Energy Sector Transformation in Ukraine: Impact on Energy Demand and Efficiency

Ukraine has undergone multiple attempts to reform its energy sector during the last two decades. At the same time, few empirical studies were developed to understand the policy responses of the economic agents. With the unique data gathered for the country’s energy sector, this research aims to investigate key relationships related to its demand and efficiency. Using the Fisher Ideal Index decomposition, we show that efficiency variation rather than structural changes in the economy is the main determinant defining Ukrainian energy intensity. The latter has been steadily decreasing for some time already for all energy sectors, except for electricity. Moreover, our panel data models support the idea that both price and institutional factors are important for enhancing energy efficiency and reducing demand. This response is not unified across the energy and economic sectors, though. Accounting for these differences as well as for the abovementioned energy intensity determinants might be particularly useful for potential policy implications. The research, therefore, focuses on the inferences that could contribute to evidencebased policy introduction in the sector.