World Bank warns of energy crunch in Eastern Europe, Central Asia

Eastern Europe and Central Asia may face an energy crunch by 2030 due to rising consumption unless massive investments are made to unlock capacity, the World Bank has warned in a report released here Thursday.

"The outlook for primary energy supplies, heat and electricity is questionable for Eastern Europe and Central Asia region, despite Russia and Central Asia's current role as major energy suppliers to both Eastern and Western Europe," the bank said.

According to the report, demand for primary energy in the region was expected to increase by 50 percent by 2030, while demand for electricity was expected to increase by 90 percent.

"Mitigation actions are required on both the supply and the demand side, and without a change in behavior, the region as a whole could face an energy crunch, moving from being a net energy exporter to a net energy importer by 2030," said Peter Thomson, Director for Sustainable Development in the World Bank's Europe and Central Asia region.

The report showed the current financial crisis created some breathing room and a window of opportunity for the region to take mitigating actions since energy demand had been significantly dampened.

"But this is only a temporary respite before energy availability again becomes a serious concern. Once growth picks back up, so, too, will energy consumption," it said.

The World Bank estimated the energy crunch could not be avoided unless investments of more than 3 trillion U.S. dollars were made in the next few decades.

Almost 1.3 trillion U.S. dollars would be needed for primary energy development from 2010 to 2030 in order to ensure the availability of oil, gas and coal.

In addition, the region's power infrastructure was in desperate need of upgrading, with a massive investment of 1.5 trillion U.S. dollars needed over the next 20 to 25 years and a further 500 billion U.S. dollars required for district heating.

Thomson said the huge amount of investment could not be provided in the region by the public sector alone, so changing the investment climate would be necessary for countries in the region to attract private sector investors.

Investing in energy efficiency was also important to not only enhance energy security, but also reduce greenhouse gas emissions and give the economies a more sustainable growth.

The report showed an additional 1 U.S. dollar invested in energy efficiency may avoid more than 2 U.S. dollars in production investment.

It said the challenge for these countries would be to secure additional energy supplies quickly and at minimum cost, while acting in an environmentally friendly fashion to limit the growth of greenhouse gases.