Former Soviet Union Countries and European Union: Overcoming the Energy Efficiency Gap

Transcription

1 RSCAS 2014/03 Rober Schuman Cenre for Advanced Sudies Global Governance Programme-74 Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap Olga Podkoryova and Yulia Raskina

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3 European Universy Insue Rober Schuman Cenre for Advanced Sudies Global Governance Programme Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap Olga Podkoryova and Yulia Raskina EUI Working Paper RSCAS 2014/03

4 This ex may be downloaded only for personal research purposes. Addional reproducion for oher purposes, wheher in hard copies or elecronically, requires he consen of he auhor(s), edor(s). If ced or quoed, reference should be made o he full name of he auhor(s), edor(s), he le, he working paper, or oher series, he year and he publisher. ISSN Olga Podkoryova and Yulia Raskina, 2014 Prined in Ialy, January 2014 European Universy Insue Badia Fiesolana I San Domenico di Fiesole (FI) Ialy cadmus.eui.eu

5 Rober Schuman Cenre for Advanced Sudies The Rober Schuman Cenre for Advanced Sudies (RSCAS), creaed in 1992 and direced by Brigid Laffan since Sepember 2013, aims o develop iner-disciplinary and comparaive research and o promoe work on he major issues facing he process of inegraion and European sociey. The Cenre is home o a large pos-docoral programme and hoss major research programmes and projecs, and a range of working groups and ad hoc iniaives. The research agenda is organised around a se of core hemes and is coninuously evolving, reflecing he changing agenda of European inegraion and he expanding membership of he European Union. Deails of he research of he Cenre can be found on: hp:// Research publicaions ake he form of Working Papers, Policy Papers, Disinguished Lecures and books. Mos of hese are also available on he RSCAS webse: hp:// The EUI and he RSCAS are no responsible for he opinion expressed by he auhor(s). The Global Governance Programme a he EUI The Global Governance Programme (GGP) is research urned ino acion. I provides a European seing o conduc research a he highes level and promoe synergies beween he worlds of research and policy-making, o generae ideas and idenify creaive and innovaive soluions o global challenges. The GGP comprises hree core dimensions: research, policy and raining. Diverse global governance issues are invesigaed in research srands and projecs coordinaed by senior scholars, boh from he EUI and from oher inernaionally recognized op insuions. The policy dimension is developed hroughou he programme, bu is highlighed in he GGP High-Level Policy Seminars, which bring ogeher policy-makers and academics a he highes level o discuss issues of curren global imporance.the Academy of Global Governance (AGG) is a unique execuive raining programme where heory and real world experience mee. Young execuives, policy makers, diplomas, officials, privae secor professionals and junior academics, have he opporuny o mee, share views and debae wh leading academics, op-level officials, heads of inernaional organisaions and senior execuives, on opical issues relaing o governance. For more informaion: hp://globalgovernanceprogramme.eui.eu

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7 Absrac This paper evaluaes convergence of energy inensy for he former USSR counries during We divide hese counries ino hree clubs and show convergence in income and in energy inensy for each club. We also demonsrae ha rae of convergence is higher in counries wh a low level of developmen. Keywords Сlub convergence; energy inensy; former USSR.

