Economic Assessment of Low-Emission Development Scenarios for Ukraine

  • Maksym Chepeliev
  • Oleksandr Diachuk
  • Roman Podolets
Chapter
Part of the Lecture Notes in Energy book series (LNEN, volume 64)

Abstract

In this chapter, we provide an assessment of low-emission development scenarios for the Ukrainian economy, which faces significant economic and environmental challenges. We use the soft-linkage of the TIMES-Ukraine and Ukrainian computable general equilibrium models, which allows us to estimate an economy wide implications of long-term energy policies, including the Ukrainian low-carbon development strategy initiative (consistent with 2 °C target), and a more ambitious transition towards 92% share of renewables in gross final energy consumption by 2050 (consistent with 1.5 °C). Results show that further maintenance of the existing highly inefficient energy system is more expensive than transition towards a 92% renewables share. Key differences between 2 and 1.5 °C scenarios arise after 2035–2040, which enables the possibility of smooth transitions from less to more stringent pathways during this period. With initially low level of energy efficiency in Ukraine, both policies result in positive macroeconomic and sectoral effects, with better perspectives in case of the renewable scenario, which at the same time requires over 3 times more investment. The existing institutional environment and inefficient market framework can pose significant risks. Key sets of issues, which should be further addressed by policy makers, include: inconsistency between targets of different strategic energy documents; lack of incentives for market transformation, including environmental taxation for industrial users and further subsidy reform for households; and lack of competition and transparency on energy markets.

Notes

Acknowledgements

The authors acknowledge the financial support from the Heinrich Böll Foundation in Ukraine and the USAID “Municipal energy reform in Ukraine” Project. We thank for assistance with TIMES-Ukraine modelling to DWG experts Gary Goldstein and Pat DeLaquil.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Maksym Chepeliev
    • 1
  • Oleksandr Diachuk
    • 2
  • Roman Podolets
    • 2
  1. 1.Center for Global Trade Analysis, Purdue UniversityWest LafayetteUSA
  2. 2.Institute for Economics and Forecasting, NASUKievUkraine

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