Eduardas Kazakevicius Senior Expert

1. Energy Community Treaty and its opportunities for improving energy efficiency in Ukrainian municipalities Eduardas Kazakevicius Senior Expert

2. Contents • What can be expected from implementing the Energy Community Treaty and associated EU energy efficiency legislation? • What are the key barriers to improving energy efficiency and how they can be addressed? • How the implementation of the EU energy efficiency legislation can facilitate energy efficiency improvements in Ukrainian municipalities? • What additional measures are needed to facilitate progress?

3. Energy Community: what it is? • The Energy Community is an international organization dealing with energy policy • The key aim of the organization is to extend the EU internal energy market to South East Europe and beyond on the basis of a legally binding framework. • Presently the Energy Community has 8 Contracting Parties - Albania, Bosnia and Herzegovina, Kosovo, Former Yugoslav Republic of Macedonia, Moldova, Montenegro, Serbia and Ukraine. • Armenia, Georgia, Norway and Turkey take part as Observers. • More information: https://www.energy-community.org/portal/page/portal/ENC_HOME • Ukraine joined the Energy Community on 1 Feb 2011.

4. Energy Community acquis communautaire • Electricity • The electricity acquis sets minimum requirements for the establishment of competitive electricity markets, including the development of coherent, transparent and non-discriminatory security of supply policies. • Gas • With the same objectives as for electricity, the Contracting Parties implement the relevant gas Third Energy Package legislation. • Infrastructure • The purpose of regulations is to streamline the permitting procedure and facilitate investments in the energy infrastructure in order to achieve energy and environment policy objectives. • Oil • The Contracting Party are to implement the Directive on the minimum stocks of crude oil and/or petroleum products. • Competition • The prohibition of anti-competitive agreements • The prohibition of abuse of a dominant position • The prohibition of State aid granted in violation of the principles of the EU Treaty.

5. Energy Community acquis communautaire • Renewable Energy • binding national targets to be achieved through the use of renewable energy in the electricity, heating and cooling, and transport sectors by 2020 • Energy Efficiency • Directive 2012/27/EU on energy efficiency(Directive 2006/32/EC on Energy End-Use Efficiency and Energy Services) • Directive 2010/31/EU on the energy performance of buildings • Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products and Implementing Labelling Regulations • Environment • Integrated pollution prevention and control, limit the air pollutant emissions originating from large combustion plants, the Environmental Impact Assessment Directive and other environmental legislation • Statistics • The acquis establishes a common framework for the production, transmission, evaluation and dissemination of comparable and accurate energy statistics in the Energy Community.

6. Energy efficiency barrier types • Ignorance, i.e. not knowing how much energy is being consumed by energy related products or not being aware of how to reduce energy consumption • Lack of motivation / interest, i.e. not interested in reducing energy consumption or providing the supporting service for energy efficiency improvements even if other benefits would accrue (e.g. saving money, leveraging business growth opportunities, etc.) • Lack of expertise, i.e. not being knowledgeable enough for implementing energy efficiency measures • Lack of affordability,i.e. funds for investments are not available even if the implementation would save money and be overall cost effective • Lack of cost effectiveness,i.e. energy saving options are not cost effective, i.e. would be more expensive than the status quo

7. Energy efficiency barriers for different players

8. Energy efficiency barriers: users / consumers

9. Energy efficiency barriers and policies

10. Energy efficiency barriers and policies

11. What can be expected from implementing the Energy Community legislation? • Directive 2012/27/EU on energy efficiency (EED) • Energy efficiency targets: indicative national energy efficiency targets are to be set for 2020 • Building renovation: long-term strategies for mobilizing investments in the renovation of the national stock of residential and commercial buildings are to be established • Exemplary role of public bodies’ buildings: 1 % of the total floor area of heated and/or cooled buildings owned and occupied by its central government is to be renovated each year. • Purchasing by public bodies: public bodies, including at regional and local levels are to purchase only products, services and buildings with high energy-efficiency performance. • Energy efficiency obligation schemes: energy efficiency obligation schemes are to be established obliging energy distributors and/or retail energy sales companies to achieving new savings each year of 0,7 % of the annual energy sales to final customers. Requirements with a social aim such as requiring a share of energy efficiency measures to be implemented in households affected by energy poverty may be included. • Energy audits and energy management systems: the availability to all final customers of high quality energy audits which are cost-effective and carried out in an independent manner by qualified and/or accredited experts shall be ensured.

12. What can be expected from implementing the Energy Community legislation? • Directive 2012/27/EU on energy efficiency (EED) • Metering: final customers for electricity, natural gas, district heating, district cooling and domestic hot water are to be provided with competitively priced individual meters that accurately reflect the final customer’s actual energy consumption. • Billing and metering information: billing information shall be accurate and based on actual consumption. Final customers shall have the possibility of easy access to complementary information on historical consumption allowing detailed self-checks free of charge. • Consumer information and empowering program: appropriate measures to promote and facilitate an efficient use of energy by small energy customers shall be taken, such as: fiscal incentives, access to finance, grants or subsidies, exemplary projects, information on energy efficiency measures and others. • Promotion of efficiency in heating and cooling: comprehensive assessments of the potential for the application of high-efficiency cogeneration and efficient district heating and cooling shall be carried out and policies encouraging the due taking into account at local and regional levels of this potential are to be implemented. • Energy transformation, transmission and distribution: national energy regulatory authorities shall pay due regard to energy efficiency.

