RIVNE, UKRAINE -- February 17 -- In a letter sent today to the President, Prime Minister, Head of Parliament and other leaders of Ukraine's new central government, five citizen groups outlined a series of recommendations for reducing the nation's dependence on natural gas through improvements in energy efficiency and use of renewable energy resources.

The organizations warned that the recent 32% increase in the price of natural gas imported from Turkmenistan "should serve as a wake-up call that Ukraine’s heavy dependence on natural gas and oil imports from Turkmenistan, the Russian Federation, and other countries poses risks to Ukraine’s economic health as well as its national security."

Furthermore, "this increase in energy costs will affect all Ukrainian consumers [including] the industrial sector, Ukrainian businesses, and ordinary citizens," the letter noted.

However, the letter added that "this situation can be changed [because] "Ukraine’s economy is among the least energy-efficient in the world."

The organizations suggested that "common-sense, cost-effective investments in improved energy efficiency, simple energy conservation measures, and expansion of renewable energy supplies could arguably reduce Ukraine’s energy consumption by 30-50% or more in the near term and possibly even eliminate Ukraine’s dependence on natural gas and oil imports while simultaneously creating new, domestic jobs and businesses, reducing environmental pollution, improving public health, and making Ukrainian industries and products less costly and more competitive."

The letter proceeded to outline twelve actions which Ukraine's political leaders could pursue to realize these energy savings. It also suggested that "Ukraine could substantially increase production of domestic sources of energy, and thereby reduce its imports, if it made greater use of its significant wind, small hydropower, biomass, and biofuel resources as well as its more limited solar and geothermal resources."

The letter concluded by calling upon "Ukraine’s new political leadership [to] signal energy policy reform and reduction of energy imports through new investments in energy efficiency and renewable energy as being a major priorities."

UKRAINIAN-AMERICAN ENVIRONMENTAL ASSOCIATION is a private, non-governmental organization founded in 2004 and chartered in both the United States and Ukraine. It was created to serve as a network of Ukrainian and American NGOs, academic researchers, businesses, and government officials to facilitate the exchange of information on a broad array of environmental issues including, but not limited to, energy policy, air and water pollution, toxic wastes, soil conservation, and wildlife and
wilderness protection.

The full text of the letter and its policy recommendations is provided below in English.

February 16, 2005

President of Ukraine
Prime Minister of Ukraine
Head of Parliament of Ukraine
Ministry Heads

Dear Sirs/Madam:

The recent decisions by Turkmenistan first to cut off its export of natural gas to Ukraine and second to resume its export, but at a substantially higher price, should serve as a wake-up call that Ukraine’s heavy dependence on natural gas and oil imports from Turkmenistan, the Russian Federation, and other countries poses risks to Ukraine’s economic health as well as its national security.

Presently, Ukraine imports 85% of its natural gas, with almost half (36 billion cubic meters in 2005) coming from Turkmenistan, as well as 70% of its oil, most of which is provided by the Russian Federation. None of its international suppliers can be viewed as being particularly stable or overly sympathetic to Ukraine’s newly elected government and all of these suppliers may be tempted to use their exports as political weapons. This puts Ukraine in a particularly vulnerable position.

Moreover, Ukraine’s fossil fuel imports come with a very high price tag for which the Ukrainian economy is ill-prepared to pay. The new contract with Turkmenistan, for example, will increase the cost of natural gas imports from that country by 32% - from US $44 to US $58 per 1000 cubic meters. This increase in energy costs will affect all Ukrainian consumers and particularly the industrial sector which is particularly reliant on natural gas for its energy needs. That, in turn, will make it even more difficult
for Ukrainian businesses to afford new investments and upgrade their facilities, provide higher wages to their workers, or to compete in the global marketplace. Moreover, ordinary citizens will be particularly hard-hit, particularly pensioners, as well as residents of villages who must choose between higher gas prices or expensive wood for their heating needs.

Fortunately, this situation can be changed.

Cost-effective investments in improved energy efficiency, simple energy conservation measures, and expansion of renewable energy supplies could greatly reduce, and possibly even eliminate, Ukraine’s dependence on natural gas and oil imports.

Ukraine’s economy is among the least energy-efficient in the world. For every unit of Gross National Product, Ukraine uses two to three times as much energy as does the United States and significantly more when compared to its neighbors in central and western Europe. Common-sense energy efficiency measures could arguably reduce Ukraine’s energy consumption by 30-50% or more in the near term while simultaneously creating new, domestic jobs and businesses, reducing environmental pollution, improving public health, and making Ukrainian industries and products less costly and more competitive.

