Energy versus Development. “Fuelling economic development in the CEE region requires an increase in the supply of energy resources (реферат)
Since the collapse of communism the
region of Central and Eastern Europe has faced
significant changes. After a period of sharp decline the region’s economy is
growing now and this growth is likely to continue in the future. However, the
welfare of countries in the Central and Eastern Europe
is different. While some countries has achieved comparatively good results in
the economic reform and experienced steady growth in the last years, others
have just recently started to recover after the long recession period. This
study will focus on economic transition in Ukraine, which economy is likely to
start recovering this year.
According to OECD data the level of
energy intensity in Ukraine
is among the highest in the world. Thus, if the country’s economy will grow the
total primary energy supply could grow as well. Since energy production is the
main source of pollution in the world (Urge-Vorsatz 2000), the economic growth
may lead to increasing the impact on the environment. The main question of this
study is whether it is possible for a country in transition to reach high
development level without significant increase in fuel consumption and, thus,
rising impact on environment.
to the data from the Energy Efficiency
and Alternative Power Sources in Ukraine by V. Didkovsky, Ukraine is a
country with a huge economic potential – taking only 2,7 per cent of the
territory of the former Soviet Union it possesses about 17per cent of its industrial potential
(Didkovsky 1996). However, since proclaiming independence in 1991 Ukraine has
experienced sharp economic decline. As stated in OECD report "Ukraine's GDP
has fallen by over 55 per cent between 1990-95. Total primary demand … has
declined by about 35 per cent".
1 shows the dynamics of change of the total primary energy supply (TPES) per
capita during the sharp economical decline in Ukraine compared to European OECD
countries. Energy intensity in Ukraine
is several times higher compared to European OECD countries. Thus, the energy
which is produced in Ukraine
now is more than enough for the welfare level of a developed European country.
Starting at a very high level in 1990 the TPES per capita level was growing in
the following years. Energy intensity increased while economy was collapsing.
The increase in TPES per capita may be explained by the fact that Ukraine has
outdated and low efficient technology in power generation as well as in heavy
industry, which caused a lot of energy losses (OECD 1996).
After a decade of economic stagnation since 1990 Ukraine is
likely to achieve the economic growth this year. In the interview to UA Today daily
Yuri Yekhanurov, the deputy prime minister of Ukraine revealed that in the first
nine months of the year 2000 the growth of country's GDP was about 5 per cent
compared to the similar period of the previous year. Yekhanurov said that
government projection for the GDP growth for the whole year 2000 is 3,5 per
cent with industrial output increase by 9 per cent (UA Today 2000).
2000* - official estimate
2 shows the dynamics of GDP change in Ukraine for the last ten years with
an official projection for the year 2000 (OECD 1996, CASE Ukraine 2000). Using
data from the table it is possible to estimate the total GDP decline since 1990
as 63.6 per cent. Calculation, based on assumption that the growth will
continue in the future at the constant rate of 3.5% of GDP per year shows that
to achieve the level of development of 1989 Ukraine needs about 28 years.
Though the rate of economy growth could be higher, it is obvious that in the
nearest years no additional power supply will be necessary for Ukraine.
One of the most important problems concerned with
the power production and consumption in Ukraine is the outdated and highly
inefficient equipmentwhich causes huge
losses. As stated in the Energy
Efficiency and Alternative Power Sources
in Ukraine, the country’s potential in energy saving is enormous
– about 65
cent of total primary energy consumed, with 80 per cent of the savings
available in industry. Introduction of more efficient technologies is also
necessary due to political reasons. Ukraine is highly dependent on
imported fuel and huge external debts have been produced in the last years
because of inability of heavy industry to pay for the consumed power (Didkovsky
1996). As Didkovsky stresses, "further increases in external debts pose a real
threat which may severely damage economy and could destroy the country’s
Probably the best way to improve
efficiency of energy use is the privatisation of heavy industry and energy
production and distribution companies, which will attract investments and
enable use modern efficient equipment (OECD 1996). Though the part of heavy
industry in Ukraine
is privatised, the electric power generation and transmission sector is still
under the state control (OECD 1996). The deep reform of energy sector and
introduction of more efficient technology is still necessary for the future
sustainable development of the Ukrainian economy.
the reforms on national level are very important, energy savings in households
can significantly contribute to minimisingpower consumption in the local communities. Weizsacker et al. shows that
the potential of energy saving by improving the household consumption can be up
to 75 per cent with no reduction in living standards. In the 1970-s the United
States experienced the so-called "decoupling effect” when GNP growth was not
followed by equal rise in energy consumption (Urge-Vorsatz 2000).However, the concept of energy decoupling
effect was criticised by T. Prugh in Natural
Capital and Human Economic Survival. Prugh argues that while the
electricity consumption is diminishing the direct use of fossil fuel is growing
more rapidly (Prugh et al. 1995). Though the most significant decoupling effect
in the USA case was observed for the electricity consumption (50 per cent less
than estimations based on GNP increase rate), the primary energy use was 36 per
cent less than estimated by official projections (Urge-Vorsatz 2000).
Therefore, the economic growth is not always causing increase in fuel
consumption. Thus, promotion of the experience of energy saving from the West
along with environmental education could increase the overall resource use
efficiency in Ukraine.
from the efficient use of energy potential Ukraine also has huge renewable
resources to produce electric power.According to V. Didkovsky, development of renewable energy technologies
has a potential which is comparable to the country’s nuclear industry capacity.
At present a pilot wind power plant ofthe capacity of 50 MW is constructed in Crimea
region by Ukrainian-American joint company and further extension of this
project is planned (Didkovsky 1996). In
Energy Efficiency and Alternative Power Sources in Ukraine Didkovsky states that
present price of electricity produced by wind power planted is about 60 percent
less than electricity from heat or nuclear power plant.According to Didkovsky, some other projects
of wind energy production were proposed though they are not implemented yet.
For example, scientists from the State Institute of Alternative Power and
Electric Engineering have proposed to partly substitute the capacity of Chernobyl nuclear power
plant (NPP) with the combined hydro-wind power plant. According to project
estimations, the capacity of the plant can be up to 500 MW which is comparable
to a nuclear unit power production. Moreover, if such project will be
implemented it could provide jobs for the Chernobyl NPP employees (Didkovsky
1996). Commercial use of the wind power generation has good perspectives though
one obstacle is still remaining for its further development. As stated above,
the power distribution companies are under control of the state and it makes
almost impossible to gain profit from electricity production (OECD 1996).
Privatisation of energy production and distribution industry along with deep
reforms in this sector could allow private capital to enter energy market.
Cheap costs of electricity produced by wind power plants should attract
investments and afford funds for the development of wind power in Ukraine. Thus,
economic development could contribute to cleaner energy production in the
positive changes in the Ukrainian economy indicate that the country has
overcome the decline period. Since the country has extremely high energy
intensity, the growth in economy could lead to rising the energy consumption
level. However, it is unlikely that in the nearest years Ukrainian economy will
be able to reach the GDP level of 1989. Thus, there is an opportunity for
economic growth without increasing fuel consumption for the nearest future.
Introduction of modern efficient technology could reduce the present energy
consumption by 65%Further reform of
energy sector could provide investments and further development for wind power
production.Introduction of energy
saving measures in industry as well as in households and wider alternative
energy use will enable economic growth in future without rising fossil fuel
consumption and increasing impact on the environment.
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for Economic Co-operation and Development (OECD). 1996. Energy policies of Ukraine
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J., Daly, H., Goodland, R. and Norgaard, R. 1995. Natural Capital and Human Economic Survival. Solomons: ISEE Press.
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