FIRST STEPS TOWARDS ENERGY-EFFICIENT CITIES

Transcription

1 FIRST STEPS TOWARDS ENERGY-EFFICIENT CITIES IN UKRAINE Bärbel Schwaiger Dr.-Ing. Deutsche Gesellschaft für technische Zusammenarbeit (GTZ) GmbH German Development Corporation Anatoliy Kopets Executive Director Association Energy Efficient Cities of Ukraine Summary: Ukraine has the lowest energy efficiency worldwide. While the industry sector is slowly going to improve, the communal services are still very inefficient and demand side management is not seriously taken into account yet. Reforms on the national level are slow, implementation and control is poor. Tariffs do not cover the real costs and with rising gas prices the subventions are growing on national and communal level. The biggest pressure is exerted on cities to quickly react on the challenges but there is a lack of knowledge, management capacity and financing capability. A German-Ukrainian technical assistance project implemented by GTZ will assist the national Government and four pilot cities to develop implementation strategies for energy saving in the building sector in an international interdisciplinary team. Together with the Association of Energy Efficient Cities in Ukraine a learning city network will be established for knowledge exchange and dissemination of achievements. Key Words: community energy management, energy efficiency in buildings, technical cooperation

2 FIRST STEPS TOWARDS ENERGY-EFFICIENT CITIES IN UKRAINE I. INTRODUCTION Reliable energy supply is a key factor for the successful development of a country relating to all aspects of sustainability. Cities are playing an important and central role when it comes to the implementation of energy saving and energy efficiency measures. The energy issues have a close connection to other urban infrastructure and services such as mobility, water supply, waste-water treatment, waste disposal, housing etc. The national Government needs to set the framework to guide and support the cities in their important role. 1. The initial Situation in Ukraine In 2006 energy consumption per dollar of GDP in Ukraine was three times higher than the average consumption level of the developed countries in the World (Secretariat of the Cabinet of Ministers, 2006). The International Energy Agency (IEA) indicator on greenhouse gas emission intensity (kgco2/gdp) is the worst in the former USSR states. It is 4,5 times higher than Poland and 16,5 times higher than Germany (IEA, 2005). The structure of energy supply in Ukraine that satisfies needs of Ukraine s economy in 2003 was as follows: Source: Primary Energy Sources in Ukraine 2

3 It did not change much until now. The country imports more than 60% of energy resources such as natural gas and oil. Natural gas has the highest share in the overall energy consumption, amounting at about 45% (Naftogas, 2006). About 73% of natural gas demand and more than 80% of the country s demand for crude oil are supplied by Russia, Kazakhstan and other countries (Ministry of Fuel and Power Ukraine, 2005). Ukraine is also importing 100% of fuel elements for nuclear power plants. Basic principles of regional and urban development in the former Soviet Union enforced urban sprawl with growing need for energy and water supply. The communists ideology intended to set up highly populated urban areas as a precondition to intensive development of industrial and military capacities. Artificially low energy prices offered by the Soviet command economy caused a waste of energy use in buildings, transportation systems and industry. The long term result of such an urban and social development philosophy is evident quick exhaust of geological stocks of fuels and fast growth of highly populated areas, increasing pollution of environment and water basins in Ukraine. Many changes have happened in Ukraine since soviet economy and relevant ideology collapsed in However, the supply side oriented mentality fed for a long time by an artificial economy and created an according lifestyle taking no care on energy consumption is still alive in this country. While the industrial sector is slowly reducing its energy consumption and becoming more energy efficient, the communal services, predominantly heating, are still very inefficient. Outdated systems in poor condition and high losses due to insufficient maintenance as well as no possibility for heat adjustment are the main reasons for the bad performance. The heat demand is extremely high as there is no thermal insulation in existing buildings. Old windows and leakages lead to inefficient use of the provided energy and a low comfort level. The building sector is the biggest consumer in the energy market of Ukraine. More than 40% of total energy use in Ukraine is caused by residential and public buildings. Its market consumption share is increasing steadily while Ukrainian households and public institutions buy more appliances and special equipment and do nothing to reduce demand in buildings. Many causes of inefficiency of energy use in Ukraine derived from the Soviet period of economical and social development. In 2005 the level of energy consumption per capita in the residential sector in Ukraine is close to Central European countries (Austrian Energy Agency, 2006) - but far away from the western comfort level in terms of indoor temperature and the efficiency in using energy resources in the building stock in Ukraine is 4-5 times lower than in western countries. For Ukraine the introduction of energy efficiency is tightly interconnected with the perspectives of further economic and social development as well as national security. The enormous growth of energy consumption in buildings, transportation and other municipal infrastructure and an increase of energy prices as a result of Ukraine joining the World energy market is causing growing social and economic disparities and financial problems. Industries, businesses, public services and private households are facing serious problems. 2. Challenges to face The introduction of energy efficient mechanisms in the building sector is always complex and changes are slow-going many actors need to be involved and a lot of challenges need to be faced in different fields in Ukraine such as: 3

