Alexander Katsuba: Manifesto for energy independence

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Since the beginning of the Russian aggression in 2014, and especially after the full-scale invasion, we have come to value our independence and subjectivity. First and foremost, independence from those who are trying to kill you, deprive you of your own identity, or at least force you to follow their policies and interests. In fact, this is exactly what Russia has been doing for many decades. We did not immediately notice this, did not immediately realise that the empire had not changed after 1991, but only mimicked something new and modern. 

Among the other areas of Russian aggression – cultural, political, economic, informational, and ultimately military – a special place is occupied by energy. Attempts to monopolise the gas and oil markets, break into the nuclear power industry, and block the integration of Ukrainian and European energy have been going on for 30 years and are continuing even during the full-scale invasion. Russia uses various tools – bribery, political corruption, and has long used direct market influence and pressure. Discrediting Ukraine and its energy sector abroad has always played a special role.

We also made many mistakes along the way. We failed to build an adequate energy policy, implement antitrust legislation, develop alternative technologies and our own industry for the production of the necessary equipment and materials. And the first systemic energy saving programmes began to be implemented only after the annexation of Crimea and the Russian invasion of Donbas.

Therefore, we have had and still have objective problems with energy independence. We are dependent on external energy sources, our economy is one of the most energy inefficient in Europe, and we have no realistic energy strategy. And the document approved by the Ministry of Energy on the eve of the invasion is now outdated due to the demands of the times.

Russia’s war against Ukraine and global events in the world keep the issue of energy independence relevant for our country and economy. What does energy independence mean for a country? It is the ability to meet the needs of the national economy and all consumers with energy at prices that are adequate for economic development, without significant political or geopolitical risks, and taking into account the needs of environmental protection.

Achieving energy independence requires a clear and consistent government policy. We need political will. We need public investment in specialised education and research. Finally, huge investments are needed in the generation and transportation of all types of energy, as well as in energy saving to reduce energy costs per hryvnia of economic output.

And all of this requires an action plan. What should be our key priorities?

Priority No. 1 is to reduce Ukraine’s dependence on fossil fuels. And at least from imported fossil fuels. Because that’s what it is:

• It washes money out of the country and forces it to build complex political, economic and technological structures to get enough gas, oil, coal and refined products.
• It is a major source of pollution and long-term environmental and climate problems.

Until 24 February 2022, Ukraine was half dependent on Russian nuclear fuel even in the key nuclear sector, while the main source of oil and diesel fuel, critical for many sectors of the Ukrainian economy, was imports from Belarus.

We need to prepare the Ukrainian oil and gas industry to attract investment now. The more private production and processing there is, the better for the long-term prospects of the industry. Of course, only global or national giants can “pull” offshore production. But onshore production can be carried out by medium and small companies. There is also an urgent need to invest in nuclear energy (both in infrastructure development and engineering and research) and to finally put things in order at Energoatom.

Priority No. 2 is to improve the energy efficiency of the economy, utilities and everyday life of Ukrainians. We have to rebuild what has been destroyed using the latest technologies that minimise energy consumption. In addition, projects of businesses, households and local governments to introduce energy-efficient technologies should be financed by the state and cheap loans. A complete energy modernisation of an old house, school or kindergarten can reduce its energy consumption by 60-80%. Improving energy efficiency is an opportunity to reduce the share of sunk costs and achieve long-term economic growth.

Priority No. 3 is to ensure healthy competition. Reducing the power of energy monopolies at the national and regional levels is very important both for attracting investment and for developing the quality of services provided to businesses and private consumers. In addition, it is necessary to develop a strategy to gradually reduce the state’s influence on the industry. State-owned monopolies such as Naftogaz and Energoatom are holding back the development of the industry, and any attempts to make them effective are doomed to failure.

Priority No. 4 is to become part of the European market and complete harmonisation with EU standards. This will enable us to finance energy projects with cheap European credit instruments and long-term development programmes from the EBRD, EIB and the European Commission.

Priority No. 5 is investment in education, engineering schools and research in the energy sector. Without human resources and our own patents, we will not be able to develop the areas critical to true fundamental energy independence – the production of energy equipment, energy-saving materials, our own nuclear power plants and wind turbines. This may be the most difficult task of all. But it will determine our energy future not for 5-10, but for 50-100 years ahead.

In addition to being important for Ukraine, our energy independence is important for the entire continent. Ukraine’s energy independence is a component of Europe’s energy security. Energy is a major part of the potential of Ukraine’s integration into the European and global economic space, our exclusive opportunity to build a strong economic foundation for our long-term national success.

Businessman and public figure Alexander Katsuba