Volodymyr Hroisman: Necessary mechanisms to encourage energy-saving and substitution of gas

The Regional Development Ministry shall submit to the Government a decree on the implementation of the comprehensive measures to ensure gradual replacement of gas by other fuels. This instruction was given by Vice-Prime Minister-Minister of Regional Development, Construction, Housing and Utilities Volodymyr Hroisman at a governmental meeting on energy efficiency.

This plan shall solve a significant Ukraine's dependency on imported gas and reduce natural gas consumption through its gradual substitution by other fuels. To its development have already joined the Ministry of Energy, Ministry for Regional Development, the Ministry of Finance, Ministry of Economic Development, State Agency on Energy Efficiency, NERC and other government agencies, MPs, and representatives of relevant institutions and associations.

“Energy independence is today a matter of national security of Ukraine, and we shall consider both mechanisms for the reduction of gas consumption, on the one hand, through introduction of advanced energy efficient technologies, and on the other hand, the creation of incentives for the use of alternative energy sources”, noted Volodymyr Hroisman.

The problem is that today the use of gas is more economically advantageous for heat producers than switching to alternative fuels. This is because mechanisms of tariff compensation are valid only when using gas. It is therefore proposed to improve the tariff system in relation to the reduction in the amount of compensation for the difference in tariffs on heat energy produced from natural gas, in favor of increasing the compensation for the cost of heat energy produced by alternative fuels.

However, pursuant to the Vice Prime Minister, implementation of such mechanisms shall have also additional stimulatory effect on the national economy as the multiplier mechanism will trigger: the support will receive domestic producers, especially local ones, not Gazprom.

Comprehensive measures also provide for the implementation of other mechanisms aimed at promoting energy efficiency and renewables, including coverage through the state budget in interest rates of commercial banks for loans granted under the purchase of energy saving equipment, including bioenergy heat generating equipment with the use of biofuel.