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9 1. Inroducion * Afer he collapse of he USSR former Sovie republics, having become independen counries, embarked on pahs of heir own. The developmenal rajecories of hese counries differed grealy. In hree of hem Lhuania, Lavia, and Esonia he economic ransformaion o a modern marke economy was very srong, and now hey are members of he European Union. Currenly, negoiaions are under way for Armenia, Azerbaijan, Georgia, Moldova, and Ukraine o sign he European Union Associaion Agreemen. The economies of Azerbaijan, Kazakhsan, and Russia have grown significanly, mainly hanks o reserves of peroleum, gas, and oher naural resources. Tajikisan and Kyrgyzsan, however, are currenly among he poores counries in he world, and are agro-indusrial. A large porion of heir GDP is from migran remances. According o he World Bank, in 2011 migran remances composed 47% of he GDP in Tajikisan, and 29% in Kyrgyzsan. An enormous reserve of naural energy resources lies in he errory of he former Sovie Union. The planned economy of a unified economic space gave each Sovie republic access o hese naural riches. Low domesic energy prices ha did no vary subsanially from counry o counry made he incenive for effecive energy use very low. As a resul, he Sovie economy was one of he mos energy inensive in he world. Afer he collapse of he USSR, his single economic space wh uniform prices disappeared. Former Sovie counries ha were rich wh naural resources buil heir own economies on his wealh. Oher counries, in which naural resources were virually absen, were forced o buy from resource rich counries mainly Russia due o geographic facors and esablished energy infrasrucure. For some ime afer he collapse of he USSR Russia sold energy resources o s former Sovie parners a favorable prices. However, gradually began o rerea from his pracice. Conflics over gas serve as an example of his: beween Russia and Ukraine in 2006 and 2008, Russia and Belarus in 2006 and 2007 as well as in 2010, and he rise in gas prices and curail of gas delivery in Moldova beginning in The high cos of energy as well as polical and economic pressure from suppliers has creaed incenive for more efficien energy consumpion. Furhermore economic growh is self associaed wh reduced GDP energy inensy. Modernizaion of he economy has lead o newer and less energy inensive modes of producion. Anoher consideraion in he economical use of energy wh economic developmen is environmenal proecion. The consumpion and conversion of energy is one of he mos polluing acivies. Counries wh significan environmenal problems are ineresed in he producion of GDP in a less energy inensive way. Rising sandards of living increase he demand for environmenal qualy and, consequenly, aenion o environmenal issues. In his paper we analyse he convergence of GDP energy inensy in he pos-sovie world o he level of developed counries of he European Union. A convergence of energy inensy may signify ha echnological differences beween regions decrease wh ime. Bu an absence of convergence may reveal he paricularies in he spread of echnology in he field of energy and serve as moivaion for supporing energy conservaion policy. We wan o answer he following quesions: Is here a convergence in GDP energy inensy of former Sovie counries wh he level of developed counries of he EU, and wha is he rae of his convergence? Does GDP growh lead o a decrease in GDP energy inensy, and, if so, o wha exen? Do hese processes differ in counries of he former USSR ha have ransformed ino marke economies and joined he EU? In counries aspiring o European inegraion? In counries rich * The auhors are graeful o Exxon Mobil for financial suppor. 1

10 Olga Podkoryova and Yulia Raskina wh naural resources ha build heir wealh on hese resources? In counries ha currenly demonsrae a low level of economic developmen? The paper is organized as follows. Secion 2 conains brief review of convergence ypes. In Secion 3 relaed sudies are lised. Secion 4 provides he source and descripion of daa used in he sudy. Secion 5 includes economeric mehodology and empirical resuls. Subsecion 5.1 evaluaes club convergence in GDP per capa. Subsecion 5.2 is devoed o condional -convergences in real per capa income and energy inensy of GDP in each club. 2. Types of convergence The concep of convergence is commonly associaed wh he heory of economic growh and reducion in income inequaly beween counries or regions. However, s applicaion is no limed o economic growh. This is evidenced by he recen increase in he number of sudies and aricles wh relevan ideas and mehods in oher fields, including energy economics. Three ypes of convergence are usually considered. -convergence inroduced by (Baumol, 1986) supposes negaive relaion beween inial level of he value of ineres (for example, income, carbon dioxide emissions or energy performance, ec.) and he subsequen growh rae. I is due o he fac ha lagging counies can ake advanage of echnologies developed by advanced counries. Usually one disinguishes beween uncondional and condional -convergence. The firs ype implies convergence o a cerain seady sae which is he same for all counries. The second ype suggess ha convergence may depend on he specific characerisics of he counry, such as he scale of producion or energy prices. Classical equaion for esing he convergence has he following form 1 Y ln Y T oher facors error T Y ln( ), (1) T where Y is he value of variable Y in he curren ime, Y - s value wh lag T. Significan negaive coefficien indicaes he presence of convergence. According o Sala-i-Marin (1996a) 1 convergence speed can be calculaed as ln 1. T Barro and Sala-i-Marin (1990) examined - convergence, which is relaed wh decreasing variaion of Y over ime. Decreasing variance means ha he counries are gradually becoming more similar o each oher. - and - convergence are conneced wh each oher bu no equivalen. Sala-i-Marin (1996b) showed ha - convergence is necessary, bu no sufficien for -convergence. The hird ype of convergence - sochasic convergence - goes back o Quah (1990), who invesigaed ime lengh of shocks in per capa income. Bernard (1995) and Durlauf (1996) generalized he noion of convergence for ime-series. I is necessary o disinguish beween he global and he local (club) convergence. Division by clubs can be made a priori, or be based on he daa. Islam (2003) has provided a very deailed review of he leraure on convergence which includes differen conceps, esing mehodology and heir correspondence wh each oher are considered, as well as numerous findings. T 3. Relaed sudies The number of papers on energy inensy convergence is no oo large especially in comparison o large body of aricles on income and carbon dioxide convergence. Ang (1999) demonsraed ha energy inensy varies in wide range and has bigger effec on carbon dioxide emissions han carbon dioxide inensy. Thus energy inensy sudies can be useful in exploring he role of indusrialized and ransion counries in climae change according o heir level of developmen. Laer Ang and Liu 2

