Ukraine’s green transition to freedom

When Russian missiles fall on Ukraine, cities are left with rubbles of destroyed houses, dead bodies of civilians, traumas, and suffering. But from the ashes of war, the country can rise as a green phoenix to lead the global energy transition, write researchers from Ukrainian universities and the University of Oxford in their recent report on Ukraine’s recovery. “We want to make Ukraine a shining model for a green energy transition around the world,“ confirms Svitlana Romanko, founder and executive Director of the Ukrainian NGO Razom We Stand.

Prior to the pandemic and to the outbreak of full-scale war in 2022, total greenhouse gas emissions in Ukraine were comparable to other large European countries in absolute terms. This means that a significant effort is needed  to decarbonize within the next few decades, as required by the EU’s Green Deal, which Ukraine would be required to comply with when it were to join the European Union.

Changing the energy mix

Even before the war started, Ukraine faced the formidable challenge to green its fossil fuel-reliant economy. Until 2014, coal made up more than a third of the country’s total primary energy supply due to Ukraine’s vast coal reserves, which are the sixth largest worldwide. However, many of its coal mines are located in the Donbas region, which was partly occupied by Russia when the war started in 2014.

As a result, coal production fell by nearly 60 percent between 2014 and 2019, leading Ukraine to increasingly rely on coal imports. In 2019, 45 percent of the consumed coal was imported, compared to 27 percent in 2010, according to the U.S. Energy Information Administration. Meanwhile, the overall role of coal in energy supply slightly decreased. At the COP26 conference in Glasgow 2021, Ukraine announced its commitment to phase out coal by 2035, at least those mines that are state-owned. According to Romanko, “this was hugely important, because a lot of state subsidies went into coal.”

In addition to a gradual decline in coal production during the last years, in 2016 Ukraine stopped buying Russian gas in an effort to become more energy independent from Russia.

However, fossil fuels still accounted for 70 percent of Ukraine’s total primary energy supply in 2020. Nuclear energy and renewables saw a slight increase in their share of the country’s energy mix. “The number of renewable energy installations has been growing quite smoothly. We had zero solar panels connected to the grid in 2012 and today we have tens of thousands,” explains Anna Ackermann, a board member of the Ukrainian NGO Ecoaction and policy analyst at the International Institute for Sustainable Development.

But while Ukraine’s government verbally committed to a green transition, Kostiantyn Krynytskyi, head of the energy department at Ecoaction, remarks that “the government liked to pay lip service to the idea of a green transition before the start of the invasion. It had many ideas on what to do in the energy sector, but it didn’t paint a cohesive picture or translate ideas into a vision of a green transition.”

Renewables for freedom and security

When Russia started bombing residential buildings, hospitals, and energy power plants, “expanding renewables became a question of national security,” says Krynytskyi. “The government understood that we need a decentralized energy system and that there are very few alternatives to renewables, especially when taking into account the costs of switching.”

The demand for solar panels has surged since the start of the war, as many communities aim to ensure their energy security through decentralized generation. Ukraine has installed more onshore wind power since February 2022 than England, despite the war conditions. The potential for renewables, particularly wind and solar, is still huge – wind power could be expanded from 1.5 GW capacity in 2021 to more than 100 GW according to the Institute of Renewable Energy of the National Academy of Sciences of Ukraine. Additionally, biomass holds considerable potential thanks to Ukraine’s large agricultural sector.

Planning the future

The next few years will be crucial for Ukraine’s recovery and the success of its green transition. “It’s a very important moment right now, which we as a national community cannot miss,” so Romanko. The government is actively drafting legislation and plans for the green transition, also in preparation for a possible accession to the EU. For instance, recent legislation introduces net metering and allows biomethane producers to access the gas infrastructure for export.

While coal power plants should phase out by 2035, nuclear energy and natural gas remain to be viewed as important energy sources now and in the future. Biomethane and renewables should also increase, with wind and solar projected to make up 30 percent of the energy mix by 2030. But uncertainty remains as the country is still at war, making it challenging to plan for the future. “We still don’t know exactly what we’re going to be left with once the war is over and what kind of economy will be developing, because we are still at war,” says Ackermann. To manage the complex challenge of transforming a country at war, Ackermann says that Ukraine has to set clear priorities.

Green reconstruction

If the priority is to make Ukraine a model for the green transition, more work is needed: the report by researchers from Ukrainian universities and Oxford University reveals that only 33 percent of proposed investments from other countries into Ukraine is likely to support climate mitigation, while 6 percent may even end up worsening climate change. The good news is that not much more money would be needed to make Ukraine climate neutral. According to the Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine, a complete decarbonization of the economy by 2050 is achievable with a modest 5 percent increase in investment compared to restoring the pre-war fossil fuel-based model.

Large investments will be needed anyway for the reconstruction of infrastructure and power plants across Ukraine. Indeed, as Russia has deliberately been targeting Ukraine’s energy infrastructure, many coal plants have been damaged or destroyed. “Private coal companies have lost generation units in the war, and it needs a lot of money to restore them. But no investments are coming into coal. Coal is done, coal is finished. No one really wants to invest in coal because everyone understands that these assets will be stranded. The same must apply to oil and fossil gas,” says Romanko.

Coal phase-out is a key component of Ukraine’s green transition. But a complete phase out will remain challenging for the affected communities. Policies are needed which foster economic diversification and the creation of new enterprises. “A critical aspect will be involving coal communities in the planning process of this transformation. These communities will be the most affected and play a hands-on role in the transition. It would be a failure to make decisions without their input. Including them and considering their recommendations is imperative for a successful outcome,” states Kostiantyn Krynytskyi.

But people are open to the transition. Anna Ackermann, who met with mayors of coal towns even before 2022, says that “the mayors told us that there is no future of coal. They said ‘We understand that. We just don’t know what to do.’ The regions in the East were all about industry and coal. So what do you do with them?” Often, people lack the financial means to make the initial investment into solar. Hence, support schemes are needed to help such regions to transition in a just way. But as Ukraine has to defend itself against Russian aggression, little government budget is available to invest into a green development. Besides coal plants, 30 percent of solar and 90 percent of wind capacities were damaged, destroyed or occupied, according to the Ministry of Energy of Ukraine. The investment needs are therefore huge.

Energy efficiency

Another crucial issue to be addressed is Ukraine’s insufficient energy efficiency. Even though some serious progress has been made, especially in the residential and agricultural sector, the potential to further reduce emissions by using energy more efficiently is high. Ukraine’s energy intensity decreased more than in any other European country – while Russia became even less energy efficient in recent years.

But energy efficiency in Ukraine is still lower than in the rest of Europe, so that the country remains the second most energy-intense economy in the continent after Russia. “Our industry was inherited from the Soviet Union and the technology was extremely energy inefficient,” says Romanko, and “Fossil fuel operating enterprises and big energy companies did basically nothing to invest into greening the production and the technologies that they’ve been using.”

Amidst the ongoing war, the reconstruction of Ukraine has already begun. In all the destruction also lays the opportunity to transform the nation into a sustainable future, moving away from a carbon-intensive past.