There are numerous specific policy actions that should be considered to enable Ukraine to become more energy efficient. These include:

1.) enact and/or substantially improve and enforce energy efficiency standards for appliances, lighting, industrial processes, and buildings (including windows, walls, and heating units);

2.) amend government procurement policies to drive investments in energy-efficient technologies including improved energy management of all public buildings including schools, hospitals, prisons, military facilities, post offices, and governmental offices;

3.) individually meter homes, apartments, and commercial units so that tenants know how much energy they are using, are paying for it, and have an incentive to reduce their consumption;

4.) provide citizens with information on simple, low-cost measures they can take to save energy in their homes such as sealing windows and doors, insulating home heating units (if they have them), turning off lights and appliances when not in use, replacing incandescent light bulbs with compact fluorescent lights, etc.

5.) encourage local and regional governments to invest in energy efficiency by allowing them to retain funds they save and to use them for alternative municipal services such as street lighting, schools, hospitals, water treatment, etc.

6.) include energy education programs as part of the national school curriculum as well as sponsor conferences, distance-learning and other forms of education to provide information about energy efficiency options to local government officials and industrial and agricultural managers;

7.) provide energy consumption information on all commercially-sold appliances (including refrigerators and stoves), heating and cooling units, computers, and lighting fixtures so that consumers can make informed choices about products and their related energy costs;

8.) establish utility-sponsored energy efficiency education programs as well as services such as weatherization programs and free or low-cost energy audits of buildings and industrial plants;

9.) host energy awards programs that formally recognize and congratulate municipal officials, business leaders, NGOs, and others who implement innovative and successful programs to reduce energy waste;

10.) approve a mix of simple, consistent, and transparent tax incentives to encourage greater investment in energy efficiency;

11.) expand the use of combined heat and power systems in large industrial plants as well as energy-efficient district energy technologies;

12.) make full use of the bully pulpits available to the President, Prime Minister, Ministry leaders, Members of the Parliament, and other decision-makers to educate the public and promote the use of sustainable energy technologies.

Some of these initiatives actually entail little or no cost. Others entail investments that will pay for themselves in the form of saved energy costs within one or two years and then continue to yield savings thereafter.

Admittedly, some investments - while providing longer-term energy and cost savings - will entail larger upfront investments. While difficult to quantify, some have suggested that longer-term investments in energy efficiency and renewable energy could cost $5-8 billion.

Some of this expense can be covered by reinvesting energy savings realized from initial no- and low-cost energy efficiency measures. Funds could also be raised through municipal and national bonds issued specifically for energy efficiency investments. International investment might well be attracted through the sale of carbon credits through mechanisms to be established under the Kyoto Protocol which goes into effect in mid-February 2005. International investment in these technologies may also be
facilitated by seeking entry into the World Trade Organization.

In addition, Ukraine has barely tapped its renewable energy potential with only about two percent of the country’s energy now coming from renewable energy sources - mostly large hydroelectric facilities. Ukraine could substantially increase production of domestic sources of energy, and thereby reduce its imports, if it made greater use of its significant wind, small hydropower, biomass, and biofuel resources as well as its more limited solar and geothermal resources. Natural gas imports could also be displaced by making greater use of coal mine methane as well as tapping natural gas produced in sewage treatment facilities, landfills, poultry and dairy farms. Some studies have actually suggested that over time Ukraine could actually meet most of its energy needs by aggressively exploiting its renewable resource base and improving overall energy efficiency.

For the moment, though, we believe it important that Ukraine’s new political leadership signal energy policy reform and reduction of energy imports through new investments in energy efficiency and renewable energy as being a major priorities.

We look forward to working with you in the months ahead to further develop and implement these ideas.

Sincerely,

1.) Taras Lychuk, Ken Bossong Ukrainian-American Environmental Association

2.) Yaroslav Tyrchenyak Public Environmental Organization “ECO-Dovkillya”

3.)Yuriy Stepanets Vinnitsia Oblast Youth Social Organization “Our Podillya”

4.) Stanislav Tkachov Regional Independent Newspaper “Coast of Hope”

5.) Oleg Venger CJSV "Agro-Soyuz"

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