0.29
Cement      
Coal 0.22 0.30 0.20
Oil 0.07 0.10 0.06
Gas 0.17 0.23 0.12
Electricity 0.06 0.08 0.05
Pulp & paper      
Coal 0.11 0.16 0.10
Oil 0.01 0.01 0.01
Gas 0.01 0.01 0.00
Electricity 0.04 0.05 0.03
Other industry      
Coal 1.79 2.25 1.48
Oil 0.95 1.18 0.71
Gas 1.24 2.01 0.93
Electricity 0.60 1.04 0.50

The base case assumes minimal improvement in automobile fuel economy. However, significant energy savings can be realized through policy measures such as standards for fuel economy. On the average, cars in Eastern Europe consume about 8.7 litres per 100 km. Increasing automobile fuel economy to 5 litres per 100 km - and implementing additional transportation energy savings measures, such as improving truck fuel economy, and converting the gasoline-powered trucks to diesel - can reduce transportation energy demand in 2025 by 1.5 exajoules compared to the base case (see Table 12.5). A net increase of 50 per cent over current levels would still be necessary even in the energy efficiency scenario, unless passenger transportation evolves completely differently to that in Western Europe. Policies to encourage or implement alternative transportation systems, however, have not been included in our energy efficiency scenario, despite the need of these countries to actively seek new transportation development patterns. Rather, I assumed that Central and Eastern Europe will develop a transportation system that is similar to the West European system.