To meet its 2035 energy goals and Paris Accords commitments, Ukraine will need to reduce energy losses in the public and residential sectors and boost production from renewable energy sources, a new study by Finnish Innovation Fund Sitra has suggested.
According to the study, published on Sept. 5, Ukraine can cut its greenhouse gas emissions by 64 million tons in 2030 – or by more than the total emissions of Portugal today. The nation could achieve such results by making buildings more energy efficient and using wind power, the study reads.
And to help Ukraine on the carbon-free journey, Finland and Sweden have allocated 16 million euros for projects in district heating and clean energy.
Green to Scale
The study, funded by the Nordic Council of Ministers, looked at how Nordic climate solutions could help five countries – Latvia, Lithuania, Estonia, Poland, and Ukraine – fulfill their commitment to stick to the Paris agreements to reduce greenhouse emissions globally.
But while fighting climate change could be a bit of a nebulous goal for most people in the world, there are many other, more tangible benefits of going low-carbon: It saves a lot of money. It reduces air pollution. And it makes countries less dependent on fossil fuel imports.
The study estimated that five countries could save as much as 1.2 billion euros by 2030.
Most importantly there is no need to reinvent the wheel, said Oras Tynkkynen, senior adviser at the Finnish Innovation Fund Sitra, who oversaw the research.
“The technologies and innovations have already been tested in the Nordic countries and proved to work,” he said at a presentation of the study in Kyiv on Sept. 5. “Moreover, they are simple and actually affordable. Just learn from the Nordic experience.”
Finland, Sweden, Denmark, Norway, and Iceland are the global champions in energy efficiency. According to European Commission data, electricity generated in the region is already 87 percent “carbon-free,” and 63 percent of it comes from renewable sources.
Each country has deployed various low-carbon energy policies – electric cars and reforestation in Norway, wind power in Denmark, geothermal energy in Iceland, reforming district heating in Sweden, and bioenergy in Finland. As a result, the five countries have cut their carbon dioxide (CO2) emissions by 18 percent in 15 years – more than any other countries in the world. Their new goal is to be completely fossil-free by 2050.
Ukraine and the Nordic countries share some common factors that cause high energy consumption: long and cold winters, and the prevalence of energy-intensive industries. But the progress divide is enormous.
Under the Paris agreements, Ukraine has committed to keep CO2 emissions at 40 percent below 1990’s level by 2030.
The study estimated Ukraine’s potential to cut greenhouse gas emissions by 64 million tons in 2030 – an amount larger than Portugal produces today.
But this will be impossible to archive if the nation doesn’t wean itself off fossil fuels. According to Tynkkynen of Sitra, improving energy efficiency in buildings and investing in wind power will help too.
As an agricultural powerhouse, Ukraine could also develop sustainable farming and biogas production from manure to mitigate the negative effects on the climate from meat and dairy production.
Besides the obvious climate benefits, Ukraine’s budget could save billions of dollars spent annually on costly energy imports and reduce the heating bill.
Currently, gas and coal combined account for almost 60 percent of Ukraine’s primary energy resources. They are followed by nuclear energy (25.5 percent) and oil (11.6 percent). Renewable sources – biomass, hydro, wind, and solar power – account for only 4 percent.
In comparison, in 2015 Denmark generated 56 percent of its electricity from renewable sources, including a world record 42 percent from wind power.
The transition to clean energy is also a matter of national security. Ukraine imports over half of its energy – gas, coal, and nuclear fuel for reactors. Some of these imports come from Russia, an aggressor state that has occupied Ukrainian territories in the Donbas and which invaded and occupies Crimea.
In its recently adopted energy strategy, the Ukrainian government set the target of reducing energy imports to below 30 percent and increasing renewable production to 11 percent by 2035. 25 percent of its electricity is projected to come from nuclear energy, wind, solar, and hydropower stations.
Funding sources
One of main drains on Ukraine’s energy spending is heating. The country already uses 80 percent of its gas on households and industrial consumption, a quarter of it going towards heating in the public and residential sector.
However, a lot of energy gets lost due to outdated and inefficient district heating systems as well as ageing buildings that leak heat and consume more electricity.
Since 2010 the Nordic Environment Finance Corporation (NEFCO) has helped to renovate various public facilities, such as schools, kindergartens, and hospitals, around Ukraine. At the end of the last year, the fund also gave a 30-million-euro loan to refurbish seven Ukrainian universities, in Chernihiv, Kharkiv, Kyiv, Lviv, Poltava, Sumy, and Vinnytsia.
NEFCO’s managing director, Magnus Rystedt, said that over the last few years municipalities have increased investment into energy efficiency projects. This was partially enabled by the decentralization reform, which gave local governing bodies more autonomy in managing their budgets and setting priorities, rather than waiting for an order to come from a central authority.
But the main incentive was monetary, Rystedt said in an interview with the Kyiv Post.
Utilities tariffs in Ukraine have gone up by nearly 10 times since 2013, and will likely rise again under pressure on the government from the International Monetary Fund to raise gas tariffs for households in order to receive a $1.9 million loan. As a result, utilities has been one of the most subsidized sectors. According to NEFCO, by the end of 2017, almost half of households needed state support to pay their heating bills.
“When you have subsidies, you don’t see the actual value of a good,” he said adding that NEFCO’s view is very practical. It gives loans to municipalities for projects that bring visible results for communities. A few solar and wind farms are being built with partial financing from the Nordic fund.
“Investment, however, may take time to pay off. It’s a long-term view that Ukraine sometimes lacks, especially in times of elections,” he said. “That’s why it’s crucial for the government and local authorities to communicate to the public the benefits (of investing in energy efficiency).”
The results can already be seen. Since 2012, NEFCO has co-financed the modernization of district heating systems in Vinnytsia, Zhytomyr, Oleksandria, Kamyanets-Podilsky, Poltava, and Ivano-Frankivsk. The six cities were able to cut 30 percent of their gas consumption, 20-50 percent of their electricity use, and reduce CO2 emissions by around 45 percent.
More loans for Ukraine are coming: Sweden at the beginning of September allocated 10 million euros for the modernization of district heating systems. In addition, Finland has granted 6 million euros to fund public and private projects on energy efficiency and renewable energy sources in power and heat generation.
