EU is helping to increase investment into sustainable energy development in Ukraine and UNECE region
November 16, 2018.
The European Union and the United Nations Economic Commission for Europe (UNECE) support creating favourable economic environment for increasing private investment in energy efficiency and renewable energy sources in order to address energy poverty in the UNECE countries, which include Ukraine. This issue was discussed at the Workshop on Sustainable Energy jointly held by the EU through the EU Technical Assistance Facility for Sustainable Energy, and UNECE as part of the 9th International Forum on Energy for Sustainable Development (IFESD) in Kyiv on November 13, 2018.
In particular, the EU's External Investment Plan approved in September 2017 includes innovative financial instruments with a focus on loans and guarantees that lower investment risks for private sector participation. Two specific guarantee tools to support sustainable energy investment have been developed for this region:
Energy Efficiency and Sustainable Cities in Neighbourhood with the budget of EUR 750 million provides through the European Bank for Reconstruction and Development (EBRD) partial loan guarantees and consultations for the implementation of "green" projects by industrial companies, improvement of energy efficiency of buildings, rehabilitation of water supply networks, wastewater treatment facilities in cities and communities, and so on.
Another EUR 2 billion has been earmarked to Boosting Investment in Renewable Energy through which the EBRD and the Association of European Financial Development Institutions (EDFI) help households and private companies to attract investment into renewable energy projects that reduce CO2 emissions.
According to international experts, investment in energy efficiency and renewable energy in this region is lagging behind and the share of renewables in the national energy mix remains very low while energy intensity remains rather high making energy poverty even more present and requesting immediate action to be taken.
"Energy Poverty is a widespread social problem. The solution is not cheap energy but stimulating energy savings and Renewable Energy use by households. Energy reforms should be focused on those priorities and benefits from energy efficiency should be monetized. Actually, energy efficiency has proven to be the cheapest and the most effective option to durably address energy poverty by decreasing gas, heating and electricity bills. In Ukraine, the EU-supported Energy Efficiency Fund will provide from 2019 grants and loans to energy efficient renovations of apartment blocks," Torsten Woellert, Support Group for Ukraine, DG NEAR, European Commission, believes.
Experts view the launching of the Energy Efficiency Fund in Ukraine as an efficient instrument to contribute towards tackling energy poverty. Owing to insufficient and deficient thermal insulation in most residential buildings, households heating consumption and bills are very high. Thus, thermal renovation of such buildings to be financed by Ukraine’s Energy Efficiency Fund will decrease heating bills for their residents.
"Energy Efficiency is not only a cost-effective way of durably reducing energy consumption and bills, it also contributes to enhancing social welfare. In a joint effort, the EU, Germany, the International Finance Corporation and the Ukrainian government have launched the flagship Ukraine Energy Efficiency Fund to finance from 2019 energy efficiency renovations of multi-family buildings," Johannes Baur, Head of Operations Section Economic Cooperation, Energy, Infrastructure and Environment, Delegation of the European Union to Ukraine, said.
The workshop participants noted that to increase private investment in energy efficiency and renewable energy in Ukraine, administrative, market and economic barriers should be removed. This requires establishing cost-reflective pricing mechanisms for energy, simplifying authorisations, introducing clear rules for access to markets and networks, applying feed-in tariffs or holding auctions for renewable energy sources, etc.
The UN Economic Commission for Europe (UNECE) was established in 1947 by the UN Economic and Social Council to develop economic activities and strengthening economic ties within the UNECE region, as well as between this region and the rest of the world. The commission includes all countries in Europe, as well as the U.S., Canada, Israel and former Soviet republics. Ukraine, as a successor to the USSR, is one of the founding members of the UNECE.