Turning subsidies into investments – Advising and supporting the Ukrainian government

Source of Funding: Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMUB)

Mandatary: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Period: 2014 – 2015

Compared to other national economies, the Ukrainian economy is highly energy-intense. Gas imports in particular have contributed to high current account deficits, which exact a high toll on a country’s macro-economic stability. Meanwhile, the national economy is hamstrung by the need to provide energy subsidies to certain groups of consumers.

The overall project goal is a gradual reorientation of Ukraine’s economy, turning away from massive subsidies in Ukraine’s municipal gas and heating sectors and encouraging investment in energy efficiency in residential building stock. Energy consumption – and with it the associated household costs – should thus be sustainably reduced.

This goal should be achievable through the “Subsidies to Investments” (S2I) program, which has been developed with the support of international donors.

Berlin Economics is guiding the development and implementation of the reform initiative, and is responsible for its conceptual and technical support.