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Natalia V. EremeevaLiubov V. Zharova
SUSTAINABLE DEVELOPMENT GOALS BASEMENT FOR ENERGY SAFETY AND ECONOMIC DEVELOPMENT

Annotation. The paper focuses on implementing sustainable development goals in the country's Action Plans and realities. Among the 17th aims chosen the 7th – affordable and safe energy which is part of country energy safety – the issue that is crucial for former USSR countries which were a part of the united energy system that was centered-oriented. That coursed a lot of problems for economic development and safety after independence. The paper aims to discover the main challenges of reaching energy safety and economic prosperity through the implementation sustainable development goals in Ukraine.

Keywords: sustainable development, law, energy, safety, economics 

Sustainable development has become a popular catchphrase in contemporary development discourse. However, in spite of its pervasiveness and the massive popularity it has garnered over the years, the concept still developing and transforming. The classical definition of sustainable development - this is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs [Our Common Future,1987]. 

The idea of “sustainable development” as a system of views of the ideologists in the Club of Rome, having emerged in the 1960-70s, generated agitated scientific and sociopolitical debates, involving the problems of the economy version, under which, based on the rational use of all resources, the use of new technologies and organizational management tools will secure the environment and the conditions for the development of the society in the future. [Akhmedova, 2019]

We should underline that it is actually closely correlated with traditional economics ideas about the keystones of the economy - Scarcity, Choice, and Cost. Something is scarce if the choice of one alternative requires that another will be given up. The existence of alternative uses also forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it that is why the latest research is moving to social from the mathematical spheres of economy. One more pillar of the economics is the idea that our resources are limited. That means that at any one time, we have only the defined set of resources of any kind (from natural to the virtual one), but our wants, our desires for the things that we can produce with those resources, are unlimited. We will always strive for more and better. Virtually everything is scarce. This scarcity makes the idea of sustainability actual and crucial for a long period, and the vitality of it based also on the world population forecast which will also endeavor more. Nature dictates the main constraints on economic growth and our knowledge determines how well we deal with these constraints.

Contemporary economics is developing in framework of VUCA world (Volatility, uncertainty, complexity and ambiguity) which is fastening with every decade. The main hypothesis is that finding the balance between equity and efficiency make everybody better off and became the basis for long-term development. The balance between equity and efficiency is no longer just an issue of economic theory and principles of economics. Finding the balance is no longer limited by political life anymore. Sustainable development principles are not just the rules of good tone on the international arena, it is the necessary elements of long-term development. The economic prosperity could not base only on efficiency because the result for such short sightedness and desire for growth here and now will lead to destruction of basis for further development. The examples of equity-efficiency balance should not be limited only national or entrepreneurial levels. The local communities also should be taken into account, they can become the agents of changes. One of the problems is the absence of clear understanding of mission, resources and possibilities of long-term development with the concentration on short-term aims which are more visible and understandable.

In the framework of this research we will focus on the 7th goal of sustainable development and peculiarities of its realization in the precise country – Ukraine.

The focus on the 7th goal is reasoned by the importance of energy safety and security issues for Ukraine. The energy security profile provides a brief snapshot of the energy security risks for Ukraine, including how it scores compared with the OECD average and a description of those factors that have had the greatest impact, both positively and negatively, on its energy security shows that country has one of the lowest levels of energy security (fig 1.)

 

 

 

Fig. 1. International Energy Security Risk Index [Global energy institute, 2020] 

Among the threats to the state's energy safety could be highlighted the distortions of market mechanisms in the energy sector; insufficient level of diversification of energy sources and technologies; monopolization of energy industries by Russian capital; over-reliance on external markets; criminalization and corruption of the energy sector; its high "shadowing"; an inactive energy efficiency and energy policy; high deterioration of fixed assets of critical energy infrastructure facilities and insufficient level of physical protection [Рябцев, 2019].

That is also need to be mentioned, that the forecasts of the most recognized organizations - the International Energy Agency (IEA), the US Energy Information Administration (IEA), Bloomberg New Energy Finance (BNEF) are confidently highlighted the latest trends – decarbonization, decentralization, and digitalization that surely was developed under the sustainable development umbrella. The latest Big Data, Blockchain, Energy Storage, EV2G technologies will soon transform the world's energy into an automated, internet-based energy model, smart generation, transportation, distribution, and electricity supply. The Bloomberg NEF concluded that by 2040, the world market for storage systems would cumulatively grow to almost 1 TWh of power and up to 1 TWh. capacity, raising $ 1.2 trillion for these purposes. At the same time, the cost of the accumulation systems themselves will be reduced more than twice already by 2030. with your own energy. The democratization of energy, its de-monopolization, involvement in its development of medium-sized, small businesses, private households - this is no longer a godsend, dreams are a new reality and the newest toolkit appears [Пояснювальна запискa,2019]. All these transformations open up opportunities for Ukraine that are difficult to overestimate.

