Ukraine celebrates 30 years of independence. This is a significant milestone in our country’s history. For three decades, we have been steadily building the country dreamed of by previous generations. Much success has been observed along the way. However, there is even more work ahead of us. Fortifying our energy independence has always been and will continue to be an important factor in determining Ukraine’s de facto political independence.
Today, in the same vein as 30 years ago, Ukraine is one of the largest energy markets in the world. An important characteristic of how we have grown stronger over the years is that every energy sector in Ukraine has maintained self-sufficiency.
Energy production drops
However, over the years, our local gas, oil, and coal markets have shrunk significantly. In 1991, we produced 135.5 million tons of coal. Yet today, this figure stands at only 28.8 million tons.
Natural gas production has also declined over this period, from 24.4 billion cubic meters in 1991 to 20.2 billion cubic meters today.
Despite this, we have seen positive structural changes in the electricity sector, namely the 8% share of electricity now produced from renewable energy sources.
Alarmingly, we are still dependent on imports for a third of our energy.
According to the International Energy Security Index, a ranking of the world’s 25 largest energy markets, Ukraine has been consistently placed last. Notably, for instance, neighboring Poland has moved from 22nd to 12th, and China from 23rd to 8th position on the list.
A natural question arises, what needs to be done to ensure real energy independence? Where should our efforts be directed to achieve energy security?
Move to decarbonization
First of all, it is decarbonization.
Decarbonization broadly presupposes a fundamental transformation of our economy.
On the one hand, it is a very complex task that depends, among other things, on political will.
On the other hand, there are very specific steps to be taken in adopting new technologies, creating new business opportunities, and devising new economic models which should be based on the experience and goals of European countries under the Green Deal. Ukraine needs to attract investment and direct funds towards the development and transformation of its own economy, especially the energy sector, to ensure the competitiveness of our goods and services in world markets.
Today, Ukraine can make a significant contribution to decarbonizing the European continent, and even become a leader in decarbonization in Eastern Europe. After all, the synchronization of plans for the clean energy transition is a practical implementation of our country’s course towards European integration
Decarbonization is a global trend that no company or country can ignore today. Over the past few years, Ukraine has managed to provide the preconditions for large-scale changes in the renewable energy sector and to embark on a gradual phaseout of coal-fired generation. In DTEK’s New Strategy 2030, we support this trend and strive for at least 33% of DTEK’s electricity to come from renewable sources. By 2040, DTEK seeks to achieve carbon neutrality.
EU integration
Achieving energy security for Ukraine also means pursuing integration into European Union markets. Ukraine is slowly moving in this direction: a liberalized market was launched two years ago, and the RAB system for grids was introduced last year. But in the next two years, we need to complete the energy sector reform and stop the practice of market interference. It is a matter of political will because synchronisation with EU markets is of geopolitical importance, as there are forces that want Ukraine to remain connected to Russia’s power systems. Therefore, aligning with the European energy system should become our national goal.
Trust is key
The path to energy independence is fully in line with the national interests of both the government and private players in this market. To expedite this process and ensure its success, we need to work through partnerships, and that requires trust. Over thirty years, we, as a society, have already learned to trust and unite at critical junctures throughout our history. We are well able to consolidate our forces to combat danger, and the latest evidence of this has been the joint and swift action taken by the private and public sectors in the fight against the COVID‑19 pandemic. Now we must learn to combine our efforts to create something new, to create vision and models of a common future. Trust in relations between the government, private business, and society is the key to strengthening Ukraine’s independence and achieving energy self-sufficiency.
Maxim Timchenko is the CEO of DTEK, Ukraine’s largest private energy company.
