SOVIET VIEWS ON ENERGY CONSUMPTION IN 1985

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00853R000200040002-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 17
• Document Creation Date: December 20, 2016
• Document Release Date: March 1, 2007
• Sequence Number: 2
• Publication Date: October 1, 1982
• Content Type: REPORT

prcwved For Release 2007/03/02: CIA-RDP83T00853R00020006 &ential
Directorate of
Intelligence
soviet Views
Energy Consumption
1985
A Research Paper
Confidential
SOV 82-10161
October 1982
Copy 4 23
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Directorate of Confidential
Intelligence
Soviet Views
on Energy Consumption
in 1985
This paper was prepared b lof the
Office of Soviet Analysis. Questions or comments are
welcome and may be addressed to the Chief, Soviet
Economy Division, Office of Soviet Analysis
O
Confidential
SOV 82-10161
October 1982
25
25
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
Soviet Views
on Energy Consumption
in 1985
The uncertainties in the Soviet energy situation lie as much on the demand
side as on the supply side. Soviet statistics and publications, however,
contain even less information about developments in the use of energy than
about energy production. To shed some light on the future growth of
energy demand in the USSR, the Office of Soviet Analysis has undertaken
a number of studies of past trends and plans for the future and of energy
requirements at the industry level and in the economy as a whole. This re-
search paper is the first of three that are intended as support for the
current CIA reassessment of the USSR's energy position. It is designed to
(a) assess Soviet statements and statistics related to domestic energy
requirements and the basis for these projections and (b) judge the realism
of these projections by assessing the underlying assumptions regarding
changes in the ratio of energy use to national income and the future growth
of national income. It is not a systematic analysis of Soviet energy
requirements based on a close examination of the energy needs of the
various sectors of the domestic economy.
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
Energy Consumption Trends 1
Projections Based on Energy-National Income Relation 1
Implications of the Demand Projections 6
Comparison of Supply and Demand Projections 7
Comparison of Soviet and Western Measures of 8
Energy Efficiency
4. Energy Intensity of the Soviet Economy, by Soviet Measure 3
1. USSR: Total Energy Consumption
2. USSR: Energy Consumption by Fuel
3. USSR: Fuel Shares in Energy Consumption
5. USSR: Alternative Projections of 1985 Total Energy Demand 5
6. Soviet Planned Energy Savings
7. USSR: Total Energy Supply in 1985
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
Overview
Information available
as of 1 July 1982
was used in this report.
Soviet Views
on Energy Consumption
in 19851
CIA projections of energy demand in the USSR based on Soviet statistics,
statements, and plans yield average annual rates of growth ranging from
1.8 to 2.8 percent during 1981-85. Although these projections are well
below the growth experienced in recent years, they still outpace the growth
in energy production that we foresee. Very large improvements in the
efficiency with which energy is used would be necessary to bring supply
into balance with the demand that Soviet planners may be projecting.
The disparity between domestic energy production and domestic demand
will be less than Soviet statistics imply because overall economic growth
will be lower than the Soviets project. Even so, closing the prospective gap
would require greater conservation than has been achieved in the past if net
exports are to be maintained at the 1980 level. The primary challenge to
the planners will be to manage the substitution of natural gas for oil and
other fuels so that the large-scale production potential of Soviet gas
reserves can be realized beyond the needs of the export market.
vii Confidential
SOV 82-10161
October 1982
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
 Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
Table 1
USSR: Total Energy Consumption
Stock Change c
(all,fuels)
Domestic
Consumption
1977
1,827.6
33.6
301.1
2.5
1,557.6
1978
1,902.7
35.0
308.8
-5.9
1,634.8
1979
1,971.2
26.3
317.7
14.6
1,665.2
1980
2,029.8
16.8
324.7
-3.4
1,725.3
1981 d
2,068
16
327
NA
1,757
a One million tons standard or reference fuel (uslovnoye toplivo) is
equivalent to 1 million tons of high-quality hard coal (with an energy
content of 7,000 kilocalories per kilogram), or about 700,000 tons
(5.1 million barrels) oil equivalent.
b Published total export data have been adjusted to put exports of
electricity on the same basis as primary electricity production, that
is, converted at the annual heat rate of thermal power plants in the
Soviet Union.
c Negative number indicates withdrawals from stocks; positive
number indicates additions to stocks.
d Estimated.