There are no doubts that reforming the energy sector and its modernization for the rising the energy safety and security should be done on the basis at the latest research, tendencies, and technologies in the framework of update priorities not only Ukraine but also the EU with which the Association Agreement was signed [Association Agreement, 2017] . That's all mean that research should be held in the frame of sustainable development goals and to be more precise – Goal 7.

The Global Sustainable Development Goals (SDG), approved by the UN Summit on Sustainable Development and the adoption of the Post-2015 Development Agenda set out a comprehensive framework for the values, principles, and key drivers of humanity's progress by 2030. Adapted to any country by taking into account national specificities SDG determine the directions of significant socio-economic transformation. Ukraine has developed a national SDG system (86 national tasks and 172 indicators for monitoring the progress) [Національнадоповідь, 2017], that is defined by the appropriate Decree of the President of Ukraine [Про Цілі сталого розвитку України, 2019] and it is a base for the development of draft forecast and program documents, draft regulatory acts. Affordable and clean energy is an integral part of the national SDG system (Goal 7). Implementation of the Goal 7 provides for overall access to low-cost, reliable and modern energy supply, increasing the share of renewable energy in the energy balance, improving energy efficiency, facilitating access to research and technology in this sector, while also creating the conditions for achieving other sustainable development goals. The rating of electricity consumption, taking into account its availability, ecological generation and rationality of energy consumption, is an important indicator of the level of human development [Human Development Report, 2019] in the context of overcoming inequalities and polarization of society.

However, the analysis of the definition of sustainable development priorities at the level of regions and cities and the study of the corporate social responsibility cases in the context of the implementation of the Sustainable Development Goals by Ukrainian companies testify the lack of broad public support for Goal 7, which has become the subject of business and public cooperation. Thus, in designing regional policies, Goal 7 is not considered a top priority for any of the areas [Обласні консультації, 2016;  Громоздова, 2017]. In 2018, among Ukraine’s regions, the production of electricity from renewable sources was actively carried out in five regions (Zaporizhzhia, Odesa, Mykolaiv, Kherson, Vinnytsia) mainly in wind and solar power plants. Other renewables, such as the energy potential of waste management, are used to a small extent [Аналітична доповідь, 2018] (fig. 2).


Fig. 2. Renewable Energy Sources. Ukraine [RES Map, 2020]
 

According to the Business Contribution Assessment of Sustainable Development Goals, based on an analysis of practices of Ukrainian companies in 2016 -2019, companies in Ukraine do not practice or identify among the priorities the Goal 7 [ЦСР: внесок бізнесу, 2020; Саприкіна, 2018, 2019]. A requisition for engaging businesses in SDG implementation becomes the ability of the company to not only form the idea of its own impacts on sustainable development but to evaluate the risks and benefits of implementing a specific goal in the long run. A stepping stone in this process should be stable, unambiguous and simple rules, enshrined in the legislation, which determine the conditions for carrying out a certain type of business activity, the criteria for applying incentives, basis for responsibility, opportunities for innovation, development of new products. For the sustainable functioning of the energy sector, the key issue is ensuring a balance of national and collective (group) interests at the national and collective (individual markets, regions, communities) level, which provides the definition of development goals in the programming documents and regulatory support for the implementation of these goals within the legislative system acts of different levels affiliation. The Program Document for the Development of the Energy Sector is the Energy Strategy of Ukraine for the Period up to 2035 (hereinafter referred to as the Strategy) [Урядовий кур’єр, 2017]. The objectives of the Energy Strategy are correlated with the national SDG system, in particular, Goal 7: Ensuring the needs of society and the economy for fuel and energy resources in a technically sound, safe, cost-effective, and environmentally friendly way to guarantee a better living environment. However, the Strategy does not define the consistency of regulatory support for these priorities in order to guarantee an interconnection between the provisions updated in accordance with the defined goals of the legislation and the consequences of the acts adopted earlier. The absence of such a link is capable not only of creating tension between the rules of laws adopted at different time periods but also of "overheating" of relevant economic relations. An illustrative example is the introduction of a new model of functioning of the electricity market [Відомості Верховної Ради, 2017] without taking into account the existing long-term alternative energy [Відомості Верховної Ради, 2003] incentive system, which in fact preserved a non-flexible and dynamic fixed premium option. In the world practice, fixed preferential tariffs have proved their effectiveness as an initial incentive for the development of renewable energy, in case of sensitiveness to the dynamics of lowering the cost of electricity and achieving the target levels of production from separate sources. Thus, in the EU countries, the time of applying the tariffs, their magnitude and the timetable for the gradual reduction of the compensation premium differ markedly by region within member-states, by specific types of renewable energy sources (RES) and are regularly reviewed. For example, Germany has cut tariff support for photovoltaic plants after reaching forecasted capacity levels, increasing wind power generation tariffs amid annual reductions in preferential tariffs to reduce the cost of renewable energy [Зарубіжна практика, 2012]. However, in Ukrainian legislation the mechanism of ensuring compliance with the level of “green” tariffs to the conditions of electricity production has not been implemented, due to this, the main advantage of the fixed bonus system – the possibility of forecasting the development of renewable energy – was lost. The unpredictable production of renewable energy has led to "overstimulation" of wind and solar power and in combination with virtually unconditional (that is in fact not taking into account the impact of the new facility on the operation of the grid as a whole), the order of connection of RES to power grids against the backdrop of regulatory, maneuverability had led to significant imbalances in the functioning of the internal market, in particular, the reduction of the capacity of all types of traditional generation to balance the integrated energy system. Moreover, meeting the need for balancing the alternating power of solar and wind power plants has increased the load on the thermal generation and has delayed in time the economic decarbonization tasks envisaged by the Strategy. The current situation gave rise to the discussion in the expert environment of the consequences of uncontrolled expansion of RES as a destabilizing factor [Коваль, 2020].