11 Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap (2006) showed ha energy inensy has moved from an increasing o a decreasing rend. Cornille and Fankhauser (2004) considered radionally very energy-inensive economies of Cenral and Easern Europe and he former USSR. They came o he conclusion ha energy prices and indusrial resrucuring are he wo mos imporan facors for a more efficien use of energy. Markandya and ohers (2006) sudied relaion beween energy inensy in 12 ransion counries of Easern Europe and 15 counries in he European Union. In paricular hey prove ha a 1% decrease in he per capa income gap beween developed and ransion economies on average leads o a decrease in he energy inensy growh rae of a ransion counry. Mulder and DeGroo (2012) examined 18 OECD counries and 50 secors during They found ha he secors of cach-up and developed counries are converging, and heir average speed is higher in he service secor han in manufacuring. Wu (2009) confirmed he convergence for China for he period o , and he divergence for Le Pen and Sévi (2010a) found ha he sochasic convergence is rejeced for he group of 97 counries for he period Le Pen and Sévi (2010b) also esed he presence of deerminisic rends in energy inensy for differen samples. Liddle (2010) used wo large ses of daa (111-counry sample spanning and a 134-counry sample spanning ) o suppor convergence, which is more increasing in recen years. Zhang (2013) found signs of convergence for he 28 counries of Easern Europe and Cenral Asia, using pooled model of panel daa. This paper seeks o exend he analysis of convergence o he energy inensy of GDP in he former Sovie space. 4. Source and descripion of daa The daa source for his sudy is he daabase of he World Bank's World developmen indicaors. 1. We use he following indicaors: GDP per capa, PPP (consan 2005 inernaional $). PPP GDP is gross domesic produc convered o inernaional dollars using purchasing power pary raes. An inernaional dollar has he same purchasing power over GDP as he U.S. dollar has in he Uned Saes. Daa are in consan 2005 inernaional dollars. Energy use (kg of oil equivalen) per $1,000 GDP (consan 2005 PPP). Energy use per PPP GDP is he kilogram of oil equivalen of energy use per consan PPP GDP. Energy use refers o use of primary energy before ransformaion o oher end-use fuels, which is equal o indigenous producion plus impors and sock changes, minus expors and fuels supplied o ships and aircraf engaged in inernaional ranspor. PPP GDP is gross domesic produc convered o 2005 consan inernaional dollars using purchasing power pary raes. An inernaional dollar has he same purchasing power over GDP as a U.S. dollar has in he Uned Saes. We analyse 15 counries of he former Sovie Union: Armenia, Azerbaijan, Belarus, Esonia, Georgia, Kazakhsan, Kyrgyz Republic, Lavia, Lhuania, Moldova, Russian Federaion, Tajikisan, Turkmenisan, Ukraine, Uzbekisan (hereinafer referred o as FSU counries) in comparison wh 13 mos energy efficien counries in he European Union in 2010: Ausria, Belgium, Denmark, Finland, France, Germany, Ireland, Ialy, Luxembourg, Neherlands, Spain, Sweden, Uned Kingdom (hereinafer referred o as EU13). The daa cover he period from 1995 o Figure 1 shows he dynamics of energy inensy of GDP. One can see ha he energy inensy of GDP in he FSU has decreased during concerned period. This favors convergence hypohesis of energy consumpion o he level of he EU. However, he reducion rae and he level achieved o dae vary considerably from counry o counry in he FSU. Figure 2 shows he evoluion of GDP per 1 hp://daa.worldbank.org/daa-caalog/world-developmen-indicaors 3

