Why is gas consumption important?

Each year more than 7 million premature deaths annually linked to air pollution (WHO). Therefore, it is extremely important reduce the emission of toxic substances on the air. Let’s say that most of the people do not care about their own health and moreover other’s health. Anyway, even taking in account this cynic assumption there are many other reasons for reducing gas consumption.

First, gas is not free, and it has never been so expensive as nowadays. In fact, gas price as a commodity increased by 52% from 2000 to 2012 for households. Furthermore, Gas imported by The Ukrainian state it did increase, in the same period, its cost by an huge 448%, from 80$ mcm to 438$ mcm (Rozwałka, Tordengren 2016). Therefore, the Ukrainian state had to subsidy heavily the gas sector, in 2014 6.5% GDP of The Ukrainian State have been spent for implicit and explicit subsidies on gas sector (idem).

Second, the consumption of gas does not concern merely the air quality breathed by humans. It has a larger impact on the environment as whole. Even though, the actual president of U.S.A. claimed that “global warming is a hoax made up by the Chinese”, there are endless proves of the negative effect of the human activity on our planet. One for all, the north pole ice during the period from 1984 to 2012 is halved (NASA). However, in comparison with other fossil fuel, gas is the one that has the littler impact on the environment. Indeed, it produces 117.0 pounds of CO2 per British thermal units (Btu) compared with the 228.6 of Coal (anthracite) (EIA).

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Energy security is one of the biggest issue for the Ukrainian State, the deterioration of the relations with the Russian Federation has put at stake its energy sector several times. The Russian Federation is trying to avoid Ukraine to ship gas in Western Europe in all the possible ways. One is the construction of North Stream 2, a second pipe line that will double the capacity of gas shipment from Russian directly to Germany. Then Polish Defence Minister Radosław Sikorski argued that the project is ‘reminiscent of…the Molotov-Ribbentrop Pact’—the non-aggression pact between Nazi Germany and the Stalinist Soviet Union that led to the division of Poland and the Baltic in 1939. In fact, it would mainly benefit Russia and Germany and actually divide Europe by bypassing Poland and the Baltic states. This way, Russia will gain the ability to punish these states by withholding gas from them without jeopardizing supplies to Germany (Zeyno Baran; 2008).

The Russian Federation is succeeding in the process. From 2008 to 2015 natural gas transition through Ukraine reduced by 44% (Rozwałka, Tordengren; 2016). Furthermore, the imports gas shares shifted broadly in the last years. In 2014, 74% of the imported gas came from Russia and the remaining part from the EU. In 2015, 63% came from UE states and only 37% from Russia (idem). The gas dependency on Russia does not involve only Ukraine but the UE as well. In fact, the “wake up call” pointing to the need for a common European energy policy, was seen in winters of 2006 and 2009, with the temporary disruptions of gas supplies strongly hit EU citizens in some of the eastern Member States. Since then, a lot has been done in order to strengthen the EU’s energy security in terms of gas supplies and to reduce the number of Member States that are exclusively dependent on one single supplier (European Energy Security Strategy, 2014). However, the success of the European Energy Strategy it prominently depends on one of the most critical and also historically weakness of the European union, which is the inability to speak fully on behalf of its members (Pami Aalto; 2012).

How can one state improve its Energy Security? Diversifying the importers or reducing energy consumption. A Common Ukrainian House consume around 250-275 kWh/m2, instead a Western European house consume about 120 kWh/m2, this make Ukraine one of the most less energy efficient state in the world (The World Bank). One of the many possible solutions to improve to efficiency of Ukrainian houses is to improve Ukrainian District Heating system, therefore reduce the gas consumption. Indeed, 73% of the fuel used for district heating is gas (Rozwałka, Tordengren 2016).

Heat meters and consumption based-billing could improve greatly the energy efficiency of Ukraine. Nowadays, the only way to control the temperature for house-holds without a temperature control system is to open the window, wasting a huge amount of energy and money.  In order to permit house-holds to control temperature inside the building a series of technical devices are needed, such as: individual heat substations (ITPs), thermostatic radiator valves (TRVs), heat-cost allocators (HCAs) on all radiators in each apartment.

There are various benefits, due to temperature control and heat-based billing. The quality of the service will improve greatly, due an increase of transparency, because each house-holds will understand exactly what they are paying for.  More importantly, they will pay less, consuming a littler amount of heat.

During my presentation, some of the participants brought up some perplexity regarding the willingness of the district heating companies to adopt those expedients. They argued that the companies are monopolies de facto at the oblast level, therefore there are few incentives for the DH companies due to the lack of competition. In fact, the only way to change supplier it is to disconnect completely for the city heating system and to install a building level heating system.

Many countries of Eastern Europe enacted critical reforms in the 1990s to address problems related to affordability, quality of service, and financial sustainability similar to those now facing Ukraine. Evidence from these countries suggests that these challenges currently facing Ukraine, while difficult, are far from insurmountable. Additionally, the EU aims to reduce average household energy consumption to 60 kWh/m2 by 2020. Achieving current EU consumption levels by 2020 and the 60 kWh/m2 consumption target by 2030 could be a realistic goal for Ukraine (The world Bank).

In conclusion, I tried to summary the contents of my presentation and highlight the most interesting points. If you have read all the paper, thank you a lot. Otherwise thank you anyway!  at least you’ve tried.

Author: David Feroce

REFERENCES

  • Rozwałka, Tordengren 2016 The Ukrainian residential gas sector: a market untapped. Oxford Institute for Energy Studies (Registered Charity, No. 286084)
  • NASA website (http://earthobservatory.nasa.gov/IOTD/view.php?id=79256)
  • EIA – Independent Statistics and Analysis Website (https://www.eia.gov/tools/faqs/faq.cfm?id=73&t=11)
  • Zeyno Baran, 23 October (2008) SECURITY ASPECTS OF THE SOUTH STREAM PROJECT the  briefing paper was requested by the European Parliament’s Committee on Foreign Affairs.
  • European Energy security strategy, Brussels, 28.5.2014
  • Aalto, Pami (2012), ‘From Separate Policies to Dialogue? Natural Gas, Oil and Electricity on the Future Agenda of EU-Russia Energy Relations’, CEURUS EU-Russia Papers, No. 3.
  • The World Bank, February, 2012 Sustainable Development Department Europe and Central Asia Region Report No. 64989-UA Modernization of the District Heating Systems in Ukraine: Heat Metering and Consumption-Based Billing

 

 

 

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