Rhein on Energy and Climate

For many years Ukraine has wasted huge amounts of energy through exorbitant subsidies on gas consumption, coupled with in-transparent multiple gas prices and large-scale corruption. Due to these factors, Ukraine has become one of the most wasteful energy consuming countries in the world. With household gas prices substantially lower than in any other European country and lower than the wholesale purchase prices, this regime had long become unsustainable.

Under the new political leadership it will finally disappear. There will be a single wholesale gas price which will cover the supply costs and yield a decent profit for the state-owned gas company. The IMF and the EU had conditioned their financial assistance to a profound reform of the Ukrainian gas market.

Gas prices will have to more than double, which cannot happen overnight. This huge rise of prices will induce consumers to a much more economic use of gas and higher energy efficiency. By the same token it will dampen the social impact of the price rise.

The future generated profits will be used to financing improvements of the gas distribution, improving energy efficiency and offering specific assistance to vulnerable groups of society.

This will be a revolution for Ukraine and other the countries still indulging in the luxury of fossil subsidies. It will not be easy to “sell” politically. But Ukrainians, having shown they can be tough, are likely to accept a higher gas price in exchange for security of supply.

If the anticipated increase of energy efficiency happens in the wake of the phasing out of subsidies Ukraine might become an example for other developing and emerging countries to be followed.

Eberhard Rhein, Brussels, 20/11/2014

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  1. For these accurate facts and figures, I would like to appreciate that Eberhard Rhein because he has got guts to talk on this critical issue. I am a senior journalist and essayist at Assignment Help Price agency and I am also quite sure about that Ukraine has wasted huge energy and they should have to excuse for this.

  2. This week, Russia and Ukraine’s years-long legal row over gas costs and delivery terms took another turn, with Assignment Writing Services Naftogaz boss business officer Yuri Vitrenko revealing that Gazprom may guarantee up to $80 billion from Kiev at arbitration hearings in Stockholm.

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