Building back greener: a roadmap for rebuilding post-war Ukraine

Destroyed Russian military equipment exhibition on Saint Michael's Square. Photo: Dati Bendo / European Commission

However, Russia’s ongoing war in Ukraine has forced not just leaders in Kyiv, but also in Brussels and EU member state capitals, to review these targets. With Russia openly threatening to cut off gas supplies and with winter quickly approaching, carbon neutrality and fossil fuel dependence suddenly seem less important than keeping the heating turned on this year. The impact of the war has created an energy crisis not just for Europe, but for the entire world. World leaders were not prepared for such a shock; they had no “Plan B”.

However, as early as 2015, they had at least laid the foundations for such a plan by committing to the UN’s Sustainable Development Goals. Yet despite this commitment, in reality, little progress has been made towards their implementation. Cheap fossil fuel, especially from Russia, benefited EU economies and huge industries, while the drastic, long-awaited energy transition was postponed.

Rethinking energy security

The term “energy transition” encompasses a global shift from fuel, such as coal, natural gas and oil, to renewable energy sources such as geothermal, hydro, solar and wind. This list is by no means exhaustive, both because new technologies or sources (such as clean hydrogen) are emerging and because experts and policymakers continue to debate whether nuclear energy should be included. Yet a wide expert consensus supports the shift towards generating energy from sources with no or minimal emissions of greenhouse gases, including methane and carbon dioxide. Hence, the EU Green Deal envisages the full decarbonisation of the European continent.

However, it is important to highlight that the EU cannot achieve its energy transition goals without Ukraine, which is the largest country entirely within Europe and one that borders four EU member states. In June, Ukraine received EU candidacy status, which will potentially open doors for additional funding from Brussels. Reconstruction plans, supported by the EU, should definitely include investment in cleaner energies. Both renewable and alternative energy sources should be given priority by both Kyiv and Brussels as an integral part of the future post-war recovery of Ukraine. Successfully implementing an energy transition will help both sides prevent the future consequences of climate change and address those being felt even today.

As a future EU member – and current oil/gas transit state – Ukraine’s energy security challenges are in a real sense also those of the EU itself. Continuous Russian targeting of Ukrainian critical infrastructure, as well as the underfunded state budget and the large role of state-owned enterprises in its energy sector, all represent considerable obstacles. They must be taken into account by all relevant stakeholders when designing new policies. The war has forced the EU to rethink its energy security. However, even though most discussions in Kyiv are centred around ramping up domestic oil and gas production due to short-term needs, Ukraine will have to review its vision for energy security and prepare to catch up with its EU counterparts.

Yet, to be able to integrate into the EU energy system and adopt the energy transition paradigm in the medium term, Ukraine first needs to do its homework by fully aligning national legislation with that of the EU in all relevant spheres. Thankfully some of this work has already been undertaken. For example, in 2019-21 Ukraine made significant progress by completing the complex legislative process of unbundling its gas and electricity transmission system operators from energy producers.

Clearly, Ukraine has great potential to become one of the biggest hubs in Europe in both producing and exporting clean energy. However, a coherent and broad strategic policy umbrella needs to be first developed. While Ukraine has great potential to develop wind, solar, geothermal, and even hydrogen power generation for both domestic use and export to the EU, as of now the government has no clear vision of what the future holds for the country’s energy security and supply. It needs to develop such a vision urgently, in close cooperation with EU institutions.

A new plan

At a minimum, Ukraine’s government should recognise that its Energy Strategy 2035 document (drafted in 2017) has been made irrelevant by the realities of war. According to a study by the Kyiv School of Economics, Russia’s invasion has caused a total of 103.8 billion dollars in damage to Ukraine’s infrastructure. The coal mining industry, concentrated in Eastern Ukraine, has suffered much more, and gas extraction relatively less. However, the war alone will not automatically make Ukraine’s energy future less carbon intensive. Without a clear vision of the future and the strategy to implement it, no meaningful change is possible. Despite the obvious ongoing challenges related to the active phase of the war, once the situation is stabilised both parties should jointly work out strategies and action plans on designing a future place for Ukraine in the EU’s energy transition.