12 Olga Podkoryova and Yulia Raskina capa. Numbers nex o he name of he counry indicae he raio of per capa GDP in 2010 o per capa GDP in Many FSU counries have subsanially increased heir GDP and reduced he gap beween he European Union. I is noiceable ha he economic growh in he counries of he FSU had differen raes. The variaion of GDP per capa in he counries of he former Sovie Union o 2010 has increased. This fac promped us o highligh he groups of FSU counries ha converge o differen club equilibria, and analyze processes o reduce energy inensy in hese groups of counries separaely. 4

13 Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap Rae of economic growh and rae of GDP growh are inversely relaed (Fig. 3), which suppors he hypohesis of reducing energy consumpion wh economic developmen. 5. Mehodology and empirical resuls We wan o verify overall convergence of group counries ino homogeneous clubs ha exhib. Then we furher analyse hese clubs o invesigae facors ha affec convergence Club Convergence in GDP per capa Former Sovie Union counries exhibed differen raes of economic growh as already menioned. The differences in he level of economic developmen had increased. According o he World Bank classificaion, oday Lhuania, Lavia, Esonia and Russia are high-income economies, while Tajikisan and Kyrgyzsan form a group of low-income economies. We believe ha he processes of reducing energy inensy can be differen in counries wh differen levels and raes of economic developmen. We are going o divide FSU counries ino several convergence clubs in GDP per capa. Our approach is based on he mehodology developed by Phillips and Sul (2007). This mehodology examines wheher he dispersion across cross-secional uns of he variable of ineres decreases over ime. A regression-based es is proposed and clusering procedure is developed based on his es. This approach does no rely on saionary assumpions and allows for a wide variey of possible ransion pahs owards convergence (including subgroup convergence). Facorial models are sandard ool in analyzing panel daa ses of differen ypes. The variable of ineres X is decomposed ino a common facor and an un specific facor loadings i, denoes of un specific idiosyncraic componens: X (2) i Phillips and Sul (2007) offer he following represenaion of facorial model X, (3) where absorbs and he un-specific componen hus represening he idiosyncraic par ha varies over ime. This approach describes variable of ineres by measuring he share of he common growh pah ha economy i sands. Time-varying facor loadings models in a semiparameric form implying non-saionary ransional behaviour as: 1 i i L( ), (4) 5

14 Olga Podkoryova and Yulia Raskina where i s fixed, i is an idiosyncraic scale parameer, is iid(0, 1) across i and weakly dependen over, and L() is a slowly varying funcion (for example L() = log ), so ha L() as, denoes he speed of convergence. The null hypohesis of convergence can be wren as: 0 : i and 0 (5) and is esed agains he alernaive H A : i for all i or 0. Under he null hypohesis of convergence various paerns of ransion for uns i and j are possible, including emporary divergence, during some periods. i j In order o model he ransion coefficien, a relaive ransion parameer h is consruced as: X h. (6) N N 1 1 X N N i 1 This parameer measures in relaion o he panel average a ime and describes he relaive deparures of economy i from he common growh pah. If panel uns converge ( for all i as ) he relaive ransion parameers converge o one ( h 1for all i as ). Then, he cross-secional variance of h, denoed by H converges o zero: N 1 2 H ( h 1) 0 as. (7) N Phillips and Sul (2007) show ha under convergence he H has he liming form i 1 i 1 A H as for some A 0. (8) 2 2 L( ) Phillips and Sul (2007) es he null hypohesis using he following log regression: H 1 log L a b u H 2log ( ) log, (9) where L() = log(+1). The fed coefficien of log is b ˆ 2 ˆ, where ˆ is he speed of convergence esimaor. A one-sided -es robus o heeroskedasicy and auocorrelaion is applied o verify he inequaly of he null hypohesis 0. The null hypohesis of convergence is rejeced if b < 1:65 (a he 5% significance level). Phillips and Sul (2007) recommend o esimae he equaion (9) no on a whole sample bu on reduced sample, ha excludes firs rt observaions. Based on Mone Carlo simulaions, hey sugges using r=0.3 for sample sizes below T=50. Rejecion of he null for he panel as a whole does no imply he absence of club convergence. Phillips and Sul (2007) exend heir mehodology and develop an algorhm for club convergence. They develop a four-sep procedure: Sep 1. (Ordering). Cross-secional uns are sored in descending order on he basis of he las period in he ime series dimension of he panel. In he case of significan volaily in X, ordering can be based on he ime series average over he las 1/2 or 1/3 periods. Sep 2. (Core Group Formaion). Selecing he firs k highes uns in he panel o form he subgroup G k for k=2,,n, run he log regression and calculae he convergence es saisic k for each subgroup. The core group is he one wh he maximum -saisic, given ha is saisically significan, i.e. k > If condion k > 1.65 does no hold for he firs wo uns in he sample, 6

