Energy Efficiency Fund reduces costs and emissions

Project description

Title: Support of the national energy efficiency fund and of a climate-friendly reform agenda (S2I)
Commissioned by: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Country: Ukraine
Lead executing agency: Ministry for Community and Territorial Development 
Overall term: 2018 to 2021

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Context

Energy consumption in Ukraine is extremely high, particularly compared with that of countries in the European Union (EU). Energy prices are rising, not least due to the country’s dependence on expensive energy imports from abroad. The problem is compounded by the fact that the Ukrainian Government reduced its subsidies for gas in private households in 2018, which triggered an extraordinary increase in gas prices – consumers now pay over 600 per cent more than in 2014. This places a burden on low-income segments of the population, in particular, and results in increasing social assistance, which must in turn be borne by the state budget. 

The environmental impact is also extremely high due to low energy efficiency and outdated technologies. Measured against economic performance, Ukraine emits three times more carbon dioxide than the EU average.

Objective

Energy efficiency in buildings in Ukraine has increased thanks to the establishment of the National Energy Efficiency Fund. Residents save on energy costs and CO2 emissions have been reduced.

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Approach

At the end of 2015, the Ukrainian Government committed to new climate and energy policy targets with its National Energy Efficiency Action Plan. The country would like to reduce its energy consumption by nine per cent by 2020 by using energy more efficiently. For this purpose, the government is setting up a national Energy Efficiency Fund, which will enable and encourage the refurbishment of buildings. Energy-efficient refurbishments offer considerable potential for saving energy. With better thermal insulation and modern heating systems, modernised residential buildings consume less energy and the energy costs for private households are reduced. Since most homeowners cannot afford to pay for the construction work, the Fund steps in with grants. The state benefits because it does not have to provide energy-related social assistance. At the same time, the renovation measures reduce greenhouse gas emissions, as the buildings now require less energy. The Fund helps the people in Ukraine and the state in achieving its climate targets. Ukraine, Germany and the EU are providing money for the Energy Efficiency Fund. The German contribution amounts to 20 million euros. 

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The project supports the Ukrainian Government in setting up the Fund. Together, the partners are creating the necessary structures for handling investments and are developing strategies, human resources concepts and work programmes. A technical office set up specifically for the purpose accepts the project applications and decides on their eligibility for funding. Around 50 experts and managers from the Energy Efficiency Fund are being trained to perform their new tasks effectively. The project is providing particularly intensive training for those staff members who are responsible for technical assessments of the projects to be selected. In addition, during a first phase, 70 energy consultants are learning how they can best support homeowners’ associations in applying for subsidies for smart renovation projects. The plan proposes that the experts will later pass on their knowledge to more than 350 energy consultants. Following approval, the office will provide support with project implementation and evaluation. For example, there are also plans to provide training to building experts on the technical requirements for the energy-efficient refurbishment of residential buildings. The results and experience gained will be made available for follow-on projects.