Prospects for the reform agenda in Ukraine: an energy and climate policy perspective

On 25 April 2018, the Ukrainian Think Tanks Liaison Office in Brussels and CEPS Energy Climate House organised a joint event on the occasion of the release of a new report entitled “Ukraine and the Association Agreement in the energy sector: In a traffic jam?” prepared by our member DiXi Group and partners from the Energy Reform Coalition. Experts from Ukraine and the EU as well as representatives of EU institutions and of the industry sector were able to examine Ukraine’s progress in implementing the reforms and assess their impact on the energy situation in the country and its industry. The report provided the basis for discussion.

This report was prepared in the framework of a project called “Increase the civil society influence in monitoring and policy dialogue regarding reforms in the energy and related sectors in accordance with the implementation of the Association Agreement”, co-funded by the EU and International Renaissance Foundation. Several Ukrainian think-tanks and NGOs are taking part in this project, and their experts participate in task forces devoted to their respective fields of expertise.

Opening the conference, Olena Prystayko, Executive Director of the Ukrainian Think Tanks Liaison Office in Brussels and Christian Egenhofer, Director of CEPS Energy Climate House, highlighted the importance of the issue of energy in Ukraine, in terms of security of supply, but also security in general. This why the energy perspective of Ukraine’s reform agenda is something to be looked at very closely.

For Olena Pavlenko, Ukraine is moving forward in terms of reforms of the energy sector, but progress is slowing down. Indeed, while Ukraine is doing quite good in adopting legislation (adoption of a package of legislation in energy efficiency, corporate governance reforms, etc.), it has troubles liberalising the market and faces delays with regards to implementation plans. There is also a clear lack of transparency and accountability towards consumers, who don’t understand the role of suppliers or what tariffs consist of.

Pavlenko: “In the energy sector, laws are being made but implementing them is the difficult part. The need for better communication is also high on the agenda”.

In line with this idea, Svitlana Holikova, Key Expert of the Task Force ‘Electricity’ of the Energy Reforms Coalition, put the emphasis on the law on electricity market, whose implementation suffers from major delays. On the positive side, however, Ukraine is making really good progress in its reform of Transmission System Operator (TSO).

Holikova: “The reform of the electricity sector is moving rather slowly, unlike other sectors where progress is really visible”.

The gas sector is one of them, according to Roman Nytsovych, Expert of the Task Force ‘Gas’ of the Energy Reforms Coalition. In 2017, several important issues were solved (Individual and collective gas metering, use of state-owned distribution assets and others). However, there are still some traffic jams to overcome in terms of unbundling and market liberalisation.

Nytsovych: “We are making progress in terms of reforming the gas sector, but it remains a difficult process. It is important to mention that Russia’s actions like stopping Ukraine’s gas supply are making this process even more challenging”.

For Julian Popov, Fellow at the European Climate Foundation & Goodwill Ambassador for the Bulgarian Presidency, energy is simply the most important issue in Ukraine: it is the cause of its current battles and led to the annexation of Crimea. When talking about Ukraine from an EU perspective, we should also remember that the country has an unparalleled cost/competitive potential in renewables.

Popov: “With its huge potential in renewables, Ukraine could play a key role in achieving the EU’s Paris objectives”.

Bernd Biervert, Deputy Head, Cabinet Vice-President of the European Commission for the Energy Union, listed the most important issues in Ukraine from the perspective of the EU: energy security, integration of the energy market and climate – in the Paris context. Even more important is the issue of energy efficiency, which is crucial for EU member states and Ukraine, and should be higher-up in the agenda.

Biervert: “I wouldn’t say that we are in a traffic jam. Some roads are free, others are moving in slow motion, but the direction is the right one”.