Mission Statement

District Heating Mission to Russia

March 11-17, 2001

Overview

The U.S. Department of Commerce is supporting President Clinton's International Clean Energy Initiative through the development of a dynamic trade promotion program which emphasizes the positive contribution that American companies and U.S. exports can make to a cleaner environment and energy efficiency.

The Department's Clean Energy Trade Initiative focuses on developing market opportunities for U.S. companies in the energy supply, manufacturing, commercial, residential, transportation, and environmental technology sectors.

The objectives of the Clean Energy Trade Initiative include: increasing the visibility of U.S. companies as global leaders in "clean energy" technology, deepening relationships with key developing country policymakers, participating in the policy dialogue (regulatory reform, privatization, etc.) with government officials, expanding communications with private sector organizations, trade promotion, and long-term market development.

Mission Description

From March 11 - March 17, 2001, the Deputy Assistant Secretary for Basic Industries or a designee will lead a district heating equipment trade mission to Moscow, Russia, and St. Petersburg, Russia. The mission will include representatives from U.S. equipment manufacturers interested in entering or expanding their presence in the Russian equipment market.

Commercial Setting

There is a large potential market for U.S.-manufactured energy efficient district heating equipment in Russia. Centralized district heating systems are used to heat most of Russia's buildings, but the equipment that they use is old and inefficient, and in need of maintenance and replacement. As of 1997, centralized district heating systems owned and operated by municipal authorities supplied 70 percent of Russian households with heat and hot water, and there were over 1000 district heating systems that served over 10,000 customers. Inefficient equipment and the resulting expensive heat that it produces makes it necessary for most cities to subsidize the cost of heat and hot water for customers who otherwise would not be able to pay for these services. A number of cities have begun investing in efficiency upgrades so that they can reduce or eliminate subsidies. Many large private enterprises that own multiple buildings also own and operate their own district heating systems, and have begun investing in equipment upgrades as well.

The Center for Energy Efficiency (CENEf) in Moscow has taken a lead role in helping Russian cities and enterprises improve the efficiency of their district heating systems. CENEf is a non-profit, independent Russian-American organization founded by the Department of Energy, USAID, EPA, and the World Wildlife Fund to promote energy efficiency and environmental protection in Russia. CENEf advises its clients on the technical and commercial issues involved in improving the efficiency of district heating systems and helps them find equipment suppliers. CENEf has identified a number of types of equipment that district heating system operators are looking for, including:

• boilers

• pipe insulating materials

• cathodic protection

• valves, joints, pipe connectors

• repair kits for pipes

• plastic pipes

• software for district heating management

• regulators

• inspection systems for pipelines

• water treatment systems

• water filters

• manholes

• end-use metering and control systems

CENEf staff believes that U.S.-made equipment is superior to the European and Japanese equipment that many cities have been buying to improve district heating efficiency, and also less expensive.

Although obtaining financing for projects in Russia can be a challenge, there are options for district heating upgrades. CENEf has worked with a number of cities to create business plans for district heating upgrades in which equipment purchases are financed with the money that the cities save in efficiency gains. In addition, the World Bank is preparing a loan of approximately $75 million to finance district heating upgrades in five cities around Moscow. The first procurement tenders are expected to take place in the fall.

Mission Goals

The mission will seek to increase exports of U.S. district heating equipment to Russia. The mission will further U.S. commercial policy objectives, advance specific U.S. equipment exporting business interests, and address market access issues.

Mission Scenario

The mission will visit Moscow, Russia, and then proceed to St. Petersburg, Russia. The mission will focus on advancing the U.S. district heating equipment industry's export opportunities and addressing market access issues.

Briefings and business appointments will be made for members of the business delegation. The mission will expose the delegation to:

• Meetings with officials from Russian government certification agencies.

• Meetings with World Bank officials.

• Meetings with CENEf representatives.

Timetable

The mission is scheduled to arrive in Moscow, Russia, on Sunday, March 11, and conclude in St. Petersburg on Saturday, March 17, 2001. The precise schedule will depend on the availability of Russian government officials and World Bank officials, as well as the specific goals and interests of the mission participants.

Criteria for Company Participation

Eligibility

Eligible companies must demonstrate a capacity to deliver relevant equipment or services to Russia.

Participating companies must be incorporated in the United States.

A company is eligible to participate only if the products and/or services that it will promote on the relevant mission are either (a) manufactured or produced in the United States; or (b) if manufactured or produced outside the United States, are marketed under the name of a U.S. firm and have U.S. content representing at least 51 percent of the value of the finished good or service.

Selection Criteria

Companies will be selected on the basis of:

• Consistency of the company's market development goals with the scope and desired outcome of the mission as described.

• Past, present, or prospective business in Russia.

• Diversity of company size, type, location, demographics, and traditional under-representation in business.

• Timely receipt of signed mission application, participation agreement and participation fee of $3,000, and $500 for each additional representative.

• Whether the company's overall business objectives, including those of any U.S. or overseas affiliates, are fully consistent with the mission's foreign and commercial policy objectives.

Mission recruitment will be conducted in an open and public manner, including publication in the Federal Register, posting on the Internet, press releases to the general and trade media, direct mail and broadcast fax, e-mail, notices by industry trade associations and other multiplier groups, and at industry meetings, symposia, conferences, trade shows, etc.

An applicant's partisan political activities (including political contributions) are irrelevant to the selection process.

Applications

Application deadline: January 12, 2001. Applications may be submitted immediately to Rachel Halpern, Energy Division - Basic Industries, U.S. Department of Commerce, Room H4054, Washington, DC 20230; telephone: (202) 482-4423; facsimile: (202) 482-0170 or 5361; Internet: Rachel_Halpern@ita.doc.gov.