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How Ukraine can accelerate European energy transition – interview with Deputy Minister of Energy, Mykola Kolisnyk

Mykola Kolisnyk will be one of the speakers at the Budapest Climate Summit, to be held on 7 December 2022.

It is difficult to build plans and speak about energy transition when Russian missiles deliberately destroy Ukraine’s energy infrastructure almost every day. However, Mykola Kolisnyk, Ukraine’s Deputy Minister of Energy says the global energy crisis can be a historic turning point towards a cleaner and more secure future, which presents multiple opportunities for Ukraine to become an engine of Europe’s energy transition and diversification.

“When Russia started to blackmail Europe with energy in the spring, everybody feared that this will be the death sentence of Europe’s green energy transition,” reminds Mykola Kolisnyk, Ukraine’s Deputy Minister of Energy.

Today, we can see this mood changing. The latest report of the International Energy Agency (IEA) said that the global energy crisis caused by Russia has triggered lasting changes that could accelerate the transition to a more sustainable and secure energy system.

“The energy world is shifting dramatically before our eyes. Government responses around the world promise to make this a historic and definitive turning point towards a cleaner, more affordable and more secure energy system”, underlined Dr Fatih Birol, Executive Director of the International Energy Agency.

Of course, these changes will not be instantaneous. According to the Agency, global emissions of fossil fuels will peak by 2025, as coal use falls within the next several years, natural gas demand plateaus by 2030 and oil demand levels off in the middle of the next decade before falling.

“Ukraine, as a part of Europe, cannot stay away. We must look ahead and propose concrete solutions to become an integral part of these global changes,” highlights Ukraine’s Deputy Minister.

Before Russia’s military invasion at the beginning of the year, Ukraine was confidently moving on a path of green transition to catch up with global trends. The country’s energy strategy set a goal to source 25 per cent of the total energy mix from renewables by 2035.

“I have no doubts that we would have achieved it,” says Mykola Kolisnyk pointing out that the prerequisites were already there. By the beginning of 2022, Ukraine’s total renewables capacity reached 9.5 gigawatts (GW) and investment in green energy was estimated to be around 12 billion US dollars.

However, Russia’s full-scale military intervention was a severe blow to Ukraine’s plans. According to a research conducted by REN21 and the United Nations Economic Commission for Europe (UNECE), by June 2022, nearly all of Ukraine’s wind power capacity (90 per cent) was out of operation, as was more than 30 per cent of its solar PV capacity.

Given that in 2021, Ukraine accounted for 30 per cent of the focus region’s total wind power capacity and for 60 per cent of its total solar PV power capacity, but the Russian-Ukrainian war has affected at least a quarter of regional wind power capacity and a fifth of solar PV capacity.

“However, there is a broad consensus that Ukraine will continue to be an attractive country for green energy investors and there is no doubt that with the help of our partners we will be able not only to restore the lost capacity but also to increase it,” underlines Mykola Kolisnyk.

As the Minister says, neither the energy crisis nor Russian military aggression will cancel Europe’s energy transition. Ukraine’s task in this context is to become a reliable partner which can support these efforts and, as Mykola Kolisnyk explains, Ukraine can provide solutions to some of Europe’s most pressing issues.

Becoming a part of the European gas market

In the summer, the European Parliament backed EU rules adding gas and nuclear power plants to the EU “taxonomy” rulebook from 2023, enabling investors to label and market investments in them as green.

Decisionmakers argued that the decision is temporary and necessary to ensure a smooth transition to green energy in the context of the growing energy crisis and the revival of coal mining.

“This could be beneficial for Ukraine, because we are sitting on one of the largest gas reserves in Europe estimated at 1.3 trillion cubic metres,” underlines the Deputy Minister, adding that this would be enough to cover domestic needs and to export part of the gas to Europe for at least 10-15 years.

Ukraine, which has of the largest underground natural gas storage facilities in Europe, combined with an extensive gas transportation system, aims to become an integral part of the European and the regional energy market. As the Deputy Minister revokes, Ukraine also made a big step forward by implementing EU codes to fully comply with the rules of the European gas markets.

“We can participate in sending natural gas flows from the Caspian region and the Baltic Sea and we can store and supply gas both to domestic facilities and to European consumers. Ukraine can become an important hub. Historically, we have been one of the largest consumers of natural gas, and after the war, volumes will bounce back,” confirms Mykola Kolisnyk.

Supporting Europe’s diversification in rare metals

According to the IEA, since 2010 the average amount of minerals needed for a new unit of power generation capacity has increased by 50 per cent as the share of renewables in new investment has risen.

Europe took the first steps already in 2020 to increase its sustainability in the value chain by creating the European Raw Materials Alliance, with the goal of building resilience and strategic autonomy for Europe’s rare earth and magnet value chains.

“We should note, that the same thing happened as in the case of Russian energy carriers. Europe, faced with energy blackmail from Russia, realised its vulnerability; dependence on one supplier and made a bet on diversification,” points out Ukraine’s Deputy Energy Minister.

As he explains, Russia’s military aggression against Ukraine, sanctions and countersanctions disrupted supply chains. Europe is already in a shortage of critical minerals, which is expected to further grow and the prices of final products will rise accordingly.

“The demand for lithium batteries in 2021 more than doubled compared to 2020 reaching a level of 340 gigawatt-hours (GWh),” explains Mykola Kolisnyk noting that under the Net Zero Emissions scenario, demand for lithium batteries is expected to reach 5,600 GWh by 2030, a 1,600 per cent growth.

As he points out, in reality, this growth will be even greater, because Europe has set a goal of reaching 25 million electric cars by 2040-2050 and US President John Biden signed a decree a year ago, outlining electric vehicles to make up 50 per cent of all vehicles sold in the United States by 2030.

“It is expected that 17.5 million electric cars will be sold in the US by 2030,” highlights Mykola Kolisnyk underlining that the lithium content in a standard electric car is about 9 kilograms.

Today, the main exporter of rare metals is China, making up 80 per cent of the market. Ukraine does not belong to the exporters of heavy metals and critical minerals, however, it has significant reserves.

“Confirmed reserves of lithium are the largest in Europe. In addition, we have explored reserves of titanium, uranium, zirconium, nickel, cobalt, beryllium, and graphite. Most of them are used in the production of renewables capacities and in the production of chips and microcircuits,” underlines the Deputy Minister.

“This is our historic chance. We must consider the European trend towards diversification and develop our export potential,” he says adding that of course, further exploration and development of these deposits will require time and significant investment once the war is over.

The current situation is extremely difficult. But as the Deputy Minister points out Europe and the world have already decided to shift to a green economy and climate-neutral energy and Ukraine plans to unlock its potential to help these efforts succeed.

The article was originally published on Epravda and was reprinted with the permission of the author.

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