Sources: Narodnoye khozyaystvo SSSR, Moscow, Statistika (vari-
ous years); Vestnik statistiki, No. 1, 1978, p. 7; Energetika SSSR v
1976-1980 godakh, Moscow, Energiya, 1977, p. 61; Elektricheskiye
stantsiy (various issues).
I
Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
 Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
Confidential
in 1985
Soviet Views
on Energy Consumption
Introduction
The Soviets do not announce an explicit plan target
for total energy consumption. We have therefore
developed projections of total energy use with the help
of estimating procedures that Soviet planners have
used in the past and by analysis of statements by
Soviet officials on the role of energy in the 11th (1981-
85) Five-Year Plan. These projections provide a basis
for assessing the Soviet Union's ability to meet inter-
nal energy requirements and export commitments
under likely conditions of slow growth in domestic
energy production.
This paper begins with a survey of trends in domestic
consumption of energy in the USSR and then derives
alternative estimates of energy consumption in 1985
using three different approaches. It then compares
these demand projections with a preliminary CIA
forecast of energy supplies. Finally, the paper consid-
ers how the apparent shortfall in supply might be
affected by (a) a bias in Soviet projections that leads
to understatement of future energy demand and (b)
the overstatement in projected energy demand im-
plied by the 1981-85 Plan for Soviet economic growth.
Energy Consumption Trends
During the 1960s, energy consumption in the Soviet
Union rose at an average annual rate of 5.1 percent
(see table 1). Growth in total energy use slowed from
4.7 percent in the first half of the 1970s to 3.7 percent
annually in the latter half. Preliminary data for 1981
indicate that energy use rose by about 1.8 percent.
The slow growth in 1981 was probably due to the
smallest increase in total energy production since
World War II and the need to maintain exports in the
face of the deteriorating hard currency positions of
both the USSR and Eastern Europe. Although eco-
nomic growth was also low (GNP increased by only
1.8 percent), we believe that the numerous reports of
energy shortages and energy rationing support the
view that consumption was held back more
constraints than by a lagging economy.
The shares of different fuels in total Soviet energy
consumption have also shifted substantially over the
past two decades. In the 1960s and 1970s the use of
oil and natural gas increased more rapidly than total
energy use (see table 2). Natural gas provided less
than 8 percent of Soviet energy requirements in 1960
but 26 percent in 1980 (see table 3). During the same
period, oil's share rose from 24 percent to 37 percent.
The growth in oil and gas occurred at the expense of
coal. In 1960 the Soviets relied on coal for more than
half of their energy needs; today it provides only 27
percent.
Estimating Demand as the Soviets Do
Although the USSR has not published a target for
energy consumption in 1985, a range of projections
can be developed. These projections are based on an
analysis of the relationship between energy use and
national income, data the Soviets provided to a United
Nations commission, and official goals for energy
conservation.
Projections Based on Energy-National Income Rela-
tion. The first demand projection is a simple analysis
of the traditional link between energy demand and
economic activity. An examination of the energy
intensity of the Soviet economy (as the Soviets mea-
sure it) shows a downward trend in energy consumed
per ruble of national income (see table 4). The projec-
tion methodology assumes a continuation of this trend
and achievement of the national income growth tar-
gets of the 1981-85 Five-Year Plan-an average
increase of 3.3 percent per year. If the decline in
energy intensity continues at the 1976-80 rate of 0.8
percent per year, total energy demand in 1985 would
be 1,951 million tons standard fuel, an average annual
increase of 2.5 percent from 1980.' The annual rate of
decline in energy intensity varies, however, depending
' One million tons standard or reference fuel (uslovnoye toplivo) is
equivalent to 1 million tons of high-quality hard coal (with an
energy content of 7,000 kilocalories per kilo ram or about 700,000
tons (5.1 million barrels) oil equivalent
Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
 Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
Table 2
USSR: Energy Consumption by Fuel
Production
749.3
1,036.3
1,304.9
1,661.1
2,029.8
Imports
10.7
9.1
14.1
36.5
16.8
Exports
59.8
117.1
168.2
241.3
324.7
Coal
362.6
391.5
412.4
451.5
471.4
Production
373.1
412.5
432.7
471.8
484.4
Imports
4.4
6.4
6.2
9.9
3.3
0.6
17.0
Fuelwood 28.7 33.5 26.6 25.4 23.8
Other d 32.7 35.3 36.1 40.1 39.9
Exports:
a Including gas condensate. Sources: Narodnoye k4iozyaystvo SSSR, Moscow, Statistika (vari-
b Estimated. ous years); Vneshnyaya torgovlya, Moscow, Vneshtorgizdat (various
c Converted at the average annual heat rate of thermal power plants years); Annual Bulletin of Gas Statistics for Europe, New York,
in the USSR. United Nations (variou.s years).