4 2.1. Policy, legislation and enforcement It is widely realized by the decision makers that the situation is aggravating. Nevertheless, there is no national strategy for the implementation of energy efficiency measures in the building sector. The stakeholders on the national level are not able or willing to coordinate their activities. Many actions are driven by personal benefits, the corruption level is high - even existing standards and legal frameworks are often not properly considered and implemented. Strategic approaches are also lacking on the municipal level there is only limited knowledge and capacity so far in terms of management, strategic planning and implementation mechanisms. Many outdated former Russian standards are still in place sometimes slightly updated, the legislative framework is insufficient and there is a need for a general new concept to shift towards European standards and legislation. The enforcement of the existing standards are weak, an efficient control system is not in place and the current practice e.g. in new construction leaves a lot of open space for personal fee systems Tariff policy Ukraine still is dependent on Russian gas and prices will rise. Today the tariffs are not covering the costs for the energy services, payments are often not discharged. Since new prices for natural gas were introduced in Ukraine at the beginning of 2009, the fuel poverty becomes more and more an evident issue in Ukraine. The issue of affordability of energy resources for low-income households in modern Ukraine was resolved in the traditional former soviet economy way by putting restrictions for the increase of prices for utility and communal services, using cross subsidy mechanisms for supporting preferential energy tariffs for the whole population and establishing a communal services subsidy program for very low-income households. In the framework of cross-subsidy mechanisms lower energy prices for residents are offset by higher energy prices charged to utilities, industrial and commercial enterprises. Such non market energy pricing instruments had negative implications to the municipal energy sector and resulted in continuous deterioration of municipal energy infrastructure. On January 22, 2006 a city-wide technological collapse happened to the deteriorated district heating system of the City of Alchevsk as signal to change the tariff policy, but politicians are reacting very slowly on this fact Ownership issues Almost 90% of the apartments in the multifamily houses are privatized but the implemented concept was not well-thought-out. The privatization ended behind the wall paper the main building structure staircases, roofs, outer walls are still owned and maintained by the municipalities. The process of further privatization by creating so called condominiums is slow, there are still general questions to be solved and ownership associations as well as apartment owners need assistance in understanding about building operation and maintenance. In many municipalities lacking strategies lead to the fact, that in multi-family buildings the owners started to disconnect from the municipal heating system and install single gas heating units in their apartments. This increases the inefficiency in the existing remote heating systems and now people are not willing to invest more money soon for more holistic solutions. 4

