The FINANCIAL -- IFC, a member of the World Bank Group, the European Union, and Germany signed agreements today to support the Ukrainian government’s work in reducing energy waste and greenhouse gas emissions in the residential sector.
Agreements were signed by IFC and EU likewise IFC and Germany to set up a new multi-donor fund to help boost energy efficiency in Ukraine. Under the agreement, IFC will initially manage up to 53 million euros of funding from the EU (43 million euros) and Germany (10 million euros).
Resources from the fund will co-finance programs of the Ukrainian Energy Efficiency Fund (EEF), a new initiative developed by the Ukrainian government, with combined support from the EU and Germany to provide grants to homeowners’ associations for energy-efficiency renovations in multi-family buildings. Ukraine has one of the largest housing stocks in Europe, but many homes are old and inefficient, with poorly insulated buildings that lose as much as 50 percent of their heat. Furthermore, energy is highly subsidized in Ukraine, according to IFC.
“We are pleased to support energy saving measures in Ukrainian homes that will have a direct impact on the daily lives of citizens and stimulate the local economy,” said Johannes Hahn, EU Commissioner for European Neighbourhood Policy and Enlargement Negotiations. “I'm glad we have an experienced partner in IFC to efficiently implement this programme with the Ukrainian government.”
IFC CEO Philippe Le Houérou said: “Climate change is a global threat and addressing it requires significant investment. This partnership is an important step in enabling us to use public funds to leverage private sector resources and scale up climate-smart and energy-efficient investments in Ukraine.”
Svenja Schulze, German Federal Minister for Environment, Nature Conservation and Nuclear Safety (BMU), said: “Energy efficiency is an investment in the future: it enhances security and resilience, creates jobs, and improves the environment. The establishment of the EEF will support Ukraine in transforming energy subsidies to investments and reducing pressure on the public budget.”
"Today we have launched an important project which will become one of the main instruments for achieving energy efficiency,” said Ukrainian Finance Minister Oleksander Danylyuk during the signing ceremony. “The new project will assist Ukraine in switching to a more modern energy consumption and accounting model. The project will also boost job creation – up to 75,000 new jobs for engineering and construction personnel, energy service industry and energy management will be created as a result."
The EU contribution is part of a comprehensive Energy Efficiency support programme for Ukraine (EE4U) adopted last year by the European Commission. The EU programme amounts to date to a total of 50 million and covers beyond this contribution additional technical assistance support for the introduction of modern energy efficiency standards and regulations.
IFC is also launching an advisory program through the World Bank Group’s Finance, Competitiveness and Innovation Global Practice to help establish and operate the fund, set up the delivery of grants through financial institutions, and deliver market-level interventions that facilitate the demand for EE renovations. Through Germany’s International Climate Initiative, BMU contributes 5 million euros to support with capacity building and in aligning the EEF and its programs with the subsidy reform. Further technical assistance will be provided by the World Bank and Poland.