2012-09-12 10:07:00

How to reduce the risks of the Ukrainian energy sector

At present, fossil fuels provide more than 80% of world energy needs of humanity. According to the International Energy Agency (IEA), fossil fuels for the foreseeable future will continue to be the main source of energy: in 2030, their combined share of the total amount of energy produced is expected to be 82%. With such prospects modernization and greening of outdated technology to produce electricity from fossil fuels becomes particularly important.

In May, the Ministry of Ecology and Natural Resources of Ukraine hosted a forum on topic «Attracting investment in advanced fossil fuel technologies." The event was held at the initiative of the United Nations Economic Commission for Europe and the International Chamber of Commerce (ICC Ukraine), supported by the World Energy Council (World Energy Council) and the Swiss "Risk Reduction Foundation".

In 2006, the Committee on Sustainable Energy of UN recognized the importance of encouraging investment in the electricity sector. To undertake this work the Ad Hoc Group of Experts on Clean Electricity Production from Coal and other fossil fuels was created. They have repeatedly discussed three major energy challenges that the world faces in the 21st century:

1) a guaranteed and adequate supply of energy at reasonable price;

2) reduction of greenhouse gas emissions;

3) prudent management of demand for energy in order to reduce spendings.

And not accidentally speakers of Kiev Forum, representatives from government, leading banks, industrial companies and expert organizations came to the unanimous conclusion that only the replacement of outdated technology of power generation, from fossil fuels to more modern and efficient is an effective way to solve the above problems and, in the first place — to reduce greenhouse gas emissions, the main factor of climate change on Earth.

However, the development of advanced technologies for the use of fossil fuels requires a huge investment. According to the IEA, investments needed to upgrade the world’s power generation capacity were estimated at $ 500 billion a year. For many countries with transitional economies, including Ukraine, even a small part of such costs can not be afforded. And attraction of necessary investment is a difficult task, since many geopolitical, economic and social factors make the developing countries not very attractive place for investment.

According to the majority of foreign experts, today Ukraine in general is unprofitable for investments. The only exception is the oil and gas industry as well as the financial sector and real estate sector. The government of Ukraine should undertake serious reforms in the energy sector to fundamentally change investment climate.

The forum has sounded the information that today Ukrainian energy sector is not very profitable. For example, only for the 1st quarter of 2012 DonbasEnergo loses 24% per year, Dneproenergo shows $ 45 million losses, Zakhidenergo — $ 40 million, Kyivenergo — $ 41 million. Tariffs for electricity are fixed and can not be determined by additional costs or market.

Experts of the International Chamber of Commerce of Ukraine under the energy reforms, understand the priority of development of renewable energy sources and the full implementation of energy efficiency programs. The Commission on the «green» investments, alternative and renewable sources of energy, using international experience, will actively work at national and international levels and will deal with the creation of an attractive environment for the efficient development of energy sector.

A special place in the development of «clean» technologies will be assigned for the use of organic fuel. For the development of this energy sector, the government has pledged to develop mechanisms to encourage private businesses, to adopt effective legislative basis, consider ways of attracting banks and commercial sector into investment projects.