RD Interview: Gonzague de Pirey, a French entrepreneur in Russia and an expert on energy efficiency projects, talks to Russia Direct about the effect of sanctions on his business and how Europe can help Russia in developing energy efficiency projects.
Solar power expert reviews solar panels at the Kosh-Agachskaya solar power plant in the Republic of Altai, launched on September 4, 2014. Photo: RIA Novosti
At the 2015 St. Petersburg International Economic (SPIEF), Russia Direct sat down with Gonzague de Pirey, General Delegate for Saint-Gobain Russia, Ukraine and the CIS, a global company with French origins, which deals with the construction market and offers innovative solutions to the challenges of energy efficiency and environmental protection, to discuss how Europe can help Russia increase its energy efficiency.
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In addition, de Pirey talked about the impact of anti-Kremlin sanctions on European businesses in Russia and the ways of coping with the challenges of working in a country that is under sanctions.
Russia Direct: One of the speakers at an SPIEF panel discussion said that the market of energy efficiency technologies in Russia is huge and in demand. Is it really the case?
Gonzague de Pirey: Definitely, energy efficiency has huge potential for French businesses in Russia, especially, for Saint-Gobain. We have already been here for a number of years and we started the business more than 20 years ago and we have already established nine plants in the Russian regions.
So, we have invested quite a lot in Russia. We do believe it has enormous potential, especially, in the building and housing business. Why? It’s primarily because of high demand in Russia: First of all, you need a new housing here in Russia. Today, the number of square meters [per capita] built for housing in Russia is approximately 24, while in Western Europe this number reaches 40-44.
So, you can imagine how many Russians are willing to live in more spacious houses. But size is not everything. People are also looking for comfort, including acoustic comfort (to be able not to listen to noise outside and neighbors) and thermal comfort —and here we come back to energy efficiency.
RD: Ok, but all this needs a great deal of reliable technologies which abound in the West, yet given sanctions, Russia might face the lack of many important technologies. Can such a sanctions regime affect the energy efficiency market in Russia?
G.P.: Actually, in the construction sector, most of the buildings are made locally to be sold locally, because we cannot afford the cost of transportation of some technologies from one country to another. So, actually, most materials we use are manufactured in Russia.
But you are talking about technologies and these technologies are global. And we import them to Russia as know-how and, most importantly, customize these technologies in accordance with the market needs.
That’s why we are developing more and more R&D capability in Russia. And this year we will inaugurate the first R&D center, which will precisely have a role to adapt our global know-how and global technologies to the Russian reality and the Russian markets.
RD: What kind of difficulties did you face in Russia after the West imposed sanctions on Russia in response to its policy in Ukraine?
G.P.: We didn’t have any direct impact or consequences [from sanctions]. Why? Again, because we have goods manufactured locally to sell locally. But we have an indirect impact: I mean the economic situation [after imposing sanctions] is not as good in 2015 as it was in 2014. So, we need somehow to adapt.
RD: Given the fact that France supported the sanctions on Russia, have you ever faced a sort of pressure from the French government in regards to your Russian operations, for example, in limiting your activity in Russia?
G.P.: No, in France business is free to do business wherever it wants. But we need to comply with the laws. So, it is not a question of your attitude toward sanctions. After all, we are a global company and we need to comply with the international laws. And if the international laws tell us you should not do this and this, we definitely comply with them no matter what we think about these laws.
RD: Coming back to energy efficiency, how can the European experience help Russia to improve its energy efficiency projects, if we look at this problem in a broader perspective?
G.P.: What we [Europe] can do now is to bring expertise (know-how) to Russia in terms of technologies and also in terms of how to create the market of energy efficiency. What we listen today is the claims about its huge potential. There is a need for energy efficiency today. But there are some steps to take between the need expressed and non-expressed. And how to create such a market based on energy efficiency need, this is a sort of know-how that, I believe, French businesses could bring. This is precisely the role of an association that gathers 15 leaders of French companies working in Russia.
RD: There is a lot of debate around alternative sources of energy in Europe and the U.S. From your point of view, does Russia have any potential in developing solar, wind or other renewable sources of energy?
G.P.: There is a fantastic room to develop some renewable sources of energy. Russia has a great deal of resources that could be used to foster alternative energy. It can create new industries. What I would like to stress is that energy efficiency is not only a matter of reduction in the consumption of energy, but energy efficiency is also a way to develop the economy. We need some services regarding energy efficiency and here, I believe, is one extremely important message that there are a lot energy efficiency services. We should not look only for the development of the industry, but also the services. And this is the future of economy and the renewable energy.
RD: Do you think that government should play a greater role in controlling energy efficiency enterprises or they should be on their own under self-regulation or supervision of private companies?
G.P.: We are advocating strongly for more standards and a regulatory framework to be stricter to impose more energy efficiency initiatives. But we talk about the ways of how to control the implementation of this new framework, and here are two ways: either the public way or private way. I don’t know which way – at the end of the day – Russia will choose, but the public way is fine, it means more administration and a greater control over complying with all the rules. But the other way is to involve private companies such as insurance companies, which could play the role of quality implementation of all imposed regulation of other companies.
RD: You mean the co-existence of governmental and private control, right?
RD: But do you think it is possible in Russia—the harmonic co-existence of private and state sector, given a traditionally bigger and restrictive role of the Russian government, much bigger than in Europe?
G.P.: This is not an issue at all. You have a framework and a design by the government and private companies could play a role in this.