d Other types of renewable energy (geothermal, solar, and so forth).
Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
 Approved For Release 2007/03/02 : CIA-RDP83TOO853ROO0200040002-9
Confidential
Table 3
USSR: Fuel Shares in Energy Consumption
Percent
Total
100.0
100.0
100.0
100.0
100.0
Oil a
24.3
27.6
32.2
36.1
37.4
Natural gas
7.7
16.1
20.2
22.8
26.0
Coal
52.1
42.5
35.9
31.3
27.3
Other b
15.9
13.8
11.7
9.8
9.3
a Including gas condensate.
b Including hydro and nuclear electricity, oil shale, peat, fuelwood,
other renewable energy sources (geothermal, solar, and so forth), and
exports of electricity.
on the historical period selected. The average for
1971-80 is 0.5 percent, whereas the rate for 1966-80
is 1.5 percent per year. Projections on the basis of
1981-85 goals for national income growth and these
alternative trends in energy intensity (as might be
measured by the Soviets) result in estimates of energy
demand of 1,980 million and 1,883 million tons
standard fuel, respectively (see table 5). They imply
average growth in energy demand during 1981-85
ranging from 1.8 to 2.8 percent per year.
The second projection of energy demand relies on a
statement by Nikolay Lo Minister of
Power and Electrification
He claimed that the
Soviet economy was already energy efficient, citing an
income elasticity of energy demand (the percent
change in energy demand divided by the percent
change in economic activity) of 0.87 and stating that
this elasticity was expected to fall to 0.70 by 1985.2
Using plan data for national income growth, energy
Table 4
Energy Intensity of the Soviet Economy,
by Soviet Measure
Total Energy National Energy Intensity
Consumption Income a (kilograms
(million tons (billion standard fuel
standard fuel) rubles) per ruble of
national income)
1975
1,441.3
363.0
3.97
1976
1,528.5
383.0
3.99
1977
1,557.6
399.4
3.90
1978
1,634.8
420.6
3.89
1979
1,665.2
432.9
3.85
1980
1,725.3
450.8
3.83
1981 b
1,757
465.2
3.78
a Utilized for consumption and accumulation.
b Estimated.
Source: Narodnoye khozyaystvo SSSR, Moscow, Statistika (various
years).
demand in 1985 can then be projected on the basis of
the indicated improvement in the income elasticity of
energy demand with respect to national income. The
resulting projection of 1,953 million tons standard 25
fuel implies an average annual growth rate of 2.5 25
percent in 1981-85 and is nearly identical to the first
projection (see table 5).
The third projection of energy use in 1985 uses a
statement in an early 1981 article by two officials of
the USSR Academy of Sciences, A. A. Makarov and
L. A. Melent'yev.' In discussing the relationship
between final energy consumption (energy actually
used by consuming sectors of the economy after the
deduction of conversion and distribution losses and
2 With Soviet data, it can be determined that the 0.87 figure applies
to the year 1980-3.4-percent growth in energy consumption (using
unadjusted Soviet consumption data) divided by 3.9-percent growth
in gross social product (the broadest aggregate Soviet indicator of
economic activity). This measure of energy efficiency, however, is
notoriously unstable from year to year because of changes in the
composition of both energy use and economic activity. Lopatin
could easil have demonstrated greater "energy efficiency'=
by citing the 1976-80 avera a elasticity of 0.80 or
even the 1979 figure of 0.49.
Ekonomika i or anizatsi a rom shlennogo proizvodsta, No. 3,
1981, p. 27.