15 Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap drop he firs un and coninue he procedure from second un and so on. If no pair of uns wh k > 1.65 exiss in he enire sample, conclude ha here are no convergence clubs in he panel. Sep 3. (Club Membership). One un a a ime is added o he core group and he -saisic from he log regression is calculaed. A new un classify as member of he club if he -saisic of he associaed log regression exceeds some chosen crical value c. Based on Mone Carlo simulaion, Phillips and Sul (2007) recommend o use c = 0, in order o reduce he risk of including a false member ino a convergence group. Run he log es for he enire group. If k > 1.65, his group forms a convergence club. Oherwise, increase he crical value c for he club membership selecion, form a new group and check a condion k > 1.65 for his group. If here are no uns excep he core group wh k > 1.65, conclude ha he convergence club consiss only of he core group. Sep 4. (Recursion and Sopping). All uns ha have no been included in he club idenified in he previous seps are esed o check wheher hey form anoher club, ha is, where k > If no, repea Seps 1 3 on his group o deermine wheher he panel includes a smaller subgroup ha forms a convergence club. If no core group can be found, hen hese counries display a divergen behavior. We apply 2 he mehodology described above in order o idenify a group of FSU counries ha converge o differen equilibria. We use GDP per capa, PPP (consan 2005 inernaional $) as indicaor of economic developmen. For all fifeen counries ogeher he convergence hypohesis is rejeced a he 5% significance level because he corresponding -saisic is So we have applied clusering procedure. Three clubs were formed, and besides wo counries showed a divergence and were excluded from furher analysis. Resuls are given in able 1. Table 1. Resuls of procedure of clubs allocaion. Counry Club 1 Club 2 Club 2 Esonia, Lavia, Lhuania, Moldova, Uzbekisan, Russia, Belarus, Kazakhsan, Ukraine, Armenia, Georgia Tajikisan Azerbaijan bˆ sa Divergen Counries Turkmenisan, Kyrgyz Republic Firs club comprises he riches counries of he former USSR: Lhuania, Lavia and Esonia, which joined he European Union, energy resources rich Russia, Kazakhsan and Azerbaijan, whose wealh is based largely on he sale of hese resources, and Belarus, which developmen is apparenly based on benefs from possession of high level of he human capal. Second club consiss of he counries wh a medium level of developmen: Armenia, Georgia and Ukraine. Counries wh low levels of developmen - Moldova, Tajikisan and Uzbekisan form he hird club. Two remaining counries - Turkmenisan and Kyrgyzsan - do no converge o any club equilibrium. In our opinion, his is due o he following reasons. Kyrgyzsan is one of he poores counries of FSU. I has no hydrocarbon deposs, which became he basis for he growh of many oher counries. The counry's economy is se up on exensive developing of agriculure and loading old producion facilies. As a resul, Kyrgyzsan has he lowes economic growh among he FSU counries during he las 10 years (see 2 Evaluaion was carried ou in Economeric Views 7.0, HAC esimaes of sandard errors were aken in he form Newey Wes. 7

