Ira Saul Rubenstein was a speaker at the 2nd European-Ukrainian Energy day, a conference promoting energy efficiency and green energy in Ukraine, held on 1 June in Kyiv.
He was speaking to EurActiv’s Georgi Gotev.
Mr Rubenstein: you are a US investment banker specialised in energy efficiency, based in the Czech Republic, but you have been travelling frequently to Ukraine for the last few years. Presumably this means that you're finding business opportunities in Ukraine?
Indeed, the company I represent, Traficon, deals with investment bankers and advisers to finance renewable energy and energy-efficiency projects and companies. We do both enterprise financings and project financings. I am indeed based in Prague. We have, however, had business opportunities and clients in Ukraine for the last five years.
We see a tremendous amount of opportunity here, in large part because there are needs that are as yet unmet for adding additional indigenous generation of energy, hopefully primarily from renewable sources. But there are also tremendous opportunities to make the energy infrastructure here much more efficient.
You still have the predominance of older Soviet-era, in some cases pre-Soviet era, energy infrastructure. The ability to upgrade their efficiency is substantial and the ability to make significant improvements is in some cases relatively simple efficiency changes with straightforward technology.
We think this provides a significant opportunity for Ukraine to become much more energy independent, to become much more budget-conscious about its energy consumption, and to become much more proactive about reducing carbon emissions.
Both the Czech Republic and Ukraine inherited the former Soviet-style system of district heating, which was based on the assumption that energy costs 'nothing'. Do you think that the Czech experience of modernising district heating is of interest for Ukraine?
We can also probably learn from mistakes. In some East European countries, people in apartment blocks have replaced their windows on an individual basis. This costs them more, while the result is not as good as it could be if it were done in an organised manner.
There is indeed a good base of opportunity to learn, from the point of view of some of the Czech businesses and investors we know. There are tremendous business opportunities for them here, so we see some ability to transfer knowledge and to introduce technology and service approaches.
The opportunity in Ukraine is that the market here is large. You can ideally do some of the projects on a significant scale and therefore be very, very competitive on a unit cost basis and be very cost effective. So you actually get on a unit cost basis a much more effective outcome of capital that's invested.
So the opportunity to do things on a structured basis for large projects as you mentioned, not just to do the apartment by apartment window replacement, but to do whole blocks and whole flats and whole sections of municipalities, and to do it on an organised basis. The impact of something like that is immediately felt.
Yes, but to do this you need legislation, you need political will, you need the understanding of the population. You need some external assistance to put in place such programmes, as the living standards in Ukraine are rather low. What kind of solutions do we have?
All this costs money, but remember that if we're talking about efficiency, this all has payback and some of this payback is very short term. So the question becomes not so much what the capital outlay is, but what the cash-flow issue has to be, because you're going to see a return in a relatively short period of time relative to investment.
In certain of these cases you can make a large-scale infrastructure improvement. In many cases, particularly where you have municipality-required involvement, you have the opportunity to leverage municipal credit structures for both public and private sources of finance to do some of these things at large scale, because what you're talking about is a relatively short period of time when financing is out.
It's then repaid and then you have reduced costs. There are also political benefits to that: you're reducing the cost of people to exist. You're making their budgets stretch further. You're putting them in a position where some of their resources can be used for other than energy costs.
And so there is a multiple set of positive benefits that accrue from this: cost, comfort, reduction in user resources, which are all very quantifiable and recoverable in a relatively short period of time from a financing point of view.
We have heard a lot of people at this conference speaking as lobbyists for energy efficiency. But one said that in this country there is a lobby, perhaps even more powerful, for energy inefficiency. Do you agree?
I probably wouldn't put it the same way but I understand the point. There are certainly lobbies in any society that oppose change. They oppose change because there are vested interests in place which benefit from the existing situation, from the status quo.
This probably deals with any issue that you can think of, industrial or political, in almost any society. I'm sure it's not any different here.
So I do think that a countervailing ability to carry home the policy message with regard to the fact of the positive benefits of these changes is important. I'm reminded of the fact, if I remember the story, as people began to look at insulating flats here, there was originally not a lot of support for this until some of the political figures realised that by doing so, they could potentially save pensioners the equivalent of a month's rent. So it basically became a 13-month kind of deal, people got a month's rent basically for free, because you saved them a month's worth of energy bills as a result of insulating flats.
You have similar benefits. So I think you can make a powerful policy and political argument, that can be a countervailing pressure against the status quo.
Where is the EU in all this? Do you think it's purely a business matter? Or is the European Union a very influential factor in a country like Ukraine that can make a difference?
I think given the fact that the EU has an obvious long-term interest in seeing Ukraine as a partner for EU members – and potentially more in the future, but that's up to politics and none of my business – there certainly are opportunities by example and by collaboration to create further opportunities that are mutually beneficial.
I believe that the EU in the Commission's next round of activity in 2014-2020 will not only continue to support renewables but will put an increasing amount of investment into energy efficiency and will put an increasing emphasis on energy efficiency through specialised programmes.
You said Ukraine's EU perspectives are none of your business. However, I think that Brussels listens to business, to people like you. What is your inner feeling about Ukraine?
I always like to say Ukraine has a lot of potential. And there is one more important point, of which I was first advised to remember and be mindful of when I started a business here five years ago. It is that Ukrainians have an abiding love for their children. It's almost visceral, you can feel it. So the point I made is nobody here wants their children to have the same infrastructure and energy infrastructure that they have now.
It's another piece of how you make life better for the next generation. But there's a tremendous capacity here to be successful in doing that. So I think the opportunity not only is real but as people begin to realise, they would also increasingly have an impact on decisions on a national basis.
And I would like to think that from a business and simply a generational point of view, this period in the next 10 to 15 years you will see a lot of change. Because people are thinking about the future here and they do that here arguably as much as if not more than any other society in Europe, in my experience.
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