25X1
25
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
nonenergy uses) and national income, the authors
indicate that, during the first 10 years of carrying out
a great number of small and dispersed energy-saving
measures, "it will obviously be possible to reduce the
specific consumption of final energy by not more
(emphasis added) than 5 to 7 percent...."
Projections Based on Conservation Goals. The final
projections, developed to illustrate possible Soviet
assessment of energy demand in the 11th Five-Year
Plan, employ Soviet goals for saving fuels and energy.
In its November 1981 revision of the plan, the
Supreme Soviet set a target for "saving" more than
200 million tons standard fuel, or about 11 percent of
current total energy uses The new goal represents a
substantial increase from the 160 to 170 million tons
envisioned in the original version of the plan and
suggests a heightened concern with energy efficiency.
Actual savings during the last five-year plan were
reported as 125 million tons standard fuel, although
Soviet energy balances indicate that final energy
consumption as a share of total energy use was
relatively constant during the 1970s.' Thus, the
Makarov-Melent'yev statement can be assumed to
apply also to total energy consumption. If it is further
assumed that the 10-year period of energy savings
begins in 1981 and that a gradual course of efficiency
improvement is followed, the reduction in specific
energy consumption by 1985 would be 2.5 to 3.6
percent. The resulting projections for total energy
demand in 1985 are 1,958 million and 1,980 million
tons standard fuel-again using Soviet targets for
national income growth (see table 5). For 1981-85,
these figures imply average annual growth in total
energy demand of 2.6 to 2.8 percent, slightly higher
than the first two projections.
ECE Balances. In addition to the projections de-
scribed above, the energy balances submitted to the
United Nations Economic Commission for Europe
(ECE) by the Soviets provide yet another indicator of
energy consumption growth to 1985. These balances,
however, were prepared prior to the adoption of the
11th Five-Year Plan and before final 1980 production
and consumption data were available. The total ener-
gy consumption estimate for 1985 provided to the
ECE is 2,020 million to 2,080 million tons standard
fuel. A comparison of this estimate with the 1980
balance submitted by the Soviets implies an average
growth rate of 2.8 to 3.4 percent per year, somewhat
higher than the reconstructed projections presented
here (see table 5). A plausible explanation of this
difference is that the Soviets, like others in interna-
tional forums such as the ECE and the International
Energy Agency, provided overly optimistic projections
of energy availability and economic growth.
' Although the Soviet Union does not publish detailed statistics on
final energy consumption, it provided a set of detailed energy
balances in 1980 to the United Nations Economic Commission for
Europe (ECE) as part of an international project to study energy
the plan called for 160 million tons.6
The Soviets use a somewhat peculiar method of
measuring energy savings: The conservation targets
include the incremental contribution of electricity
generated from hydro and nuclear sources (not treated
as conservation or savings in the West), and the
calculation does not involve an accumulation of sav-
ings achieved in each year of the plan period.' In the
Soviet view, if the savings target is to be achieved,
total energy consumption in 1985 (the last year of the
plan) would be 200 million tons less than that which
would have obtained if the efficiency standards of
1980 had prevailed.
So far, the Soviets have not provided a detailed
breakdown of their new conservation target consistent
with that published for the 10th Five-Year Plan
(1976-80). A comparison of the specific goals of the
previous plan with those announced so far for the
1981-85 plan is presented in table 6. The added
generation of electricity from hydro and nuclear
sources has been shown separately to indicate "real"
improvements in energy-use efficiency.
Our last projection assumes that, in the absence of
conservation, the same energy use per unit of national
income observed in 1980 (3.83 kilograms standard
fuel per ruble) would prevail in 1985. Using an
Pravda, 18 November 1981, p. 2.1
6 Ibid.; Izvestiya, 15 May 1981, p. onomt a i organizatsiya
promyshlennogo proizvodstva, No. 9, 1980, p. 124r _TJ
' Planovoye khozyaystvo, No. 1, 1981, p. 35.