16 Olga Podkoryova and Yulia Raskina Fig. 2). On he conrary, Turkmenisan has large reserves of oil and gas. Despe he conservaive model of economic developmen, sipulaing he predominance of public secor, Turkmenisan demonsraed a srong economic growh during he pas 10 years. The growh rae was high enough o allow Turkmenisan o leave he hird club of underdeveloped counries, bu no high enough o join he second club. 5.2 Condional -convergence in energy inensy We can improve our finding by analysing rae of convergence and idenifying facors ha affec. Preliminary analysis of he daa shows ha average EU13 per capa GDP is greaer han per capa GDP of he FSU counries, bu average energy inensy, conversely, is lower. So he rich counries are more energy efficien, as we inially expeced. Based on his we conjecure ha GDP growh in FSU will lead o a decrease in energy inensy. In case of ransion counries, Markandya e al. (2006) sae ha income convergence would be a base for energy inensies convergence. We begin by checking he condional -convergence of income, which is a meaningful problem in s own righ. We used he classical model wh fixed group and ime effec GDP i, ln i GDPi GDP ln(, 1), (10) i, 1 where GDP i, is per capa GDP of counry i in year. We esimae regression (10) for each club pooled wh EU13. The esimaion resuls (see Table 2) indicae ha expeced negaive relaionship beween he inial level of income and he rae of growh is confirmed. For all hree clubs of he coefficiens are significan and negaive. Consequenly, here is a convergence in income, alhough ln almos equals wh he very coefficien. Noe ha coefficien is insignifican for he enire FSU, so he clusering was jusified. very slow one, because small values of speed 1 Table 2. Regression resuls, bea-convergence in real per capa GDP, coefficiens for ime and group effecs are omed FSU+13EU 1 club+13eu 2 club+13eu 3 club+13eu *** *** ** R 2 whin obs Hereinafer, he symbols ***, ** and * denoe saisical significance a 1%, 5% and 10% level. Now we can clarify he facors affecing he convergence. Following Markandya e al. (2006) we esimae equaion IE i, IE _ AV Y _ AV ln i i ln i ln, (11) IE i, 1 IE i, 1 Y i, 8

17 Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap where IE i, - energy inensy of counry i in year, IE _ AV - average EU13 energy inensy in year, Y _ AV - average EU13 GDP per capa in year. We guessimae posive coefficiens. Value i is a rae a which he energy inensy of counry i will adjus so will converge average EU13 energy inensy. So 1% decrease in he gap beween average EU13 energy inensy and counry i will reduce inensy growh rae of counry i by i %. If here is convergence in income (as we demonsraed above) hen posive i poins ou ha 1% decrease of he gap beween EU13 per capa GDP and counry i pulls down energy inensy growh rae of counry i by i %. In boh cases we observe convergence in energy inensy. The economeric resuls are given in able 3. Table 3. Regression (11) resuls, by counry. Counry gamma dela Azerbaijan 0.75*** 0.9*** Belarus 1.03*** 0.95*** Esonia 0.86*** 1.02*** Kazakhsan 0.44*** 0.18 Lavia 0.77*** 0.8*** Lhuania 0.64*** 0.82*** Russia *** 1 club, R-squared=0.72, obs=111 Armenia Georgia 0.42*** Ukraine 0.93*** 0.57*** 2 club, R-squared=0.79, obs=48 Moldova Tajikisan 0.78*** 0.85*** Uzbekisan 0.58*** 1.3*** 3 club, R-squared=0.64, obs=48 Analysis of he of energy inensy dynamics revealed he following. As expeced, mos of he coefficiens are posive and significan, so mos of counries show he convergence o he European average level due o economic developmen (reducion of he gap beween counry per capa GDP and he European average level). However, several counries sand ou of he general paern. The only ousiders in he firs club are Kazakhsan and Russia. Energy inensy of Kazakhsan indusry is very high is MJ/$ 2005 in 2010 (for comparison, average FSU is MJ/$2005) and is decreasing very slowly, jus as he Russian one. Boh counries are rich in naural resources, hence incenives o reduce energy inensy of GDP in hese counries are no big. Besides boh counries are characerized by a high share of indusry in GDP (42% and 35 % respecively 3 in 3 WDI, Indusry, value added (% of GDP) 9

