Assessment of Energy Efficiency Gaps: The Case for Ukraine

Abstract

This article substantiates the need to find and implement innovative tools to improve the efficiency of the domestic system for energy sector control. The authors determined that energy policy renewal should consider Ukraine’s commitments to transition to a carbon-neutral economy. The systematization of scientific achievements shows that one of the priority tasks is to minimize the gaps in the energy efficiency of the national economy. It is established that, despite the significant scientific achievements in this area, the scientific community has not adopted a single approach to assessing energy efficiency yet. The purpose of this article is to assess the energy efficiency gaps in the national economy, in order to identify their peak values and the factors causing them, and appropriate mechanisms to minimize them. The energy efficiency gaps are assessed using frontal analysis and Shepard’s energy distance function. Analytical data from the World Bank, the Swiss Institute of Economics, and the International Energy Agency form the information base. The study applied software package Stata 14 for calculation the energy efficiency gaps for Ukraine for 2002–2019. The study applied the Shepard’s function translogarithmic, stochastic frontier analysis for the assessment of energy efficiency gaps. According to the study results, the average level of energy efficiency gaps is 0.12, and their values became the largest in 2009 and 2015. First of all, this is due to the impact of the global financial crisis and the escalation of military–political conflicts. The growing dynamics of the energy efficiency gaps level is due to the excess of the negative effect of increasing exports of primary energy resources and inefficient technologies for their processing over the positive impact of energy-efficient innovation imports. In this case, the government should provide a proactive strategy for creating a positive investment climate, in order to attract additional financial resources for extending green innovations and popularizing the green style and cultivate the energy safety behavior in society.