25
25
I
25
25
25
25
25
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
Table 5
USSR: Alternative Projections of 1985 Total Energy Demand
Total Energy Demand
(million tons
standard fuel)
Average Annual Growth
(1981-85) (percent)
Implied Savings
(million tons
standard fuel) b
1. Continuation of decline in energy use per unit of
national income:
-0.8 percent per year (1976-80 average)
1,951
2.5
80
-0.5 percent per year (1971-80 average)
1,980
2.8
51
-1.5 percent per year (1966-80 average)
1,883
1.8
148
2. Decline in energy/economic activity elasticity from
1,953
2.5
36
0.87 in 1980 to 0.70 in 1985 (Lopatin, November 1981)
3. Ten-year decline in final energy use per unit of national
income of 5 to 7 percent (Makarov and Melent'yev,
March 1981):
-2.5 percent by 1985
1,980
2.8
51
-3.6 percent by 1985
1,958
2.6
73
4. ECE submission (mid-1980)
2,020-2,080
2.8-3.4
5. Meeting planned conservation target c
1,885
1.8
6. Reduced conservation in line with 1976-80 results
1,923
(74 percent achieved) c
a With the exception of projection 4, all the projections assume that
national income grows at the planned rates in 1982-85.
b Implied savings or "conservation" are calculated as the difference
between the respective projections and the 1985 demand level
without improvements in energy use per unit of national income (for
projections 1 and 3) or improvements in the elasticity of energy
demand with respect to economic activity (projection 2).
c After deduction of the planned or actual contribution of increased
hydro and nuclear electricity production, which the Soviets consider
to be energy savings.
adjusted target of 17.6 percent of national income
growth in 1981-85, total energy demand would rise to
2,031 million tons standard fuel in the last year of the
current plan.' If the savings goal of 146 million tons
(excluding the increments from hydro and nuclear
electricity) is achieved, energy demand in 1985 would
be reduced to 1,885 million tons.' This is one of the
' The 1981-85 plan called for 17.8-percent growth over the period in
national income. In 1981, however, growth was 3.2 percent instead
of the planned 3.4 percent.
' Conservation savings may also- a calculated or the first three
projections by comparing the projected values for 1985 energy
demand with the energy demand that would be implied by planned
national income growth coupled with the efficiency standards of
1980. The savings range from a low of 36 million tons standard fuel
in the case of the elasticity improvement scenario to a high of 148
million tons-greater than the planned level-if the 1966-80
average annual decline of 1.5 percent in the energy intensity
measure is used.
lowest projections and yields an energy demand
growth rate of only 1.8 percent per year.
0
The conservation goals, however, are probably too
ambitious. To test the effect of not achieving these
goals, we assumed that conservation in 1981-85 would
be only as successful as it was in 1976-81. Adjusting
the actual savings of 125 million tons standard fuel in
1976-80 and the planned savings of 160 million tons
to eliminate the share from increased hydro and
nuclear electricity (36 million tons versus the 39
million tons planned) yields a "real" saving of only 89
million tons standard fuel, 74 percent of called-for
conservation. Using 74 percent as the ratio of
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Table 6
Soviet Planned Energy Savings
Million tons
standard fuel
achieved conservation to planned conservation, total
energy demand in 1.985 would be 1,923 million tons
standard fuel, an average annual increase during the
plan period of 2.2 percent per year.10
1980 1985
(compared with (compared with
1975) 1980)
Reduction of specific 44 NA
fuel consumption in the
production of manufac-
tured products
Reduction of specific 36
consumption in the pro-
duction of electricity and
thermal energy
Better use of secondary 19
fuels and heat resources
Reduction of specific 15
consumption of light pe-
troleum products and
improvement in the
structure of truck
transport
Reduction of fuel losses
during storage and
Makarov and Melent'yev in fact acknowledge that
progress in conservation has been slow in recent years.
They explain that the potential for energy savings in
several areas-improving the efficiency of rail trans-
portation, reducing specific consumption of fuels in
the generation of electricity, and substituting natural
gas and oil for solid. fuels, for example-is being
exhausted." In the current Five-Year Plan, the Sovi-
ets expect to concentrate on increased centralization
of heat supply, replacement of energy-inefficient
equipment, dieselization of the motor vehicle fleet,
and wider usage of secondary energy resources. They
will have a difficult time, however, meeting their
ambitious savings target because so much of the
savings involve large investments during a period
when there is fierce competition for investment re-
sources.
transport Implications of the Demand Projections
Reduction of boiler fuel a 55 If Soviet planners are indeed counting on energy
use in direct combustion
Subtotal
Increase in electricity
production from hydro
and nuclear power plants
Total
121
39 b
146
62-
a Not counted as a savings item in the 1976-80 plan.
b Actual "savings" were 36 million tons standard fuel.
c Calculated from 1985 targets for hydro and nuclear electricity
production.