13. What can be expected from implementing the Energy Community legislation? • Directive 2012/27/EU on energy efficiency (EED) • Availability of qualification, accreditation and certification schemes: certification and/or accreditation schemes, including suitable training programs, are to be available for providers of energy services, energy audits, energy managers and installers of energy-related building elements. • Information and training: information on available energy efficiency mechanisms and financial and legal frameworks are to be widely disseminated to all relevant market actors, such as consumers, builders, architects, engineers, installers of building elements. • Energy services: energy services market and access for SMEs to this market shall be promoted by disseminating clear information on available energy service contracts, financial instruments and other information. • Other measures to promote energy efficiency: measures to remove regulatory and non-regulatory barriers to energy efficiency such as the split of incentives between the owner and the tenant, administrative barriers and others are to be implemented. • Energy Efficiency National Fund, Financing and Technical Support: the establishment of financing facilities, or use of existing ones for energy efficiency improvements shall be facilitated.

14. What can be expected from implementing the Energy Community legislation? • Directive 2010/31/EU on the energy performance of buildings (EPBD) includes: • the common general framework for a methodology for calculating the integrated energy performance of buildings and building units • the application of minimum requirements to the energy performance of new buildings and new building units • the application of minimum requirements to the energy performance of: • existing buildings, building units and building elements that are subject to major renovation • building elements that form part of the building envelope and that have a significant impact on the energy performance of the building envelope when they are retrofitted or replaced • technical building systems whenever they are installed, replaced or upgraded • national plans for increasing the number of nearly zero-energy buildings • energy certification of buildings or building units • regular inspection of heating and air-conditioning systems in buildings • independent control systems for energy performance certificates and inspection reports.

15. What can be expected from implementing the Energy Community legislation? Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products (ELD) establishes a framework for labelling and standard product information, on the consumption of energy and where relevant of other essential resources during use, thereby allowing end-users to choose more efficient products

16. Energy efficiency barriers, policies and EU energy efficiency legislation (EED, EBPD, ELD)

17. Energy efficiency barriers, policies and EU energy efficiency legislation (EED, EBPD, ELD)

18. What additional measures could facilitate energy efficiency? • Implementation of the Directive 2009/125/EC establishing a framework for the setting of eco-design requirements for energy-related products (sets minimum energy efficiency standards) • Energy tariff reform coupled with social policy framework addressing the needs of the low income families (subsidies only for the needy households enabling them to participate in building retrofitting projects) • Removal of administrative barriers to energy efficiency: simplified administrative procedures and lowering reconstruction permit costs for energy efficiency improvements, availability of exemplary renovation projects and contracts. • Conducive legal framework ensuring effective decision making on energy efficiency improvements by homeowners of multifamily buildings and their access to affordable financing

19. Few lessons from improvement of energy efficiency in other Eastern European countries • Priority setting: • First focus on low-cost / no cost measures in residential and public buildings (awareness of these measures is important) • Improvements in energy control systems and energy metering / consumption based payment are key (no consumption based payment = no interest / no energy use control = no savings) • Tariffs: • There is a need to find a fine compromise between the social goals and long term financial sustainability of the district heating companies (renewable energy and energy efficiency investments need to be recovered from the tariffs) • Subsidies: • Subsidies and grants are important to start the building renovation process. • Avoid subsidizing energy efficiency / renewable energy projects for wealthy households / private companies (technology pioneers should be rewarded in the wealthier states, avoidance of “free riders” is important) • In longer term subsidies should focus on the needy households only allowing them to participate in the multifamily building renovation projects.

20. Lessons from improvement of energy efficiency in other Eastern European countries • Financing: • Involvement of private banks is important, but ambitious energy efficiency projects require long term and affordable financing, so local banks may be not in the position to offer such products until the financial sector matures • Energy efficiency funds attracting long-term financing from multilateral donors are important for pilot projects and capacity building of local market players • Innovative financing and ESCOs can be helpful for renovating public buildings, but transaction costs and risks might be too high for using them for renovating residential buildings • Leadership: • Leadership of municipal authorities and municipally owned companies in promoting energy efficiency and energy savings is very important. • Pilot projects and capacity building of market participants (energy consultants and construction companies) could demonstrate the benefits of energy efficiency, reduce risks and build confidence among stakeholders

21. What can be expected from comprehensive multifamily building renovation projects? Address: Gerosios Vilties str. 18, Vilnius, Lithuania* Construction year: 1964 No. of apartments: 101 Heated area: 5671 m² Energy savings:70% Total investments:€608130 Address: Didlaukio str. 44, Vilnius, Lithuania* Construction year: 1978 No. of apartments: 108 Heated area: 5673 m² Energy savings:44% Total investments:€ 564 759 * - source: http://atnaujinkbusta.lt/renovations/

22. Дякую за увагу! E-mail: ekazakevicius@rec.org