Posted on Oct 28, 2022
Even as fighting still rages in Ukraine in the ninth month of Russia’s invasion, attention is increasingly turning to how to rebuild the devastated country once the conflict finally concludes. Ukraine needs international aid to allow it to build a European future away from Moscow’s sphere of influence, observers underlined on October 25th, as a conference on Ukraine’s eventual reconstruction kicked off in Berlin. Summit host Olaf Scholz pledged a “new Marshall Plan for the 21st century” to rebuild Ukraine after the war, while Polish prime minister Mateusz Morawiecki argued that assets seized from Russian oligarchs should be the financial backbone of Ukraine’s reconstruction.
Above all, the Berlin conference served as a chance to sketch out what a post-conflict Ukraine will look like—and how Kyiv will ultimately be integrated into the European Union, after officially being granted candidate status this summer. The question of what to do with one critical industry loomed particularly large—Ukraine’s energy sector, which Moscow is endeavouring to cripple. Addressing the Berlin conference via video link, Ukrainian President Volodymyr Zelensky said that Russia has destroyed more than one-third of Ukraine’s energy infrastructure, leaving the country facing a brutal winter full of blackouts. Ukraine’s energy sector must be rebuilt as soon as possible—but Kyiv and its Western partners should take the opportunity to build a more modern, sustainable energy mix to replace aging infrastructure damaged by Russian rockets and Iranian-manufactured drones.
As recent analysis by US diplomat Kurt Volker and former Slovak economy minister Vazil Hudak argued, despite overall strong support, Ukraine’s Western partners have heretofore overlooked one important opportunity—the prospect that coordinated investment in Ukraine’s renewable energy capacity would not only benefit Kyiv, but could help alleviate the energy crisis in the rest of Europe and knit closer ties between Ukraine and the EU it is set to eventually join.
Renewable promise more critical than ever
Even before the war, industry insiders had been calling attention to the underexploited potential for investment in Ukraine’s clean energy sector. Canadian-Ukrainian entrepreneur Michael Yurkovich, the CEO of independent energy firm TIU Canada, which has invested more than $65 million in the Ukrainian solar energy sector, has advocated for years for greater policy support to accelerate investment in Ukraine’s renewable energy industry.
“Renewable electricity support should not be considered in isolation,” Yurkovich has argued, “but as an integral part of Ukraine’s energy sector reform, [including] policies to transform the country from being one of the least energy-efficient in Europe and address an energy intensity that is two to three times greater than neighbouring countries Poland, Slovakia and the Czech Republic.” Yurkovich has recently advocated for a ‘green bridge’ between Ukraine and the EU. This bridge would allow exports of renewable energy produced in Ukraine to European countries who have higher demand and greater resources to cover the tariff. In other words, a win-win for both Ukraine and the EU. Unfortunately, Russia’s attacks on Ukraine’s energy infrastructure in recent weeks have led to a temporary halt of exports to the EU.
Before the war, Ukraine had in fact made significant strides in embracing renewable energy. Ukraine ranked among the world’s top 30 renewable energy investors in 2019 and in March 2021 set a goal of achieving net zero emissions by 2060. Securing adequate financing to achieve this transition, however, remained a sticking point. When Kyiv rolled out its net-zero government strategy, deputy energy and environmental protection minister Irina Stavchuk admitted that investments would have to triple in the 2040s in order for Ukraine to achieve its green ambitions. In addition, now approximately 90% of the wind and a third of the solar energy facilities in Ukraine are now under Russian occupation, further complicating Ukraine’s future plans for renewables development.
While some international investors such as Michael Yurkovich saw promising investment opportunities in Ukraine’s burgeoning renewable energy sector, some other sources of investment were hard to access—until Ukraine is a member of the EU, for example, it is ineligible for programmes like the Just Transition Fund which countries like Poland are relying on to move away from fossil fuels. Because the UN climate process classifies Ukraine as a developed country, meanwhile, it is considered ineligible for funding from the Green Climate Fund (GCF), despite having a lower GDP per capita than several of the countries receiving GCF support.
The conflict with Russia has naturally complicated the investment environment, but has also crystallised the importance of increasing the pace of Ukraine’s renewable energy uptake. At the recent Berlin conference, Ukrainian environmental campaigner Svitlana Romanko met with Scholz and von der Leyen to emphasize that the reconstruction of Ukraine “must steer clear of the [energy sources] that allowed Putin to thrive”. The imperative to reconstruct Ukraine, Romanko recently argued, “and the associated mobilisation of infrastructure funds is the unique chance for Europe as a continent to step up and actively develop energy efficiency measures, phase out fossil fuels and switch to renewable energy sources”.
Benefits could spread across Europe
Dedicating some of the substantial funds which will need to be earmarked for Ukraine’s reconstruction to building its energy sector back better and greener than before the war is not only a boon to Kyiv that could leapfrog the country towards its net zero goals despite the devastation wrought by Russia’s invasion. The benefits could reverberate across the continent, alleviating the EU’s own problematic dependence on fossil fuels.
In contrast to many EU member states who are struggling to stay on track to meet their carbon emission targets, Ukraine—which would have the largest land mass of any member state if it joined the European Union—has vast swaths of territory perfect for wind and solar power. Estimates have suggested that Ukraine has capacity for 320GW of onshore wind and 70GW of solar energy by 2030, almost all of it already cost-competitive.
Offshore wind could add another 251GW of renewable energy production. Substantial portions of this production could be exported to the EU, a remarkable increase which could reshape the European energy landscape and accelerate the whole continent’s energy transition. As Ukraine’s European allies weigh up how to best support the embattled country’s recovery and facilitate its eventual accession to the European Union, policies encouraging investment in Ukraine’s promising clean energy sector must be a high priority.
Image: https://securityconference.org/impressum/via Wikipedia
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