The Impact of the Government Policy on the Energy Efficient Gap: The Evidence from Ukraine

TLDR

The study investigates how investment and institutional quality affect Ukraine’s energy‑efficiency gap, hypothesizing that higher institutional quality boosts green investment and synergistic effects reduce the gap. Using time‑series data from 2002–2019 sourced from the World Bank, Eurostat, and Bloomberg, the authors applied unit‑root, Johansen, and VECM tests to assess stationarity and cointegration. Bibliometric analysis shows growing interest in the gap’s determinants, and empirical results indicate that a 1 % yearly reduction in Ukraine’s energy‑efficiency gap requires a 1.5 % rise in green investment, a 3 % boost in political stability, and a 1 % increase in public anti‑corruption perception, accelerating sector recovery and guiding policy focus.

Abstract

This paper aims to check the impact of investment and institutional determinants on the energy efficiency gap. The findings of the bibliometric analysis confirmed the growth of research interests in identifying the core determinants of the energy efficiency gap. The central hypothesises are: the increasing quality of the institutions leads to an increase of green investments in the energy sector and the dual relationships between investment and institutional determinants lead to additional synergy effects, which allow boosting the decline of energy efficiency gaps of the national economy. For the analysis, the times series were collected from the World Data Bank, Eurostat, Bloomberg, for Ukraine for the period of 2002–2019. The following methods were used: the unit root test—for checking the stationarity of data—and the Johansen test and VEC-modelling—for the cointegration analysis. The findings prove that to reduce the energy efficiency gaps in Ukraine by 1% next year, it is necessary to increase green energy investments by 1.5% this year, and the political stability and public perception of corruption by 3% and 1%. The increase of the public perception of corruption by 1.47 points and of political stability by 2.38 points leads to maximising the recovery speed of the Ukrainian energy sector. Thus, while developing the policy to decrease the energy efficiency gaps, the Ukrainian government should consider the level of public perception of corruption and political stability.