5 2.4. Financing and fiscal instruments Today, the national Government is only providing very limited financial resources for supply side measures (e.g. exchange of boilers). So far, there is no awareness, that also the retrofitting of private buildings will need incentive mechanisms and support programs provided by the national Government to cities and private home owners. This becomes even more relevant as the implemented privatization progress giving the apartments almost for free to the residents made people to home owners, who would never be able to afford this under real market conditions. Furthermore, the state privatized a building stock which already had a backlog in terms of maintenance and refurbishment. And still for private people it is difficult to receive credits from banks for the necessary investments Awareness, information and knowledge The level of awareness is still low even on the political side, but particularly in the population. The mentality is still provision-oriented, private initiatives need to be triggered by awareness raising campaigns and financial incentive mechanisms. There is a general lack of information about energy use in municipalities. Data about energy consumption in different buildings, comparable Ukrainian benchmarks on energy consumption or related costs are not available. The same applies with figures about the potential to safe energy in buildings and amortization of related investment costs. The access to knowledge about best practices in other countries is, mainly due to language barriers, difficult for all stakeholders. Best practice examples are not in place yet. 3. First Steps towards energy efficiency in cities In 2007 the ice was broken in Ukraine after the Association Energy Efficient Cities in Ukraine (EECU) was established by patterning good networking practice of the Association of local authorities Energie-Cités (EnC). The awareness raising campaign on demand side energy efficiency in cities was initiated by the Association among local politicians and administrators. City-members of the Association started to pay more attention towards local sustainable energy policy and institutional capacity building in field of energy management with emphasis on demand side energy efficiency. With EECU assistance first municipal energy management units were established in 2008 in cities Lviv, Kamyanets-Podilsky, Lutsk, Dolyna. City energy managers started to play a crucial role in developing sustainable energy policy, energy planning and coordinating actions. II. THE GTZ PROJECT ENERGY EFFICIENCY IN BUILDINGS End of 2007 the project Energy Efficiency in Buildings started ( This is a technical assistance project in the framework of the German-Ukrainian bilateral cooperation. It is financed by the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by the German Development Cooperation (GTZ - Deutsche Gesellschaft für technische Zusammenarbeit GmbH). The phase one will be implemented until A second phase for another three years is planned. 5

6 The project will primarily focus on capacity development. It assists to build up knowledge and institutional capacity for the development of strategies and associated action plans for the implementation of energy efficiency measures. Political decision makers from the national Government and municipalities as well as implementing agencies are addressed by providing training, information material on best practices and consultancy in the implementation process. The project is implemented together with the Ministry of Regional Development and Building as well as the Ministry of Housing and Communal Services of Ukraine. Basically, the implementation strategies for energy efficiency should follow three main strategic areas: 1. reduction demand side management, use less energy 2. efficiency supply side management, optimization of energy supply 3. change use renewable energy sources as much as possible Within each strategic area there will be no single solution which works for the whole country. Demand side management strategies need to distinguish between new construction and existing buildings. Investment in improving of existing buildings needs a long-term strategic framework and it does not make sense if buildings will not last at least for the next ten years. The future supply structure should take the urban patterns and spatial demand requirements into account as well as optimization potential within the urban structures. An adaptive staged development plan which consists in assessing whether a concept of distributed generation using as much renewable energy as possible would allow a better adaptation to changes needs to be developed. The current activities of the national and communal institutions are focusing primarily on the supply side - exchange of boilers, isolation of pipes etc. First experiences to use renewable energy sources have been made but there is no real strategy about it. The project will focus on energy saving and reduction - the demand side management in the building sector as an overall strategy does not exist yet in Ukraine and the reduction of energy demand through retrofitting of buildings is not seriously taken into account. 4. Project Goals and Approach 4.1. Project Goals The overall goal in the long term is the reduction of primary energy use and the associated greenhouse gas emissions - focusing on the reduction potential in the building sector. Therefore, the following tasks for assistance are identified together with the local partners: development of concepts, strategies and implementation instruments capacity building and training setting up information and awareness raising campaigns The strategies will address the current and future needs of the Ukrainian energy sector in buildings by simultaneously providing applicable solutions with associated strategies, action plans for implementation or business models integrated in a long-term strategic plan. Institutional capacities need to be built and staff trained. Awareness raising and information campaigns have to be designed for various stakeholder groups. 6

