Europe

#Ukraine – A high-potential renewable energy partner to the EU #DTEK

Despite the impact of COVID-19, Europe’s renewable energy sector has shown its resilience and will form a key part of the EU’s Green Deal-centred economic recovery, writes DTEK CEO Maxim Timchenko.

As the CEO of Ukraine’s largest energy group, I know that Ukraine has massive potential as EU’s partner in this sector, but we need to ensure that the right domestic and international frameworks are in place to further unlock and finance that potential.

As our largest trading partner, the EU’s political agenda has significant bearing on Ukraine, and the Green Deal presents a huge opportunity for development and economic growth. This makes our alignment with the EU on energy and climate matters all the more imperative.

Ukraine’s 2035 Energy Strategy has committed the country to increasing the share of renewables to 25% of the total energy consumption by 2035, alongside significant increases in energy efficiency. In 2019, Ukraine produced 5.6 billion kW of green energy, which is only 3.7% of total electricity consumption in Ukraine. To reach even such a modest level, more than €10 billion has been invested by DTEK. In fact, the renewable energy sector was the only energy industry in Ukraine which succeeded in attracting investments, building new capacity and creating new jobs. This makes it all the more critical for us to not stop at the achieved level in order to both realize the goals of the Ukraine’s Energy Strategy and adhere to the Green Deal. 

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Today, domestic discussions between the government and industry concerning the choice of mechanism to further support the development of green energy are ongoing. If we are serious about tackling climate change; about laying the groundwork for future generations, then we must be prepared to invest in it. We need to find the right balance between decarbonization and the economic impact on business and consumers.

With investors increasingly looking to sustainability-compliant projects and companies, adopting environmental, sustainability and governance (ESG) principles into strategic planning will be economically advantageous in the long run.

Other mechanisms, such as the issuance of green bonds, can also be highly effective in attracting investment from both inside and outside the country. In fact, DTEK, as recently recognised by the Climate Bonds Initiative – green energy pioneer award, has benefitted greatly from being the first Ukrainian company to issue green bonds last year.

But, companies cannot go it alone. We need domestic and international political and financial frameworks to enable long-term investment into green technologies and infrastructure. We must go beyond quick-fix financing if we are to truly transform into a green economy. To effect long-lasting, systemic change, we must adopt new approaches which overcome barriers to structural change – whether institutional, regulatory or financial – and in turn, also create knock-on incentives for further investment in innovation and low-carbon technologies.

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Concretely for Ukraine, we must pursue greater dialogue with the EU and international financial institutions (IFIs). The EIB, for example, has already amended its financing priorities towards green projects, which could help accelerate the renewables sector in Ukraine significantly.  We also need to apply a coherent approach domestically, involving political, industrial and civil society actors across Ukraine. For example, we know that coal-reliant communities will be affected as we decarbonise our economy, so it will be vital to achieve consensus and agreement on the implementation of a just transition programme. This will require active partnership and close cooperation across local, national and European levels.

Undertaking a green transformation isn’t easy for any economy. However, Ukraine has already proven how much potential we have to be a key contributor to the EU’s Green Deal, and a leader on renewable energy in the region. To drive this, DTEK aims to achieve carbon neutrality by 2040 and drive the transformation Eastern Europe. What is certain is that we are only at the beginning of this long road, and the realization of Ukraine’s potential will rest in our ability to align financial, political and regulatory support domestically, and with the EU.

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