Resource rich and with a growing economy, the Russian Federation is currently targeting improvement of public funds allocation via program based budgets. First attempted by Moscow as a region of Russia in 2012, this ambitious transformation has subsequently been taken up by the national government followed by regional governments. Effectively, over 83% of the national budget or over $360 billion was allocated to 39 state public programs in 2014. Although the proposed program based budget system is novel for modern Russia, it has its foundations in the existing practice of public program development and implementation in Russia. Analysis of this practice demonstrates the limitations of the existing system highlighting the lack of economic analysis at the earlier stages of public program development. It reveals the potential for improvement in the program planning and budgeting system in the region and country.The objective of this research is to develop recommendations for the integration of specific tools for economic analysis which would address the current problems of program planning and budgeting in Russian regions within the constraints of evolving institutional arrangements. This requires identifying, developing and adapting economic evaluation and modelling techniques as well as applying them to a specific public program before they can be recommended for implementation.Russia is frequently referred to as a country with enormous energy efficiency and green energy prospective. The potential for energy efficiency improvement is estimated to be 45% of primary