7 4.2. The Bottom-up and Top-down Approach local solutions and national framework Within the complexity of an integrated approach addressing energy efficiency in buildings, it is necessary to develop an approach to reduce the complexity and to identify scales which can be handled and the impact of interventions can be shown soon. There is a need for a multi-scalar approach and action. The chosen approach is addressing two levels of intervention national and local. In phase one the main emphasis will address the municipal level. In the current situation in Ukraine where the national Government is still very ineffective, cities are playing an important role when it comes to the implementation of demonstration projects. The cities are closer to reality and the problems and they do want to develop solutions. Cities are more serious and flexible to address the issue and starting pilot projects. Working on the city-level also helps to identify the constraints given by the national legal framework which have to be changed and the needs where the national Government has to provide support in terms of setting the framework and supporting implementation structures. Four cities where selected during a two-staged competition. During the first stage, 39 cities all over Ukraine were applying. The guidelines for application were calling for cities from 50 to 300 thousand inhabitants as the experience in other countries have shown that in large cities it is more complicated to achieve results soon due to too many different tasks on the political agenda. The submitted proposals were evaluated by three experts and a shortlist of 10 cities was created. A delegation visited all the 10 cities to discuss with the mayors, representatives of the city council and administrative staff from the relevant departments. Finally the main selection criteria were political will and capacity for implementation and the pilot cities should represent typical situations and different starting positions. The selected cities are two oblast centers Ivano- Frankivsk ( inhabitants) and Chernihiv ( inhabitants) and two smaller cities Novograd-Volynskyi ( inhabitants) and Myrgorod ( inhabitants). Pilot Cities in the GTZ Project 7

8 5. National level Activities On the national level there are two main actor groups for collaboration: the national Government and NGOs. The focus in phase one will be awareness raising and identification of the most urgent topics. One of it seems to be the establishment of a financing support program (incentive program). The second task is the provision of a knowledge exchange networking platform in cooperation with active NGOs Developing Financial and Fiscal Instruments Today tariffs are not at all covering the real costs and western European mechanisms like performance contracting are not functioning in Ukraine yet. Incentive programs for apartment and building owners to trigger refurbishment activities are not yet taken into account by the national Government. A survey has been already prepared to demonstrate examples about different funding and support programs in Western and Eastern Europe and to explain how they function and their effects. Together with representatives of the relevant ministries a seminar will be arranged to raise awareness and discuss about potential solutions for setting up funding and incentive programs in the Ukrainian context Creating a learning Network It is essential that apart from all external knowledge input and expertise local knowledge and experiences can be exchanged. Together with the Association Energy Efficient Cities in Ukraine a city network will be created and platforms for information exchange will be established. A project web page will offer training materials, inform about the current activities and provide contact persons. Workshops are organized on a regular basis that stakeholders have the possibility to meet and exchange information and discuss experiences made. 6. Local Level Activities The main partners on the local level are the municipal Governments of the four pilot cities as well as educational institutions Municipal Energy Plans The activities on the local level will primarily deal with the development of municipal energy plans and related implementation strategies. The focus will be on the building sector and two cities will be focusing on public buildings, the other two on multi-family residential buildings. One city already wanted to start with the development of decision making tools. The pilot cities are supported by an international interdisciplinary expert team regarding: implementation of an energy efficiency unit within the city government data collection about energy use and demand in buildings development of a long-term strategy (energy plan, including measures for demand side management) development of an action plan for implementation financing and incentive mechanisms public awareness campaigns setting up a monitoring and reporting system 8

