Manual Ukraine energy policy review 2006

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Energy and Environmental Challenges to Security pp Cite as. These states consume far more energy relative to the size of their economies than Western European countries because of the relatively large size of the industrial sector in their economies and energy inefficiencies in all sectors. Large quantities of natural gas and oil are imported from or through the Russian Federation to fuel this demand and to compensate for insufficient domestic energy supplies. These countries lack a diversity of energy suppliers and have been subject to gas supply interruptions and sharp price increases, allegedly to advance Russia's economic and political interests.

In response to these risks, Belarus, Moldova and Ukraine are attempting to enhance their energy security with a variety of policies and programs. It is critical for these countries to devise energy policies from a comprehensive perspective, including the likely environmental impacts of any proposed energy policy. With a broad policy perspective, governments can determine the best way to achieve their energy security goals without undermining other policy objectives.

It is especially important that governments be cognizant that the negative environmental impacts of their energy policies may themselves create security challenges.

  • Energy Security And The Environment In Eastern Europe: The Case Study Of Ukraine!
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Drafted and adopted in in the wake of gas supply interruptions and steep price hikes, the Strategy focuses on how Ukraine can meet a growing energy demand while reducing gas imports. The Strategy calls for a dramatic expansion of nuclear and coal power, but neglects to answer how these strategies are better than the alternatives. The environmental and social consequences of the Strategy have yet to be adequately analysed and the Strategy raises difficult questions for both Ukraine and its neighbours.

Unable to display preview. Download preview PDF. Skip to main content. Advertisement Hide. Conference paper. This process is experimental and the keywords may be updated as the learning algorithm improves. This is a preview of subscription content, log in to check access. Cherp, Aleh et al. Dempsey, Judy. June, 13, Dubien, Arnaud. May National Research Council of the National Academies. Current policies and their impacts. So what did these strategies and goals amounted to in terms of actual policies and what were their outcomes as regards achieving their goals and impacting economic freedoms?

These targets took into consideration the local climatic capacities and other circumstances specific for a given country. CO2 emissions. In theory, this should allow for the supply and demand with these allowances to result in a creation of a balanced price for the pollution and offer a good disincentive to factories and producers to scale down their emission levels.

The problem with this approach is, however, that the level of the total number of allowances which was set up arbitrarily did not create a short supply of them, so the effect of the incentive was relatively low. The key to the success of this strand of energy policy is an optimal level of the allowances, which in practice is extremely hard to achieve, and which in past always proved unsuccessful 4.

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Renewable resources are also on the priority list of the European Union and this was represented by the number of initiatives undertaken in this field in the member states of the EU. So it can be seen that all of these programmes in support of the renewable energy were based on the interference in the market on numerous levels. This means that they were from their very outset prone to create imbalances in the energy market resulting in the unintended consequences to be borne by clients in the member states.

To begin with, the implementation of the renewable energy sources is expensive with respect to the initial investment costs as well as the energy demands at the time of installation. For example, the energy returns for the coal plants are approximately 3. The renewab le energy resources fare in this comparison is much worse, with energy returns for water plants being around 4.

Ukrainian Energy Reforms and European Gas Supply

Another problem associated with the renewable energy sources is their irregular and unpredictable electricity production, since it is dependent on natural factors. In case of positive circumstances there is an overproduction of electricity and a considerable congestion of the transmission system. Conversely, in case of bad weather circumstances might cause insufficient energy supplies, which have to be compensated by the backup, which increases the costs. The problems of this system are aggravated by the increasing integration of the European energy network.

Energy Security And The Environment In Eastern Europe: The Case Study Of Ukraine

This means that the member states will have to invest increasingly large sums of money to maintain and reconstruct their own networks. One of the complementing arguments in favour of the renewable energy approach from the proponents was that it would help create new jobs and increase the competitiveness of the sector in comparison with the rest of the world. The total turnover of the energy sector in the EU was estimated to be billion Euros. The number of new jobs was estimated to exceed 1. A bulk of them was associated with installation and the service of the new plants.

However, despite the expectations, the European producers of renewable energy are gradually losing their competitiveness to the rest of the world. While Europe is still dominating the global market in the area of wind energy, in case of the solar energy, the top 10 producers of solar panels contain eight from China and none from Europe. Moreover, even the argument about the jobs is based on a very limited perspective.

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The subsidies directed at the renewable energy are crowding out the investment and consequently jobs from the unsubsidised and cheaper energy sectors. Furthermore, the resources spent on subsidies could be directed to other purposes, and thus have a more positive effects on the employment, or alternatively, given back to the taxpayers for their own use 6.

Finally, the most hotly debated aspect of the support for the renewable energy is the impact it has on the energy prices in the European countries. It opted for a number of measures in support of the renewable energy producers, including income tax exemption for the first five years of production later abolished , property tax exemption and investment support from subsidy programmes. The key element was the law no. These measures collided with a decrease in the costs of the solar panels due to cheap exports from China, which caused a boom in the solar energy sector that then resulted in a boom in the energy prices.