18 Olga Podkoryova and Yulia Raskina 2010). This feaure disinguishes hem from Azerbaijan, who is also rich in gas and oil, bu has he lowes level energy inensy in he FSU (1.37 MJ/$ in 2005) and pracically has no heavy machinery. Now we consider he second club. In general, oal final energy consumpion has decreased in our sample. And even in hose rare cases when increased he incremen rae was no more han 10%. The peculiary of Armenia and Georgia is ha hese indicaors have increased by 1.6 imes and 1. 2 imes respecively, which explains he lack of convergence. There is one ousider in he hird club: Moldova. This is an economy wh a very high dependence on food producion. Migran remances o Moldova consue more han 20% of GDP, which is he highes rae in he FSU and he second in he world. 6. Conclusion In his paper we analysed he former USSR counries for energy inensy. We figured ou 3 clubs in GDP per capa. Two counries (Turkmenisan and Kyrgyzsan) have demonsraed divergence and were excluded for furher analysis. We found evidence of -convergence in income for every club pooled wh EU13, wherein he convergence rae is higher for counries wh a low level of developmen. We invesigaed he rae of convergence in energy inensy of GDP and idenified facors ha affec. The convergence based on s own endency o he average level EU13 energy inensy exiss in almos all FSU counries, wh he excepion of Russia, Armenia and Moldova. The convergence based on per capa GDP endency o he average level of EU13 exiss in almos all counries, wh he excepion of Kazakhsan and Georgia. Empirical resuls o a cerain exen suppor he hypohesis ha energy inensy of GDP in resource-rich counries declines more slowly han in he enire sample. Meanwhile our analysis is of macroeconomics naure. The decrease of energy inensy can be aribued no only o echnological advances, leading o he more efficien use of energy, bu also o changes in he srucure of he economy and indusrial decline. To furher invesigae he causes of curren rends a sudy of he economic srucure and secoral analysis of energy inensy are needed. We inend o exend curren research performing decomposion analysis. 10

19 Former Sovie Union Counries and European Union: Overcoming he Energy Efficiency Gap Leraure Ang, B.W. (1999). Is he energy inensy a less useful indicaor han he carbon facor in he sudy of climae change? Energy Policy, 27, Ang, B.W., Liu, N.(2006). A cross-counry analysis of aggregae energy and carbon inensies. Energy Policy, 34, Barro, R.J. and X. Sala-i-Marin. (1990). Economic Growh and Convergence Across he Uned Saes. NBER Working Paper No. W3419 Cornille, J., Fankhauser, S.(2002). The energy inensy of ransion counries. EBRD Working Paper No. 72. European Bank for Reconsrucion and Developmen, London Cornille, J., Fankhauser, S.(2004). The energy inensy of ransion counries. Energy Economics, 26, Islam, N. (2003). Wha have we learn from he convergence debae? Journal of Economic Surveys, 17, Le Pen Y., Sévi, B. (2010b) Wha rends in energy efficiencies? Evidence from a robus es. Energy Economics, Le Pen, Y., Sevi, B. (2009) On he non-convergence of energy inensies: evidence from a pair-wise economeric approach. Ecological Economics, 69, Liddle, B. (2010) Revising world energy inensy convergence for regional differences. Original Research Aricle Applied Energy, Volume 87, Issue 10, Ocober 2010, Pages Markandya, A., Pedroso-Galinao, S., Sreimikiene, D.(2006). Energy inensy in ransion economies: Is here convergence owards he EU average? Energy Economics, Elsevier, vol. 28(1), pages Mulder, P., De Groo, H. L. F. (2012) Srucural Change and Convergence of Energy Inensy Across OECD Counries, Energy Economics, Volume 34, Issue 6, November 2012, Pages Phillips P. C. B., Sul D. Transion modeling and economeric convergence ess // Economerica. 2007a. Т С Wu Yu.M. (2009). Spaial Economeric Analysis of Energy Efficiency Convergence of Chinese Provinces. Power and Energy Engineering Conference. APPEEC Asia-Pacific Zhang F.(2013). The Energy Transion of he Transion Economies An Empirical Analysis. Policy Research Working Paper

20 Olga Podkoryova and Yulia Raskina Auhor conacs: Olga Podkoryova S. Peersburg Sae Universy Faculy of Economics Tchaikovsky Sree S. Peersburg Russia European Universy of S. Peersburg Gagarinskaia Sree S. Peersburg Russia podkoryova@gmail.com Yulia Raskina European Universy of S. Peersburg Gagarinskaia Sree S. Peersburg Russia raskina@eu.spb.ru 12