Ukrainian President Volodymyr Zelenskiy laid out a vision of Ukraine as a “hub for modern green energy” in Europe to over 1,000 Western leaders and top European businesspeople in his comments to the Ukraine Recovery conference on June 21.

His speech also coincided with the UN releasing a report the day before that said renewables could power 80% of Ukraine economy by 2050.

At this second recovery conference, delegates assembled to thrash out ideas for rebuilding the country and where the money will come from after the fighting ends.

Zelenskiy’s remarks to the audience were peppered with references to clean energy and renewables. He suggested that as part of a “build back better” effort to repair the estimated $411bn worth of damage Russia has done, Ukraine should embrace the green revolution.

The vision was very similar to the scenario laid out by bne IntelliNews last year “Fourth Russia – Green Ukraine” that was part of a series of speculative pieces on what a post-war Europe could look like.

Ukraine’s renewables sector was already well advanced before the war started thanks to generous green tariffs for power offered by the previous Poroshenko administration that pulled in some $5bn of domestic and international investment to take the renewables share in the power mix up to circa 25%.

As Russia has been targeting Ukraine’s energy infrastructure, Zelenskiy is suggesting that as part of the reconstruction, more money should be invested into increasing the renewables share. The UN estimates that $30bn will need to be invested into renewables per year to achieve its goal of 80% by 2050.

“Every strike on Ukraine’s energy facilities and every manifestation of Russian blackmail with an energy crisis spells the end of the era of fossil fuel dominance, when entire regions would depend on a single supplier like Russia,” Zelenskiy told the London conference. “The potential of this industry alone is about $400bn.”  

Green rebuild

The devastating war in Ukraine has left the country in urgent need of rebuilding critical infrastructure, particularly its energy system. Currently Ukraine relies heavily on fossil fuels, accounting for approximately 70% of its primary energy supply in 2020. However, the Russian invasion has resulted in the occupation and destruction of key energy infrastructure, leading to a significant decline in energy supply and a 40% decrease in electricity demand by October 2022.

There is a lot of potential and a lot of the ground work has already been done. Bioenergy, hydro, solar and wind generation could serve as the foundation of Ukraine's future energy system, contributing up to nearly 80% of total energy generation by 2050, the United Nations Economic Commission for Europe (UNECE) said in a report. It has developed pathway scenarios using its Carbon Neutrality Toolkit, which offer insights and recommendations for Ukraine's energy transition.

Ukraine's energy intensity is currently three to four times higher than the European Union average due to factors such as high demand for residential heating and an energy-inefficient industrial and building infrastructure. By prioritising energy efficiency improvements and electrification, Ukraine could achieve a substantial decrease in energy intensity of up to 60% by 2050.

Decarbonisation efforts across all sectors are crucial to reduce reliance on fossil fuels. The report estimates the potential for a decline in fossil fuel dependence by 93% in the transport sector, 97% in the industrial sector, and nearly 100% in buildings by 2050.

As Ukraine transitions to a carbon-neutral energy system, there would be a doubling of electricity demand. However, this transition would also enhance the resilience and independence of Ukraine's energy system, making the country self-sufficient in terms of primary energy to the extent of 98% by mid-century. Such a transformation would not only contribute to energy security but also mitigate the impact of regional and global energy crises on Ukraine.

Achieving these ambitious goals necessitates massive investments. It is estimated that annual investments need to increase by €30bn per year, equivalent to approximately 15% of GDP, by 2050 across various sectors such as transport, residential buildings, industry, power generation and renewables.

Energy investments alone would require €9.5bn annually, with additional investments needed in energy infrastructure such as power grids, heat networks and gas pipelines. Prioritising investments in clean and efficient end-user devices, along with significantly increasing investments in power generation technologies like batteries, bioenergy, wind and solar, will be critical to achieving carbon neutrality.

It is important to note that these scenarios are built on the assumption that all occupied territories are restored and that captured and damaged production facilities are returned and recovered by 2025. Imports and exports of hydrogen, biomethane or other green fuels/energy have not been considered in this analysis.

Ukraine faces significant challenges in rebuilding its energy system after the war, but by embracing renewable energy sources, prioritising energy efficiency and making substantial investments, the country can move towards a sustainable and carbon-neutral future.