Gazprom may finance energy efficiency in Ukraine

The allocation of US 2.9 billion paid by Gazprom under Stockholm arbitration ruling to finance energy efficiency may become an excellent initiative.

In developed countries, they have long realized that instead of investing in the production of another cubic meter of gas, ton of coal, kilowatt-hour of electricity or kilocalorie of heat, it is much wiser and economically prudent to invest in energy efficiency. Moreover, it helps enhance energy security, reduce environmental pollution and soften global climate change, which is already felt in Ukraine. In general, energy efficiency must become a key development priority for our country and all sectors of the national economy in the coming decade.

Since residential sector has especially large potential in energy efficiency, this money should be allocated to that sector. In doing so, investments in thermal modernization of apartment buildings may produce fast and visible effect, which could manifest itself in the reduction of electricity, gas and heat consumption. It would have a positive reflection on household utility bills (which is a painful social issue in Ukraine), and lower the demand for budget subsidies. A whole number of positive economic, social and environmental effects will thus occur.

If the government indeed finds the way to spend Gazprom’s funds on energy efficiency, it will be a good signal and proof that the recently declared intention to ensure “green” energy transition of Ukraine is serious. It will also serve as a good compensator for the possible rise of energy prices.

Surely, it will be important to ensure transparency and effectiveness of the spending of these funds. To that end, the existing mechanism of financing Associations of Apartment Building Co-owners via the Energy Efficiency Fund, which has already proved itself well, can be used.

Bohdan Serebrennikov
Manager on consultancy and analytical services