Therefore, the legal support for the implementation of Goal 7 requires the implementation of certain protector's rules in the legislation that would contribute to the sustainable functioning of the energy sector. Such rules could be

the sustainability criteria for generating capacity;

specifying in the framework of mentioned criteria the powers of local executive bodies and local self-government bodies in relations with the entities of electricity; grounds for liability of electricity entrepreneurs;

the flexible and dynamic system of incentives for renewable energy.

The foundation for establishing a system of sustainability criteria have become EU Directives 2009/72 / EC on common rules for the internal market in electricity and 2009/82 / EC on the promotion of the use of energy from renewable sources [ОфіційнийвісникЄС, 2009 1,2]. These criteria have to be the basis for resolving the issue of permitting the construction of new generating facilities; connection of electrical installations to the power grids; approval by local executive bodies and local self-government bodies of the placement of electricity objects in their territory; the application of a restriction, suspension (suspension) or termination of activity of electricity objects; conducting competitions for the construction of new generating capacity and implementation of demand management measures; the use of incentive measures. According to the mentioned Directives, the sustainability criteria can be divided into four groups: economic, technical, social, and environmental. Economic and technical criteria will provide an assessment of the economic impact of the project for the system as a whole; reliability of the project payback, which will ensure investment stability; compliance with the technical requirements taking into account the optimum ranges of operation of the grid and the factors of energy security. Social criteria include a preliminary analysis of the economic impact of the project on the consumer; opportunities to use local production facilities to create an affordable equipment market for an energy enterprise; indicators of creating additional jobs; fulfillment of the obligation of the energy supplier to inform the population (end consumers) in an accessible form at certain intervals about the structure of the fuel balance of the enterprise, indicating the share of each energy source, environmental impact, the number of harmful substances and greenhouse gases. Environmental criteria should take into account the energy efficiency of the project; the contribution of generating capacity to emission reductions; waste generation; rational use of land resources.

It is advisable to provide regulatory prioritization during an assessment of a specific range of issues for ranging the application of a particular set of criteria and establishing the respective obligations of the generating companies.

According to these criteria, the powers of local executive authorities and local self-government bodies should be specified regarding the coordination of placement of electricity objects in their territory (Article 10 of the Law of Ukraine “On the Electricity Market”). Additionally, in order to resolve the issue of the territorial location of electricity facilities based on the interests of the territorial community, it is necessary to clearly state the importance of such approval when obtaining a permit for the construction of new generating facilities, to regulate the approval process, to harmonize it with the environmental impact assessment procedure [Відомості Верховної Ради, 2017]. Failure to comply with the sustainability criteria and their corresponding obligations may be considered as the basis of a restriction, temporary prohibition (suspension), or termination of activity of energy companies (Article 14 of the Law of Ukraine “On the Electricity Market”). Thus, the implementation of these criteria will serve as a basis for improving the rules of legal responsibility in the field of energy, subject to the harmonization of special legislation with the general rules of the Economic Code of Ukraine on administrative and economic sanctions; determination of the exhaustive circle of authorized bodies and the procedure for bringing to justice.

In the conditions of maintaining the fixed bonus system for renewable energy until 2030, the sustainability criteria can serve as a benchmark for assessing the compliance of the preferential ("green") tariff with the conditions of energy production from the relevant source. It is considered appropriate to give the national regulator the authority to carry out such an analysis and to propose tariff adjustments for new RES facilities, taking into account the achievement of projected (indicative) capacity and reducing the cost of producing certain renewable energy sources.

Therefore, the legal support for the achievement of the Sustainable Development Goals through the implementation of certain safety standards through the establishment of a system of criteria for the sustainability of energy companies will contribute to the stability of the conditions of economic activity in this area and the cooperation of business and the public in achieving Goal 7 

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