Energy Saving Policy in Ukraine, Problems and Prospects

Energy Saving: Problems and Solutions

In the period from 1995 to 2005 GDP energy content was reduced due to the effect of the structural factor, which was in the industry. The value of the constant energy component in the cost of goods was reducing proportionally to the increase in production output, and as a result, the GDP growth was ahead of energy consumption growth.

At the same time it should be noted that by now the structural factor as a component of the energy saving potential mostly has been exhausted. For maintaining the existing GDP energy content reduction rates (4% to 6% annually), it is necessary that the technological factor of the energy saving potential be engaged immediately. If no fundamental measures are taken, Ukraine's economy lagging behind the developed countries performance in terms of energy efficiency will become chronic. This, in its turn, will significantly restrict the competitive strength of domestic products on world markets in the short- and medium-term period.

In addition, GDP energy content reduction rates will be affected by the following factors:

  • energy tariffs and prices are not in line with energy production costs;
  • economic risks associated with natural monopolies operation;
  • unmetered energy consumption
  • high energy losses in process of transmission and consumption;
  • status of offsetting mutual debts at wholesale electricity market and other energy markets;
  • low level of energy efficient processes and technology;
  • high wear of manufacturing equipment in all sectors of the national economy.

Proceeding from the above, key energy saving problems were identified, which should be addressed in the first place:

  1. Bringing certain provisions of energy saving legislation in correspondence with the economic situation. In particular, creating economic incentives for businesses with regard to improving energy efficiency.
    This problem can be addressed by developing draft amendments to tax legislation as regards restriction on assigning energy resources consumed by businesses to total costs, and imposing a duty for energy consumption in excess of rated for energy content per unit of output.
  2. Improving the procedure for rationing energy content per unit of output - adopting the new version of the Law of Ukraine On Energy Saving - the Law of Ukraine On Energy Efficiency.
  3. Establishing a system of new energy standards - adopting the new version of the Law of Ukraine On Energy Saving - the Law of Ukraine On Energy Efficiency.
  4. Improving the state energy saving audit system - adopting the new version of the Law of Ukraine On Energy Saving - the Law of Ukraine On Energy Efficiency.
  5. Introducing obligatory statistical reporting with regard to energy use - adopting the new version of the Law of Ukraine On Energy Saving - the Law of Ukraine On Energy Efficiency.
  6. Establishing an integrated mechanism for state control in the field of energy saving and energy efficiency while avoiding overlapping functions of State administration agencies in these fields - adopting the new version of the Law of Ukraine On Energy Saving - the Law of Ukraine On Energy Efficiency.
  7. Establishing legal liability for legal persons, officials and individuals for inefficient use of fuel and energy resources, specifically: drafting changes to relevant articles of the Code of Ukraine on Administrative Offences as regards increasing penalties for offences in the field of energy saving; establishing financial responsibility of legal persons for inefficient use of fuel and energy resources.
  8. Ensuring transition to mass application of and replacing for modern, energy meters. There is an urgent need to regulate payments for consumed resources by housing and communal services users, which payments are now based on established standards which significantly exceed actual energy consumption;
    This problem can be addressed by adopting the Law of Ukraine On Commercial Accounting of Resources Transmitted by Networks.

This problem can be addressed by adopting the Law of Ukraine On Commercial Accounting of Resources Transmitted by Networks.