Sources: Ekonomika i organizatsiya promyshlennogo proizvodstva,
No. 9, 1980, p. 124; Izvestiya, 15 November 1981, p. 2.
consumption to grow by roughly 2 to 3 percent per
year during 1981-85, they might well have to make
some major adjustments before long to 1981-85 plans
for the allocation of energy supplies. Growth in energy
production is likely to fall short of the growth in
energy consumption. implied by projections based on
10 This methodology can be applied to the 1976-80 period to
compare the results with actual energy consumption in 1980. In
1975, energy use per ruble of national income was 3.97 kilograms
standard fuel. National income grew to 450.8 billion rubles in 1980,
implying-again in the absence of any improvement in the energy
efficiency of the Soviet economy-total energy consumption of
1,790 million tons standard fuel. When the "actual" conservation of
89 million tons is subtracted, the resulting figure of 1,701 million
tons is close to the actual level of energy use in 1980 (1,725 million
tons standard fuel by our measurement). This calculation demon-
strates that the decline in energy intensity of the Soviet economy
observed during 1976-80 (using the Soviet measure of economic
growth) is roughly consistent with the Soviet measure of "conserva-
tion," when the growth of hydro and nuclear electricity production
is excluded.
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
25
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
Soviet procedures. Equally important, the Soviet fore-
casting procedures have a pronounced bias that re-
sults in an underestimate of future energy consump-
tion. To match consumption and supplies in the
context of the 1981-85 plan, Moscow would have to
trim domestic allocations or net exports. Substantially
slower economic growth-and therefore slower
growth in energy demand-seems to be the only
development that could close the prospective gap
between energy supplies and the demand for energy.
Comparison of Supply and Demand Projections. The
projections of growth of domestic energy consumption
in table 5 mainly fall in the 2.5- to 3-percent range,
with a few around 2 percent per year. But even in the
lowest projection, total energy demand rises to 1,883
million tons standard fuel in 1985. Since we estimate
that total energy production probably will rise to only
2,193 million tons (compared with the 2,335 million
tons planned-see table 7), net energy exports would
have to decline marginally from the 308 million tons
registered in 1980 to support domestic consumption at
the projected level. Two of the other projections,
however, suggest energy consumption of 1,980 million
tons in 1985 and, coupled with our assumption re-
garding energy production, imply a reduction in net
exports between 1980 and 1985 of about one-third
(from 308 million tons to 213 million tons)."
The Bias in Soviet Procedures. The shortfalls indicat-
ed above only take into account the effect of a failure
of energy supplies to measure up to plan. Were the
Soviets to use the methodologies described above to
project energy requirements in the 1980s, they would
be systematically understating future energy use if
the national income plan is met. Because of embodied
inflation and double counting in economic statistics,
reported growth in national income is higher than
planned growth even if every quantitative goal is met
precisely." Therefore, with economic activity inflated
Table 7
USSR: Total Energy
Supply in 1985
Million tons
standard fuel
Plan
Preliminary
Estimate
Total
2,335
2,193
Oil a
901
822 b
747
693
473
480
Hydro c
74
72
Nuclear c
70
56
Other d
70
70
a Including gas condensate.
b The outlook for Soviet oil production is currently being restudied.
The amount shown, therefore, is a provisional level of annual output
(equivalent to 11.5 million b/d) and is subject to change.
c Converted at the planned or estimated average heat rate of thermal
power plants in the USSR.
d Including peat, oil shale, fuelwood, and other types of renewable
energy sources (geothermal, solar, and so forth). The Soviet Union
does not publish a plan for these categories of energy production. The
figure shown is that provided by the Soviets to the United Nations
Economic Commission for Europe in 1980.
by Soviet measure, energy consumption per unit of
"actual" national income will be higher than the ratio
the Soviets calculate simply because the denominator
in the calculation is smaller.