Due to the loss of many key industrial facilities and significant housing stock, Ukraine is literally faced with a giant reconstruction project. To meet this reality, Ukraine needs to devise new energy efficiency targets. Given the carbon intensive nature of construction as a whole (globally the sector accounts for almost 40 per cent of carbon emissions), energy efficiency targets could have a huge impact on not just regional but also world climate targets. In the previously adopted national plan covering the period until 2030, Ukraine’s energy consumption that year should not exceed 91.5 million tonnes and 50.5 million tonnes of oil equivalent. However, due to  aforementioned reasons these targets could be reviewed and made more stringent. Furthermore, the plan could be revised by including carbon capture and storage technologies. Other modern solutions worthy of inclusion in a revised plan include battery storage, heat transition, hydrogen and biogas production.

Recently, the EU adopted an ambitious plan, called REPowerEU, to increase energy efficiency, produce clean energy and diversify energy supplies. Ukraine should endeavour to incorporate this plan into its future reconstruction, thereby opening up new channels of financing for pilot initiatives and large industrial projects alike. Eighty-five per cent of Europeans believe that the EU needs to decrease its dependence on Russian oil and gas, and from a geopolitical perspective such a move will make the EU stronger and more resilient to possible energy shocks in the future. There is no doubt that dependence on fossil fuel should be minimised. However, wise strategies on investments should be worked out by governments in close cooperation with private companies (from both SMEs and larger businesses) and civil society experts to make cleaner energy affordable and competitive. In this way, the temptation to return to higher use of fossil fuels simply because of price will be lessened. Commitments aligned with real action plans for the development of more alternative energies and investment in renewables will ensure that the EU and Ukraine make fundamental and irreversible changes on the path towards what should be a shared energy transition.

Controlling costs

Energy supply shocks will be an inevitable part of the energy transition journey, accompanied by price fluctuations and even inflation. Thus, to safeguard the economies of EU states and Ukraine alike, resilience and energy diversification should be increased within the next several years to mitigate the negative effects of macroeconomic volatility. Transparency and openness to civil society monitoring are also vital ingredients in a green recovery for Ukraine. Both independent experts and the general public should be able to influence policy and decision-making processes related to the energy transition. Independent civil society-state platforms, advisory bodies at the central and local government levels, e-democracy tools such as e-appeals and e-petitions, public consultations, and participatory budgets should be further developed using the policy and decision-making principles set out in Ukraine’s existing European integration commitments.

The war has caused irreversible damage to many cities, towns and critical infrastructure. At the same time, given the need to construct new residential and industrial buildings and to diversify its energy supply, Ukraine will have a unique chance to incorporate climate friendly and durable approaches into its post-war recovery. The EU should ensure that reconstruction is carried out according to the latest green principles. Moreover, with solid expertise from individual member states, the EU can advise on the best approaches to be adopted by Ukraine at both the local and national level.

Ukraine can play an important role in the EU’s energy transition. A green agenda should be prioritised as a part of the post-war recovery of Ukraine. Its integration into the EU’s energy market and energy transition priorities should become key targets not just for the EU, but for other external donors and international financial institutions. For both Brussels and Kyiv, there is no acceptable geopolitical alternative besides a complete transition away from fossil fuel usage. Accordingly, close cooperation between the two parties is a necessary and essential part of mitigating climate change effects on the European continent.

Given Ukraine’s huge potential, some prioritisation is necessary. The country possesses large oil and gas pipelines that could be potentially used for hydrogen exports, as well as wide areas of high winds or dry and warm climates ideal for wind and solar power generation respectively. The state also benefits from nuclear power plants and agricultural capacities for biogas production. Accordingly, it is necessary for both the EU and Ukraine to quickly bolster the state’s energy security, as well as develop a strategic yet concrete vision of how Kyiv can participate in the future medium-term energy transition of the EU.

Oksana Khomei is a fellow at the Netherlands Institute for Advanced Study.

energy, green transformation, reconstruction, Ukraine