Energy policy, Legislative background, funds and programmes
Energy policy
Energy Strategy of Ukraine to 2030
In March 2006, the Cabinet of Ministers approved the Energy Strategy for the period until 2030, which outlines strategic objectives for energy sub-sectors that aim to enhance the country's overall economic development and the people's well-being.
The strategy states as main goals:
- creating the conditions for a sustainable and high quality energy supply
- ensuring reliable and sustainable functioning of the energy industry and its efficient development
- reduction in energy dependency
- reduction of energy intensity
- reduction of environmental impact and ensuring civil safety
- integration of the Ukrainian power industry into the European system while increasing power exports and strengthening the country's position as gas and oil transit country.
The Energy Strategy specifies that Ukraine will increase the use of renewable and non-traditional sources of energy from 10.9 mtce in 2005 to 40.4 mtce (18.3% from total energy consumption, including 9.2% from biomass) in 2030. This will require investments in this sector in the amount of approximately 60.4 billion UAH.
The largest increase is expected in the use of solar energy, methane gas from coal mines and heat pumps operating on low potential heat. The strategy envisages that the electricity production from renewable energy will increase up to 1.6 billion kWh in 2020 and 2.1 billion kWh in 2030.
[Energy Strategy of Ukraine for the period until 2030]
State Programs to support renwable energy sources
State programmes for the development of renewable, non-traditional and secondary sources of energy have been initiated in the Ukrainian state programmes. Currently work on the following programmes is being undertaken at the national level:
- The National Energy Programme of Ukraine to 2010 approved by the Resolution of the Verkhovna Rada of Ukraine of 15 May 1996 No. 191/96-VR "National Energy Program of Ukraine to 2010” envisages 10% covering of general energy consumption by renewable energy sources; the commissioning of 190 MW wind farms by 2010;
- The State Support Programme for the Development of Non-traditional and Renewable Energy Sources and Small Hydro and Thermal Power Plants approved by the Resolution of the Cabinet of Ministers of Ukraine of 31 December 1997 No. 1505. This Programme details what were understood to be the most promising directions for the development of non-traditional energy. The target is 10% of renewables till 2010 year from general energy consumption.
- The Comprehensive Wind-farm Construction Programme approved by the Resolution of the Cabinet of Ministers of Ukraine of 3 February 1997 No. 137;
- The State Programme for Scientific and Technical Support “Ecologically Clean Geothermal Power Engineering in Ukraine” approved by the Resolution of the Cabinet of Ministers of Ukraine of 17 January 1996 No. 100. Although this resolution expired in 2001, the energy potential of geothermal resources is tapped under this programme.
- Program “Ethanol” was approved by the cabinet of Ministers in 2000 (Decree #1044 of 4.07.2000). The Program is directed at wider use of ethyl alcohol as energy carrier and raw material for industry; one of its tasks is to start production of environmentally friendly blend petrol. Main lines of the Program include the production of high-octane oxygen containing admixture to petrol (HOA - Ukrainian analogue of bio-ethanol), ethyl tertiary butyl ether (ETBE), ethylene, acetone, synthetic rubber, and ”biodiesel”. It is planned to realize the Program in two stages: 1 stage (2000-2005) – to start production of high-octane oxygen containing admixture to petrol, ETBE, technical alcohol, ethylene, acetone, ethyl acetate, styrene; 2 stage (2005-2010) – production of ethylene and its derivatives including biodiesel. Financing of the Program is envisaged at the expense of own funds of enterprises (including involved credits) and the fund “Ethanol” which is planned to be created by common agreement of enterprises – executors of this Program.
Legislation of Ukraine in the Sphere of Renewable Energy Sources
Legal, economic, environmental and organizational principles for the use and promotion of the use of all alternative sources of energy in the fuel-energy mix were established in the Law of 20.02.2003 No. 555-IV “On Alternative Sources of Energy”. Article 1 of the Law contains the definitions of “alternative sources of energy”, “alternative energy”, “alternative energy facilities”, and “sphere of alternative energy”. Under this Law, alternative sources of energy include renewable energy sources such as solar energy, wind energy, energy from the seas (wave and tidal), rivers, biomass, geothermal energy and “secondary energy resources that exist constantly or are periodically generated in the environment”. Energy equipment is considered to be alternative if contribution of renewables is not less than 50% of installed capacity. The law is mainly of declaratory nature, and its absence of concrete supporting mechanisms and instruments for energy production from renewables is a real shortcoming.
The basic principles of the state policy in the sphere of alternative sources of energy are:
- increasing production and consumption of electricity generated from alternative sources to decrease Ukraine’s dependence on the import of traditional energy sources;
- improving the local and global environment by reducing the negative impact on the environment by consuming electricity generated from alternative sources of energy rather than from fossil fuels;
- appropriately managing the environmental impact during the construction and operation of alternative energy facilities and in the transmission and supply of electricity generated from alternative sources of energy;
- attracting domestic and foreign investments and supporting entrepreneurship in the sphere of alternative sources of energy, in the development and implementation of the national and local programmes promoting of alternative energy.
The law envisages the creation of national, regional and local programmes in the area of alternative energy sources, especially the provision of financial support for scientific and technological research. It is intended that organizational support of the activity would include:
- granting licenses for production of electric, thermal and mechanical energy from alternatives sources and its transmission and supply;
- granting licenses for production of geothermal energy;
- granting construction permits for energy facilities that use solar irradiation, wind, and tides;
- granting construction or renewal permits for hydro power facilities on small rivers;
- granting licenses for construction and operation of networks to transmit energy generated from alternative sources to customers;
- defining the sources and purposes of financial support for alternative energy sources;
- granting approvals to the network operators for connection of facilities that generate electricity from alternative energy sources to the interconnected power system of Ukraine irrespective of the ownership of the facilities;
- creating records of the available resources of alternative energy sources;
- inspection and technical compliance approval of generating facilities.
While the Law envisages that permits for the location and construction of facilities generating electricity from alternative energy sources and for the construction of networks to transmit alternative source electricity to customers will be granted, it fails to determine the conditions and procedure of granting these permits.
Law on green tariff
In September 2008 the Law on green tariff for electricity produced from renewables was adopted by Verkhovna Rada. (601-VI from 25.09.08).
Harmonization process regarding EU-accession
Action Plan “Ukraine – European Union” was approved by the Cabinet of Ministers of Ukraine on 12.02.2005 (N 994-693). The Plan is for 3-year period and its purpose is to assist implementation of “The Agreement on partnership and collaboration between Ukraine and European Communities” (N 998-012 from 10.11.1994). In April 2008, European Commission expressed its intention to prolong the term of the Action Plan for 2009. Action Plan “Ukraine – European Union” includes harmonization actions for all areas: politics, economy, social area, trade and market, justice, transport, energy, environment, people contacts.
Important contracts between Austria and Ukraine concerning energy issues
Memorandum of Understanding of November 2000, signed by the Austrian Minister for Agriculture and Forestry, Environment and Water Management, Wilhelm Molterer, and the Ukrainian Minister for Energy and Fuel, Serhii Yermilov.
