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The Ukraine inherited a highly inefficient infrastructure from the Soviet Union. The country's energy intensity in 1995 was 193,000 Btu/$1995, while the U.S. value was 11,000 Btu/$1995. Besides this obviously excessive consumption, several social, economic, and environmental factors have encouraged the country to promote energy efficiency policies, including a sharp rise in energy prices (due to the withdrawal of Soviet subsidies), considerable dependence on foreign energy imports, and the necessity of replacing aging nuclear power plants.

To address the problem, in 1994 the Ukrainian parliament adopted the Law on Energy Conservation, which established the legal, social, and environmental bases of energy efficiency and conservation. The following year, under presidential decree #666/95, the State Committee of Ukraine for Energy Conservation (SCEC) was established. This committee carries out national policy on energy conservation through coordination of work and cooperation with regional and local branches of the government (as well as with the Council of Ministers of the autonomous region of Crimea). The Committee staff provides technical assistance to representatives of the government ministries and local state administrations. They also record and analyze data on energy consumption in the public sector.

In 1996, the parliament of Ukraine adopted the Comprehensive National Program on Energy Conservation proposed by the SCEC. The program focuses not only on the development and realization of energy-saving strategies, but also on providing the proper incentives for the use of energy-efficient technologies and projects. Also emphasized are the increased utilization of local fuels and renewable sources of energy (especially small hydro-power plants). The program was last amended by decree of the Cabinet of Ministers of Ukraine in 2000The revised strategy earmarks US $50 million over five years for developing and implementing energy efficiency measures in administrative buildings of ministries, administrations, and local governments.

In addition to regional government efforts, local municipalities also play an important role. Currently, several projects are implemented in Ukraine at the municipal level with the assistance of the Alliance to Save Energy. Some of these projects have demonstrated impressive initial success, creating a solid base for expansion of the program. The details of the work conducted by the Alliance in Ukraine can be found at http://www.ase.org/programs/international/munee/ukraine.htm.

Ukraine has specific targets for improvement of energy efficiency. For example, as part of the 1999 presidential decree #662/99, on measures for reducing energy consumption by state organizations and state-owned enterprises, a target was set to reduce energy consumption by 25% in 2004 compared to a 1998 base level. The decree also directs (and regulates) energy audits in the public sector. As a result of the goals and a strong promotional effort, energy efficiency measures were implemented in more than 9,000 public facilities in 2000.

In 1998, the European Bank for Reconstruction and Development (EBRD) loaned US$30 million to the government of Ukraine to establish the first energy services company (ESCO) in Ukraine, UkrEsco. The state-owned company's first major objective is to implement energy-saving investments in small and medium-size enterprises and public sector institutions; also emphasized will be municipal heating and lighting projects. Public sector projects are currently being implemented at a municipal water supply company "Kievvodokanal" on the Kiev metro system, and in several municipalities in the Snyatyn Region of Ivanofrankivsk Oblast and Vladimir Region of Rivne Oblast.

In 2000, The World Bank and the city of started the Kiev Public Buildings Energy Efficiency Project. The five-year initiative focuses exclusively on public buildings under city ownership (public buildings owned by the national government are not included). Targets of the program are hospitals, administration buildings, schools, cultural centers (theaters, art galleries, and museums) - in all, over 1,300 public buildings with a floor space of over 5 million m2. Total cost of the project is estimated at US$30 million, of which the World Bank is providing US$18 million. It is estimated that implementation of the project will save 41 million cubic meters of natural gas (0.6% of the country's natural gas consumption) per year and result in savings of nearly US$ 3 million per year.

Also in 2000, under the United Nations Economic Commission for Europe's (UNECE) Energy Efficiency 21 Project, energy efficiency demonstration zones in the Dniprodzerzhynsk, Zaporizhia, Mariupol and Slavutych regions were created. The project supports local municipalities' initiatives for energy efficiency projects in street lighting and district heating, as well as in lighting and heating systems in schools, hospitals, and other public buildings. Full implementation of the project is expected to yield annual energy savings of US$6 million (see table, below). Total investment costs are estimated at US$16 million.

Project Description

(in thousands $US)

Annual Savings
(in thousands $US)

Street Lighting Retrofit, Mariupol



Development of EE Heating in District Schools, Dniprodzerzhyns



Improvement of Envelope Heat, Heat Regulation and Metering in Municipal Hospitals, Mariupol



Energy Saving Measures in the Oblast Cardiology Clinical Dispensary, Zaporizhia



Energy Saving Measures Implementation, Oblast Clinic Hospital, Zaporizhia



Heat Distribution System Retrofit at Mariupol Teplomerezha, Mariupol



EE Improvement of Heat Energy Consumption at the Sites, Slavutych



EE Improvement of Heat Energy Production and Distribution Sites in Slavutych






In 2002, the Global Environment Facility (GEF) and European Bank for Reconstruction and Development (EBRD) started the first stage of a program called Climate Change Mitigation in Ukraine Through Energy Efficiency in Municipal District Heating. The initial phase of the program is being conducted in the city of Rivne. This pilot project involves: capacity building for implementing energy efficiency activities at the local level; gradual implementation of a municipal energy saving program; and establishment of an energy service company (ESCO) for financing energy efficiency activities in the city. The total cost of this pilot project is US$2 million; the projected cost of the entire program is roughly US$26 million and involves financial support from the EBRD and from other private and public funds.

Energy-efficiency initiatives at the national, regional, and municipal levels are reflected in recent trends in the Ukraine's energy consumption and economic growth trends. In 2000, GDP growth was 6%, despite a 3% decrease in national energy consumption. In 2001, GDP grew at an impressive 9% rate, and again energy use went down, by 1%. This decline in energy intensity is a strong testament to the initial success of the country's recent emphasis on energy efficiency, especially in the public sector.