‘Cheap energy resources do not create an impetus for more efficient use’ – interview

Interview with Mr. Angel Minev, Team Leader of the EU-funded Project “Capacity Building of the State Agency for Energy Efficiency and Energy Conservation in Ukraine” offers an overview of European experience in energy saving and perspectives of its application in Ukraine. 

Energy efficiency is motivated by a principle “do the same with less”
Energy efficiency is motivated by a principle “do the same with less”

Energy efficiency is always a crucial issue for Ukraine. Interview with Mr. Angel Minev, Team Leader of the EU-funded Project “Capacity Building of the State Agency for Energy Efficiency and Energy Conservation in Ukraine” offers an overview of European experience in energy saving and perspectives of its application in Ukraine.

– Is energy efficiency an actual topic for Ukraine?

I believe that this question should beannounced a national priority. One of the challenging issues in the EU member states and in the whole world is to diversify energy supply and decreasing of dependency on the imported energy resources because it directly affects of national security and sovereignty. On March 28 Ukrainian government has decided to increase prices on gas, electric energy, and housing services by 35-40%. It means that an average bill of a consumer of these services will grow by half. Energy efficiency could decrease even these expenses. It might give the citizens a possibility to pay their bills in the framework of a new pricing policy. What matters for a consumer it is not a price of the energy itself but the bill that he or she has to pay for it. If the price of the energy resources increases than measures on energy efficiency are to be taken. In that case, the bills of the citizens could in fact remain unchanged. – In the framework of energy efficiency, how can the energy resources be approached?

Energy efficiency is motivated by a principle “do the same with less”. Energy efficiency does not put off the comfort. In this regard, we should make a difference between energy efficiency and energy saving. Motion detectors, which switch off the light in the corridors when no one is there, are an example of energy saving. In contrast, efficiency presupposes substitution of the light bulbs with more energy-saving ones, for example. It is more expensive, but in a long-term perspective it contributes significantly to more efficient and conscious consummation. Energy could be used efficiently in several areas: buildings, transport, services, and production. State should create such economic and legal conditions, when high prices on energy resources stimulate more efficient energy consumption.  Citizens themselves can also contribute to this process by investing in renewable energy sources for their houses or by using energy-saving measures. By the way, in the EU there is a Directive, which forbids production of bulbs with capacity of more than 50 watts.

– Please tell about sustainable development concept that is currently central in Europe and all over the world. What is the role of energy efficiency in it? 

“Sustainable development” means economic growth combined with preservation of the environment and social development. Energy efficiency is the most important instrument that enables functioning of this system, since this approach is not based on shortening of production, gives people a possibility to decrease their expenses even despite high prices on energy resources, and at the same preserves the environment by means of more conscious approach to consumption. From this point of view, an alternative case of China is interesting, as long as its government reduces taxes for producers and enables their production to stay cheep and highly competitive until recently and at the expense of social development. However, ecology is not taken into account at all – cheap energy resources do not create an impetus for more efficient use. Similar situation took place in the former Soviet Union, where economy was developed according to the slogan “we will conquer the nature”. Just one of the consequences has almost completely destroyed Aral Sea. One should understand clearly: preservation of the environment really costs a lot; however, we could not allow ourselves to ignore an ecology factor any more. You should never ignore social development as well. That is exactly what sustainable development theory has been designed for.

– Do the EU member states manage successfully an ambitious task of implementing the sustainable development principles on practice?

In this regard, we should speak about the Europe 2020 strategy: the EU’s 10 year strategy since 2010 for smart, sustainable, and inclusive growth – so-called “Strategy 20/20/20”. It has been developed in the EU, and it means: 20% less energy consumption, 20% share of renewable in total energy consumption, and 20% less CO2 emission. All this seems to be focusing on the environment only. However, the implementation of energy efficiency measures is connected closely with economic development, since low energy consumption of the enterprise leads to its low production cost and better competitiveness. Economic growth is a pre-condition for a high level of social prosperity. Of course, there is no universal model, and any country should use energy efficiency measures in a creative way on the basis of its own peculiarities. For progress evaluation, certain set of indicators is used to build a triangle, whose verges demonstrate economic, social, and environmental factors. When country is developing sustainably, this triangle will be oblique; however, in the most of cases this triangle is warp. Norway is an example of a genuine sustainable development, since energy is produced primarily from renewable sources; its economy is very energy efficient and competitive, while society is really prosperous. Till recent times, Germany also could serve as an example of the realized sustainable development. However, in the last years, Germans were investing too much in renewable energy sources, and that has resulted in the disproportionally increased prices on the energy for citizens.

– Does Ukraine have resources for moving towards sustainable development? Could Ukraine allow itself to apply this strategy? What could be the main obstacles on its way?  

Any country has sufficient resource potential for achieving a balance among three key factors. That is simply an issue of state’s priorities. One should just understand that in contrast to universal theory there is no universal strategy. For instance, in the case of Ukraine, ecology and social development are not proportionally short in comparison to economic growth. First and foremost problem in Ukraine is an unconscious attitude towards environmental protection of the energy sector, ignorance of its high cost and central role for sustainable development. A problem is the model of human behavior as well. Ukraine has 46 million of people. You can count how much could be saved if everybody switches off the unnecessary devices at home or in the office. A broad informational campaign is needed for that, and it should not be simple occasional events like conferences or round tables but a permanent demonstration and educational center on energy efficiency. It is critically important to work with children and teenagers on their model of behavior and respectful attitude to nature. Parallel to this work, a pricing reform is necessary in order to move toward cost reflective pricing. However, such unpopular but necessary measures are to be implemented in a socially compatible way (this includes protection of vulnerable customers through well targeted social tariffs). Disabled or elder people in economically weaker must be protected, but those costs should be covered not by the industry but should be financed by social funds. In order to contribute to saving, one can implement differentiated tariffs according to the principle “the less you consume, the lower is the price”, what allows vulnerable consumer to optimize their expenses.

–          How does the project facilitate the principles of energy efficiency in Ukraine?

The project «Capacity Building to State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE)» is a project of technical support in the framework of the broader Budget support program. The project has started in December 2011 and it includes three main components, or dimensions of work: enhancing of managerial and professional skills of senior managers and staff at large of the SAEE, support of the Agency in realization of its tasks (ad hoc activities), and development of a new cooperation concept in the framework of the EU Budget Support program. An important dimension of our work is professional staff training. 24 employees of the Agency (primarily middle and top-managers) are now studying on their second year of a specially designed MBA program on energy efficiency. In my opinion, just a few energy agencies in the EU member states acquired such a fundamental and high-quality professional education, which is now available to Ukrainian experts thank to this program.

Background information: In January 2012 the EU launched the technical assistance Project “Capacity Building of the State Agency for Energy Efficiency and Energy Conservation in Ukraine” to strengthen the overall capacity of the SAEE to foster EU-Ukraine cooperation in the area. This project is a part of the Sector Budget Support Programme (SBSP) titled “Support to the implementation of Ukraine’s Energy strategy in the area of energy efficiency and renewable sources of energy” signed by the EU and Ukraine in December 2009. The purposes of this project are as follows: to strengthen SAEEEC’s capacity for the design and implementation of national policies in respect of energy efficiency (EE) and renewable energy sources (RES), to assist in the implementation of the sector policy support programme funded by the EU. The project lasts till the end of 2014, budget of the EU-funded project is € 2,781,000.00.