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Ukraine’s energy efficiency hindered by a state budget which contradicts the Green Deal

Ukraine is very gradually but surely becoming energy efficient and independent of external energy supplies through the development of renewable energy sources. That was the main takeaway of the European-Ukrainian Energy Day, as stated by its Chairman Mats Lundin.

While the European Union has set itself the ambitious goal to become the world’s first climate-neutral continent by 2050, it must focus on priorities such as the development of clean energy and pollution reduction.

Today in Ukraine 40 per cent of electricity is used by buildings and construction and 60 per cent of natural gas is used by central heating systems and houses. According to the Deputy Minister of Community and Territorial Development of Ukraine for European Integration, Ihor Korkhovyi, within the framework of the policy of joining the European Green Deal, the ministry is setting ambitious goals to increase thermal modernisation of buildings to 60 per cent by 2050 and increase the share of renewable energy sources in heating systems to 50 per cent. He also noted that a program worth 300 million euros is being discussed with the European Investment Bank (EIB) for the thermal modernisation of public buildings, schools and kindergartens in the cities of Ukraine.

The head of the EU Delegation to Ukraine, Matti Maasikas also noted Ukraine’s interest in joining the Green Deal. However, he expressed his concerns regarding the draft state budget of Ukraine for 2021 which does not include funds for energy efficiency but instead supports the coal industry in the amount of 3 billion hryvnias (90 million euros). According to him, this contradicts the statements about the Green Deal and does not meet Ukraine’s obligations to jointly finance energy efficiency. 

Indeed, RES investors are uncertain about the further implementation of policies aimed at energy efficiency and support for the development of renewable energy sources in the country. In particular, Yuriy Kubrushko, EUEA Board Member and Managing Partner of Ukraine’s leading advisory group IMEPOWER, noted that payments for the electricity provided did not reach the state-guaranteed 100 per cent but are 10 per cent higher than the payments in January. Furthermore, Sergiy Makhin, senior portfolio manager of VR Capital Group, noted that this state of settlements is a constant obstacle to further investments, without which the development of the industry is impossible.

However, the government is trying to reassure its citizens. Acting Minister of Energy Olha Buslavets stressed that in addition to the Energy Efficiency Fund, Ukraine has a program of warm loans for the population. This year, the amount of investment under this program amounted to 1 billion hryvnias (30 million euros) and the ministry is working to extend this program for another year as a socially-oriented and quite positive and effective program.

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