Context
Soaring energy costs and increasingly fierce competition add to the pressure on Ukrainian industrial companies to produce more while consuming less energy. This applies in particular to heavy industry in eastern Ukraine, which consumes one fifth of the country’s energy resources. Overall, energy consumption in Ukraine far surpasses the European average, and relative to economic output, the country consumes four times the amount of energy as the European Union. This makes Ukraine one of the world’s largest emitters of carbon dioxide (CO2). The introduction of an energy management system (EnMS) is to help steadily increase energy efficiency and reduce costs. Energy conservation also generally leads to a reduction in CO2 emissions, thereby contributing to climate change mitigation.
Objective
An energy management system that reduces specific energy consumption is introduced and is increasing the competitiveness of enterprises. Activities in three pilot companies confirm that climate change adaptation objectives and economic efficiency are not mutually exclusive.
Approach
In a multi-stage process, a team of German and Ukrainian experts selected three pilot companies for the introduction of an energy management system based on ISO 50001: Energomashspetsstal (EMSS), Slavyansk High Voltage Isolators and Chasov-Yar Refractory Works.
Activities undertaken at these companies include the collection and analysis of energy consumption data, the setting up of energy usage and CO2 monitoring systems, and identification of potential areas where energy can be saved. The companies have also been advised on how energy efficiency measures could be realised.
In carrying out individual activities on behalf of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, GIZ draws on the expertise of German energy management service providers. A consortium of GFA and Limon-Consulting (Kassel) was significantly involved as subcontractors in the implementation of this project.
The initiation of policy dialogue on energy efficiency in industry, technological cooperation with German companies and the communication of results and lessons learned round off activities at the pilot companies.
Results
Introduction of the energy management system is nearly complete. Even without major investment, it is already apparent that the pilot companies can make energy savings of up to five per cent. Far greater savings – potentially up to 25 per cent – could be achieved with the appropriate investment.
At EMSS in Kramatorsk, collected emissions data (CO2 emissions divided by the production index) show that there was already a drop in emissions compared with 2011 within the first year of project implementation. Aggregated for the subsequent years, this adds up to a cumulative reduction of 2,151 tons.
Corresponding measurements in late 2014 showed that on average, around three per cent in annual energy savings were being recorded by all three companies. The level of energy savings was calculated against a baseline, namely the predicted energy consumption according to the relevant company data at the start of the project (status quo scenario).
The challenge, however, lies in acquiring the necessary investment capital. Although credit facilities for energy efficiency are available in Ukraine through multilateral and bilateral development banks, companies lack the know-how to prepare the documents required for a credit application. The pilot companies are being assisted in completing eligible credit applications for the energy efficiency measures identified. Unfortunately, it was not possible to conclude talks initiated over the course of the project with potential financing partners due to the dramatic worsening of political conditions in the region in early 2014.