These were covered from two sources: the former from the subsidies provided from the national budget, and the latter from the increased energy prices for the households and companies.

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  6. Just in the Czech Republic the subsidies reached However, these subsidies covered only some portion of the total amount of the increased costs associated with the renewable energy. The part that is passed on the consumer has reached This proves that the politically motivated approach to decrease the dependency on the foreign sources of energy can cause negative outcomes if it is based on the policy of subsidies 7.

    The last key aspect of the current energy policy of the European Union and its member states reflects the fact that the EU is a net importer of energy, as stated above, notably in the areas of oil and gas. Thus, it has been crucial for the EU to develop good energy relations with its neighbouring countries and regions, which could act as potential partners with respect to the energy exchange. The main regions that are in the interest of the European Union are the Eastern Europe including Russia and Ukraine , South Eastern region starting from Balkan countries, through Turkey up to the Caucasus region in the North and Mediterranean region including North Africa and the Middle Eastern countries in the East.

    These countries have been approached through various multilateral partnerships, such as the Union for the Mediterranean, Energy Charter Treaty, and Energy Community, which altogether cover all mentioned areas. These partnerships focus mostly on energy market, efficiency, transit and investment, dispute settlement and increased use of renewable energy. The importance of the neighbouring regions for the EU was strengthened through offers for economic partnerships in form of the EU neighbourhood policy and later association agreements, which should act as a carrot that would encourage economic, social and political reforms. This explains how the EU has currently such a rich network of agreements, including the currently signed Association Agreements with Ukraine, Moldova and Georgia and the negotiations of the Agreements with Armenia and Azerbaijan.

    This generally shows a good direction of the EU policy towards ensuring the security of its energy exports through expanding the options of the imports in case that there will be an escalation of the political crisis such as can be seen now. However, this is currently very difficult and costly mainly due to the regulatory processes that have to precede the exports to the countries, with which the United States have not signed the Free-Trade Agreement.

    Since this currently applies also to the countries of the European Union, these countries will have to either push towards a change of the approach in the USA or try to speed up the signing of the Transatlantic Trade and Investment Partnership, which would allow for a faster adoption of such measures. This proposal would be generally in lines with the principles of the free market 8. Common European gas purchasing vehicle. The idea behind this proposal is that the European Commission should negotiate gas contracts on behalf of the entire EU as a bloc, which would help unite its purchasing power, and thus ensure through its better bargaining position that the security of the imports would not be jeopardised.

    According to Donald Tusk, this, together with the solidarity clause, would help weaken the position of Russia and help end its stranglehold on Europe. It may look good on paper. In reality, though, it would mean that Europe would bring the European Union back to the model of public utility of the s or s, where it would adopt the role of the end-to-end coverage of energy services and price setting, which would counter the entire set of reform packages currently aiming at the liberalisation of the energy markets.

    Furthermore, the idea of solidarity that Tusk refers to, might be just a more eloquent name for something commonly known as free-riding, which presumes that while some member states would pay the bill, others would benefit, either in heightened energy security, lower prices or the cost of infrastructure. In this particular case, the Polish prime minister argued mostly for the European orchestration and the financing of a dense energy infrastructure, which would greatly benefit the Central and Eastern European countries, including Poland, but would be provided from the budgets of all the countries in the European Union.

    Fortunately, it looks like this proposal will not be adopted at the European level as the liberal principles that are taking roots in the European energy market combined with the particular national interests of the individual countries seem to be too great a hurdle for such policy to be passed 9. Unfortunately, the outbreak of Ukraine crisis led to another unfortunate development that will undoubtedly affect the future of the European energy policy, namely in the form of the sanctions targeting Russian energy sector.

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    The main rationale behind this policy is the effort to punish Russia for its military annexation of Crimean peninsula and discipline it into cooperative behaviour with respect to the ongoing fighting that the Eastern parts of the Ukraine are still facing. The main reason why the energy sector was picked as a suitable one for the sanctions was the scope of the energy sector in Russia and the effects the sanctions could have on Russian budget and the economy.

    It was due to this aspect, that it was expected that such an approach would leave Russia without the option of turning the taps off for the European consumers.

    Whether or not we agree with the approach for political reasons and regardless of the actual efficiency, it is necessary to investigate a number of particularities of the energy market that could have a serious impact on the energy security and prices in Europe. One thing that needs to be remembered about the global oil market is its size with roughly ninety million barrels of oil consumed each day. With such number in mind, it is almost impossible to place aside one of the largest oil producers out of the energy market without causing significant repercussions within the European Union.

    The primary consequences could be in terms of price shocks, inevitably hurting customers on both sides of the importing and exporting nations. The price vulnerability would be, however, felt mostly in the European economies. This cost is all the more questionable given the fact the outcome of the sanctions — the proponents of sanctions often refer to the sanctions that were placed on Iran due to its nuclear programme in The problem with this analogy is that with respect to Russia we are dealing with a very different historical, political and economic background that preceded the application of sanctions in the country.