Ukraine’s own Green Deal aims to slash energy imports

Ukraine aims to cut its dependency on energy imports, like coal, nuclear fuel and gas. [Photo: Shutterstock]

Ukraine’s long-term climate plan could significantly cut reliance on energy imports, its energy ministry suggested last week. But a 2050 phase-out date for coal power has provoked disappointment.

According to new plans published by the ministry for energy and ecology last Tuesday (21 January), Ukraine will focus its efforts on energy efficiency in the coming decades, with the aim of slashing power demand by 50%.

Deputy Minister Sergei Maslichenko said the country must “reduce consumption in order to produce less. This can be done through the introduction of energy efficient measures. In the end, we have to reach 50% savings. It will also reduce energy imports by three times.” 

Ukraine is heavily reliant on imports of coal, gas and nuclear fuel.

Cutting energy dependency is a political priority in Ukraine, which severed ties with Russian gas in the wake of Moscow’s annexation of Crimea. In 2018, Kyiv still imported 10 billion cubic metres of natural gas via Hungary, Slovakia and Poland.

Russian gas will continue to flow across Ukraine to Europe though, under a transit deal brokered in December that will run until 2024. Fears about the bypass Nord Stream 2 pipeline in the Baltic Sea have upped the pressure on Kyiv to secure lucrative transit fees.

The proposed climate plan has estimated annual investment costs of 5% of GDP, which could be funded in part through an updated version of the existing carbon tax.

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Coal dump

While efforts to reduce Russia’s influence are welcome, the energy ministry’s pledge to take all coal power plants offline by 2050 has already been met with disappointment.

Under the current plan, Ukraine will achieve carbon-neutrality in 2070, two decades later than the EU.

Minister Alexei Orzhel acknowledged while presenting the strategy that coal could be shown the door before the mid-century deadline though, citing increased renewable energy investment as a main driver of decarbonisation.

Pieter de Pous from climate think-tank E3G also pointed out that Ukraine’s phase-out could come sooner than planned and drew a comparison with Germany’s own coal ambitions.

“It comes at a moment that Germany is backtracking on its commitments and planning to let almost half its lignite plants run as long as 2038. Fast forward along this track and the last coal plant to switch off in Europe may well be in Germany,” he told EURACTIV.

Leaked documents published by Der Spiegel last week showed that energy firm LEAG is set to profit from billions of euros in coal phase-out compensation payments, despite only pledging to ditch the fuel along a business-as-usual pathway.

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Renewable Ukraine

Ukraine’s climate plan targets a 70% share of clean energy sources by 2050, although green group Ecoaction pointed out that modelling done in 2017 showed that Ukraine could hit 91% renewables by the same date.

“The aim declared in the concept could and should be more ambitious. In addition, the price of renewables falls annually,” said Ecoaction energy expert Kostiantyn Krynytskyi.

Ukraine is indeed looking seriously at mass renewables deployment and on Friday (24 January), a key advisor to President Volodymyr Zelensky revealed that the state is in talks with clean energy developers about boosting investment.

“We are […] talking about an alternative incentive mechanism, a new model that we will offer and that investors will be able to volunteer for,” Yulia Kovaliv said during an event at the World Economic Forum in Davos. 

Nuclear energy is classed as carbon-neutral in the strategy but its share in the energy mix is supposed to drop from roughly 50% to just 20-25%. The idea is to deploy small experimental modular reactors and extend the operating lifetime of existing reactors.

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Western funding

New clean energy projects could count on the support of European money, after the European Bank for Reconstruction and Development (EBRD) said on Thursday (23 January) that it would launch a new programme worth €50 million for the EU’s neighbourhood.

The EBRD expects its new scheme to generate added investment of around €500m and deliver an extra 340MW of clean power capacity.

“It will cut greenhouse gas emissions, first in Ukraine and then in countries in the EU’s southern neighbourhood, with a particular focus on Jordan, Lebanon and Tunisia,” said EU enlargement boss Olivér Várhelyi.

But the road ahead still appears to be a long one for the Eastern European country. As of 2019, renewables only make up roughly 5% of Ukraine’s energy mix, although new figures suggest that installed capacity doubled in 2019.

After the proposed plan makes its way through the legislative gauntlet, one of the next major milestones will be in 2035, when Ukraine must hit a 25% renewables target. For comparison, the EU has set a 32% benchmark for 2030. 

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Climate-neutral Europe?

The European Commission has advertised its 2050 climate strategy as the blueprint for “Europe to become the first climate-neutral continent”, suggesting that its greening effect will not be limited to the EU’s borders.

But climate policies in Europe’s 17 non-EU countries (according to UN definitions and post-Brexit), cast doubt on whether the continental climate-neutrality goal will be realised.

According to Eurostat data released last week, some of the countries aiming to join the EU are flagging when it comes to renewable energy. Serbia gets about 20.3% of its power from clean sources but it has a 2020 target of 27%.

Neither Albania nor North Macedonia, two countries aiming to start membership talks with Brussels, have yet reached their goals either.

Montenegro though has smashed through its 33% target and as of 2018 has sourced 38.8% of its needs mainly from hydropower and wind turbines. Solar power potential remains untapped.

EU applicants will have to align their policies with bloc rules before joining, so the climate-neutral continent objective may become easier to achieve if enlargement policy leads to more members. 

For those that do not end up in the club, the EU’s climate negotiators will have to rely on the promised financial benefits of green investments coming good and provoking copy-cat policies elsewhere. Failing that, a mooted EU carbon border tax on imports might force the hands of neighbouring countries.

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[Edited by Zoran Radosavljevic]

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