Towards an efficient and low carbon economy post-2012: opportunities and barriers for foreign companies in the Russian energy market

  • Maria Garbuzova
  • Reinhard MadlenerEmail author
Original Article


Russia is one of the most energy- and carbon-intensive countries in the world. The high level of technical abrasion and a low level of investments into modernization of the Russian energy industry cause huge energy wastage and carbon emissions. This situation is regarded by countries relying on energy imports from Russia as an increasing threat to security of supply and as a major barrier to global climate change policy. This paper provides an overview of the current and future Russian energy efficiency and greenhouse gas mitigation policies. The focus is laid on the detailed investigation of the progress and future potential of the market-oriented mechanisms Joint Implementation (JI) and Green Investment Scheme (GIS), being considered as two possible channels for FDI in transnational energy efficiency and carbon mitigation projects. The analysis was conducted by reviewing the relevant scientific and non-scientific literature including a variety of theoretical and practice-oriented arguments. Based on this assessment, we conclude that JI and GIS are confronted with numerous barriers in the Russian energy market. We further scrutinize the ability of Energy Service Companies (ESCOs), as one of the market intermediary models, to overcome some of these barriers in the process of effectively integrating JI and GIS in their long-term business strategies. Due to the compatibility of the main features of JI and GIS with the working procedures under the ESCO model we conclude that numerous synergy effects can be generated and that the majority of transaction barriers specific for the Russian energy market can be overcome. Such an integrative framework for international energy efficiency and carbon mitigation projects would contribute to the modernization of the Russian energy industry and enable a “win-win” situation for foreign companies seeking to invest in a sustainable manner.


Energy efficiency Carbon mitigation Joint implementation (JI) Green investment scheme (GIS) Energy service company (ESCO) Russia 



Assigned Amount Unit




Central and Eastern Europe


Commonwealth of Independent States


Carbon dioxide


Corruption Perception Index


European Commission


For example


Energy Performance Contracting


Emission Reduction Unit


Energy Service Company

et al.

Et alii


European Union


Foreign Direct Investment


Gross domestic product


Greenhouse gases


Green Investment Scheme




International Emissions Trading


Intergovernmental Panel on Climate Change


Joint Implementation


Joint Implementation Supervisory Committee


Kilowatt hour


Ministry of Economic Development and Trade


Monitoring and verification


Non-governmental organization




Operation and maintenance


Special Report on Methodological and Technological Issues on Technology Transfer


Ton of oil equivalent


Transparency International


The United Nations


United Nations Conference on Trade and Development


United Nations Environment Program


United Nations Framework Convention on Climate Change


The United States of America


Purchasing power parity


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© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.Institute for Future Energy Consumer Needs and Behavior (FCN), School of Business and Economics / E.ON Energy Research CenterRWTH Aachen UniversityAachenGermany

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