Ex­perts: Sim­ple en­ergy-saving steps only way to pro­tect poor

Kyiv Post - - Business Focus - BY I SO­BEL KOSHIW [email protected] Kyiv Post staff writer Iso­bel Koshiw can be reached at [email protected]

Tents have been erected out­side Ukraine’s Cab­i­net of Min­is­ters by supporters of the Rad­i­cal Party to protest the gov­ern­ment’s de­ci­sion to raise en­ergy prices to mar­ket rates. Dubbed the “Tar­iff Maidan,” the demon­stra­tors say they are an­gry that the poor have to pay un­af­ford­able prices for util­i­ties while many politi­cians con­tinue to live lux­u­ri­ous life­styles.

Ro­man Spi­vak, an en­ergy con­ser­va­tion­ist ex­pert, told the Kyiv Post that the gov­ern­ment has yet to wit­ness the full force of pub­lic anger about en­ergy prices.

“Peo­ple will get their bills on Nov. 10 and when they see their bills have gone up by 80 per­cent they will come out to protest…This is all hap­pen­ing be­cause of a vac­uum of in­for­ma­tion,” he said. “The min­is­ters need to have di­a­logue with the peo­ple in­stead of pla­cat­ing peo­ple with sub­si­dies.”

The In­ter­na­tional Mon­e­tary Fund’s bailout con­di­tions re­quire Ukraine to raise en­ergy prices to mar­ket rates. But th­ese rate hikes are nec­es­sary, with or with­out an IMF pro­gram.

“The gov­ern­ment is blam­ing the hike in en­ergy prices on the IMF,” Ed­ward Chow, a se­nior fel­low at the Cen­ter for Strate­gic and In­ter­na­tional Stud­ies, told the Kyiv Post. “And this just ex­poses them to pop­ulist at­tacks... The space needs to be opened to the pub­lic for in­formed dis­cus­sion, in­stead of blandly say­ing ‘we’re go­ing to re­form.’”

In the past, the gov­ern­ment sub­si­dized the en­tire pop­u­la­tion, but now is try­ing to limit sub­si­dies to just the poor.

“In fact, what has hap­pened is a pos­i­tive thing,” Grze­gorz Ga­jda, oper­a­tions of­fi­cer at the World Bank, told the Kyiv Post.

But the amount the gov­ern­ment is spend­ing this year on en­ergy sub­si­dies, Hr 25.3 bil­lion -- or $1.1 bil­lion -- is still cre­at­ing a con­tin­u­ous deficit in the state bud­get.

One third of Ukraini­ans are cur­rently re­ceiv­ing en­ergy sub­si­dies, said Krzysztof Gierul­ski of the Euro­pean Com­mis­sion dur­ing the En­ergy Pol­icy Talks con­fer­ence on Nov. 3.

Ino­gate, an EU en­ergy co­op­er­a­tion pro­gram, predicts that sub­sidy spend­ing could reach Hr 50 bil­lion next year as the num­ber of vul­ner­a­ble con­sumers con­tinue to grow.

“We are in­vest­ing in an in­ef­fec­tive sys­tem,” said Sergey Porovk­siy, ad­vi­sor to the min­is­ter of en­ergy and coal in­dus­try of Ukraine.

The only so­lu­tion is to make vul­ner­a­ble con­sumers more en­ergy ef­fi­cient, ac­cord­ing to en­ergy ex­perts. If they use less en­ergy, their bills will be­come more man­age­able and this will al­low the gov­ern­ment to cut sub­si­dies.

One pro­posed so­lu­tion is the mon­e­ti­za­tion of sub­si­dies. This would al­low the con­sumer to use any money not spent on bills to im­ple­ment en­ergy ef­fi­ciency mea­sures – in­stead of the sub­sidy go­ing straight to util­ity com­pa­nies.

Cur­rent gov­ern­ment plans in­clude in­tro­duc­ing sub­si­dies on the con­di­tion that con­sumers im­ple­ment en­ergy ef­fi­ciency mea­sures.

Hen­nadiy Zubko, min­is­ter of re­gional de­vel­op­ment, con­struc­tion and hous­ing, told jour­nal­ists that mon­e­ti­za­tion would be a slow process, as en­ergy au­dits of build­ings would need to take place.

What should be done first as top pri­or­ity, ac­cord­ing to en­ergy ex­perts, is to in­stall me­ters in ev­ery house­hold so en­ergy consumptio­n can be mon­i­tored by both sides.

Re­gional sup­pli­ers are obliged to in­stall me­ters for free, but Ga­jda of the World Bank said, “de­mand at the mo­ment is weak be­cause the pub­lic is not in­formed about what is on of­fer.”

In the long run, the most ef­fec­tive so­lu­tion is to in­su­late and ren­o­vate build­ings. Proper in­su­la­tion, for in­stance, would cre­ate a 40-per­cent saving but it could take five years, ac­cord­ing to Spi­vak.

Loans are avail­able and ac­cord­ing to Mykola Ili­nov, head of the en­ergy ef­fi­ciency cen­ter at state-owned Ukr­gas­bank, “one loan is is­sued by the bank ev­ery 35 sec­onds.”

How­ever, the ma­jor­ity of those deemed vul­ner­a­ble con­sumers are pen­sion­ers or peo­ple who live alone, and they would strug­gle to se­cure a loan from a bank, Svy­atoslav Pav­lyuk of Ino­gate said.

The bat­tle to im­ple­ment en­ergy ef­fi­ciency mea­sures is as much about at­ti­tudes to­wards consumptio­n as it is about money. Peo­ple are used to the Soviet sys­tem, whereby when it’s mi­nus 25 de­grees Cel­sius out­side, it will be plus 25 in­side.

“There is no un­der­stand­ing that we should pay for our habits,” said Porovskiy of the En­ergy Min­istry.

Dis­trust in so­ci­ety, par­tic­u­larly of the gov­ern­ment, means “vul­ner­a­ble con­sumers will al­ways be a re­sis­tance group to en­ergy ef­fi­ciency pro­grams,” Pav­lyuk of Ino­gate said. For in­stance, they might be afraid that their sub­si­dies will be re­moved and they will be left to live with­out suf­fi­cient heat­ing.

A study car­ried out by the Kyiv In­sti­tute of So­ci­ol­ogy and the Na­tional Eco­log­i­cal Cen­ter of Ukraine found that 9 out of 10 Ukraini­ans be­lieve that en­ergy ef­fi­ciency mea­sures are ex­pen­sive or un­af­ford­able.

Ac­cord­ing to Gierul­ski, there are sev­eral af­ford­able mea­sures, in­clud­ing in­stalling ther­mo­static valves for ra­di­a­tors, which is im­por­tant to avoid over­heat­ing. An­other, even cheaper, mea­sure could be pipe lag­ging, and in­su­lat­ing win­dow seals, screens be­hind ra­di­a­tors, or anti-draught for doors.

“No-cost mea­sures are re­lated to be­hav­ior – that is the un­der­stand­ing of how heat wastage could be re­duced,” Gierul­ski said.

This means us­ing cur­tains at night to re­duce heat loss via win­dows; not cov­er­ing ra­di­a­tors with cur­tains or other things; and, clos­ing ther­mo­static valves on ra­di­a­tors be­fore open­ing the win­dows.

Gierul­ski said: “What is needed is a tar­geted in­for­ma­tion cam­paign to reach those peo­ple and tell them what can be done with­out nec­es­sar­ily a lot of money.”

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