In addition, estimates of past increases in energy
efficiency will be exaggerated. In fact, by Western
measures of economic activity, the trend in the energy
intensity of the Soviet economy as measured by an
energy/GNP ratio has actually been upward since
1977, not downward as the energy/national income
statistics in table 4 suggest (see figure). The ratio of
energy consumption to GNP was 1.046 in 1977
(1970 = 100). It has increased each year since and in
1980 stood at 1.099. Prelimi for 1981 yield a
ratio of 1.098.
1980 level in 1985 regardless of the demand projection selected.E The importance of the likely Soviet miscalculation of
" For a discussion of this issue, see NFAC Research Paper energy efficiency can be shown by using the energy
ER 80-10461 (Unclassified), August 1980, Comparing Planned and consumption/GNP ratio and the 1981-85 plan goals
Actual Growth of Industrial Output in Centrally Planned Econo-
mies. (u) to estimate the energy consumption necessary to meet
"Soviet plans for energy production are at least consistent with our
reconstructed demand projections. If the Soviets were to meet their
energy output targets, available energy exports would exceed the
7 Confidential
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
Comparison of Soviet and Western
Measures of Energy Efficiency
Soviet Measure: Energy/National
Income Ratio
Soviet economic performance, however, is falling far
below plan. Our most recent baseline estimates indi-
cate that average annual growth in GNP will do well
to reach one-half of the rate implied by the Five-Year
Plan." Analogously, Soviet national income growth
would be 2 percent per year instead of the 3.3 percent
per year in the plan.
Two-percent annual growth in national income (by
Soviet measure), coupled with some increase in the
efficiency with which energy is used, could close the
implied gap between projected demand and supply
outlined above. With no improvement in efficiency,
domestic consumption of energy would rise to 1,905
million tons standard fuel in 1985-288 million tons
less than the production we project. To maintain net
energy exports at the 1980 level would then require
only 20 million tons of energy savings." Savings on
this scale seem much more plausible than the savings
implied by the demand projections in table 5. Where-
as those projections required reductions in energy use
per ruble of national income during 1981-85 ranging
from 2.5 to 7.2 percent, a decline of only 1 percent
would permit savings of 20 million tons standard fuel.
Even this relatively small amount of energy savings
will not be easy to achieve as evidenced by the
performance of the energy/GNP ratio in the 1970s.
But it should be ;possible. During most of the 1970s,
there was abundant energy available and little real
incentive for conservation. Moreover, the Soviets have
demonstrated-in 1968, 1970, 1973, 1977, and
1981-that the energy efficiency of the economy can
the plan goals in 1985. The 1981-85 plan implies a
4.3-percent-per-year increase in Soviet GNP by West-
ern measure. If the USSR succeeds in arresting the
rise in the energy consumption/GNP ratio and holds
it to the 1980 level, energy consumption, rising at the
same rate as planned GNP, would reach 2,130 million
tons standard fuel in 1985. This alternative projection
of energy demand is 150 to 247 million tons (and 8 to
13 percent) higher than the projections based on
Soviet ener intensity measures that are summarized
in table 5.
Saved by Slower Growth? Soviet energy planners, we
have suggested, may well be overly optimistic in
projecting the trends in both energy production and
energy demand in the 1981-85 period. If the 1981-85
plan were on schedule, the shortfalls in energy sup-
plies would be having more of an impact on domestic
allocations and exports than has been reported so far.
be improved.
If the USSR can manage such energy savings, the
challenge to the Soviet Union would then be to
manage the consumption of particular kinds of energy
so as to realize export possibilities. Since natural gas
"DDI Research Pap,-r SOV 82-10127 (Confidential), September
1982, USSR: Econocnic Projections, 1982-90, p. 3. (u)
" Energy savings are here defined as the difference in 1985 between
energy demand without any improvement in energy use per unit of
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
25
25
1
 Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential
will account for such a large part of the increment in
energy production between 1980 and 1985, natural
gas will have to be substituted extensively for oil and
other fuels in domestic use. Otherwise, the USSR
runs the danger of having gas production constrained
by its inability to use at home the difference between
the volume of gas it could produce and the volume of
gas it is able to sell abroad, a volume already fixed
within narrow limits by contracts and pipeline capaci-
ty.
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
 P,pproved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9
Confidential)
Confidential
Approved For Release 2007/03/02 : CIA-RDP83T00853R000200040002-9