9 In summer 2010 there should be defined pilot projects ready for implementation in phase 2, such as retrofitting of buildings, establishment of a municipal advisory center four condominium associations and private building owners, special information campaigns etc. During the first phase a major task is also the identification of constraints for the cities given by the current legislation. These issues will be addressed in the second phase on the national level Establishing Training courses Further training for municipal staff is an urgent issue. Today there is already a training program for energy managers existing held by the Training Center for Energy Efficiency at the Kyiv Polytechnic University. The existing program modules were developed in the framework of an European TACIS project focusing on municipal services (electricity and heat supply). Within this project new modules on community energy management including demand side management and awareness and information campaigns for residents and building owners will be developed and the trainers will be trained. 7. Where we are today 7.1. First results Today, the project is still in an early stage. At the national level the ministries are supported to develop a new energy efficiency law but there are still many issues to solve and the progress is very slow. A survey about potential program for incentive mechanisms is ready and a round table will be organized as soon as a new minister will be appointed. The work on the municipal level is more promising key stakeholders are very committed and enthusiastic and they really want to change something. All pilot cities have established an energy efficiency unit and the first trainings for the staff have taken place. The data collection to calculate energy indicators for typical buildings already started and the first indicators are calculated. Further training workshops on the development of a municipal energy plan and networking events have already taken place. The web page as a knowledge and information platform is established and will be continuously updated Next steps during phase one Preparation of demonstration projects Local demonstration projects, following a more systematic, holistic approach and set in place by key actors on the local level, need to be identified and action plans prepared. Within these projects demand side management should be equally taken into account as well as efficient supply systems. Business and financing plans will be conducted as foreign investments cannot be attracted without them. The municipalities will be assisted in exploring the options for additional funding and credits. Establishing a Monitoring System A monitoring process should be developed to assess the effects and impacts of the demonstration projects and investments. The monitoring process needs indicators to measure the effects and dissemination procedures and feedback loops to assist a learning process. 9

10 Scaling-up Within the further development of action plans on the municipal level constraints for the implementation caused by the national law and regulations will be identified. These constraints will be addressed in phase two on the national Government level. 8. Conclusions The financial crises aggravates the situation and the necessary investments need to put in place in catalyst projects to trigger further investments and demonstrate possible solutions and pathways, to reduce the use and the dependence on gas. It is evident that in current economical conditions municipal Governments need to take practical actions first that they are becoming good models for their citizens and other local actors. In order to do this local politicians need to change their mentality regarding energy services and energy efficiency in municipalities, develop a new vision of the energy future of the community and prepare realistic action plans to transform the whole energy system, including the energy consumption side. The supply side oriented mentality of local policy makers, administrators and general public formed in the soviet economy era including artificially low prices for energy need to be replaced by sustainable energy concepts that are coherent with objectives set by the EU in energy and climate fields for Experiences of municipalities in Ukraine are still small. Most of the politicians at the local level do still not understand the real value of demand side energy efficiency and the use of renewable energy. The general public still believes that a stable energy future in local communities could be achieved through technological renovation of energy generation units and distribution networks as well as a good deal in prices with suppliers of energy resources and low tariffs for local energy producers. The potential to reduce energy demand on the local level is huge in Ukraine. Some municipalities already understand the importance of their role as the most accessible area for the implementation of energy efficiency and renewable energy solutions are elements of municipal property: public buildings, street lighting system, etc. Essential savings can be achieved at local level to reduce energy consumption and municipal energy costs in the future an opportunity not to be missed. III. BIBLIOGRAPHY Austrian Energy Agency, (Dec. 2006) Energy Demand Ukraine - EECU, Energie-Cités, Ministry of Fuel and Power Ukraine, (2005), Report of the Minister of Fuel and Power Sector of Ukraine to Ukrainian Parliament, publish/printable_article?art_id= (July ) Naftogas, (2006), Review of activity of National JSC, services/securities_issue/investors/analytics/ugv_9m2004.pdf (December 2006) Secretariat of the Cabinet of Ministers, Ukraine, (2006), Енергоефективність в Україні: час реальних зрушень ; BC27EF?art_id= &cat_id= (December 2006) 10