Transforming Ukraine into a Promoter of Europe’s Green Transition
As Ukraine continues to focus on winning the ongoing war, there is a need to prepare for what comes next, including economic plans for a post-war Ukraine. The country’s recovery conference in London offers an opportunity for its friends to join the plans. One of the most ambitious plans is to transform Ukraine into an advocate for Europe’s green transition by investing in carbon-free energy and rebuilding the country. Ukraine’s natural resources and nuclear sector can provide services for green hydrogen, and its metalworking tradition and cheap labor force can fill a supply shortage in manufacturing and processing.
The Benefits of Ukraine as a Hub for Europe’s Green Transition
Ukraine is well-suited to become a hub for Europe’s green transition, offering benefits such as geographical proximity to the European Union (EU), significant natural resources for renewable energy generation, and nuclear expertise. Additionally, Ukraine can fill a supply shortage in manufacturing and processing as the EU seeks to diversify from China. Green steel, chemicals, and lithium processing are some examples. Such a vision would benefit both the EU and Ukraine and provide the narrative and conceptual coherence needed for a whole-hearted commitment to rebuilding the country.
Challenges in Rebuilding Ukraine
While the ideas for rebuilding Ukraine are promising, there are challenges in mobilizing the broader financial support that reconstruction requires beyond ordinary budgetary aid. Without confidence in sufficient public funding, private investment will fall short of the required amounts. To secure voter and corporate support for Ukraine’s long-term recovery, Europe must see it as essential to their interest. To achieve the vision of a decarbonized energy supplier and a substitute for China’s green industry supply chains, investment opportunities for investors should get communicated adequately, and the role of governments in leading structural transformation needs to find the right balance to minimize excessive quandaries.
Conclusion
The vision of Ukraine becoming a hub for Europe’s green transition provides hope for the successful rebuilding of the country after the war. Investment opportunities should get communicated effectively, and the right balance needs to get set between the government and the private sector. As Ukraine focuses on winning the ongoing war, economic plans for a post-war Ukraine must get discussed to minimize the risk of losing the peace. With the EU at the peak of the green transition, Ukraine is well-suited to transform itself into an advocate for Europe’s green transition and rebuild the country at higher initial costs with net-zero compatible standards and technologies.
Additional Piece:
“Rebuilding Ukraine for a Sustainable Future”
Ukraine has faced immense challenges in recent history and has suffered the consequences of war, energy insecurity during the winter campaign, and political turmoil. The COVID-19 pandemic exacerbates this situation, making it even more urgent to rebuild the country from the ground up.
A bold vision for a sustainable future can serve as a rallying point for Ukraine’s recovery and transformation. By focusing on a decarbonized energy supplier and substitute for China’s green industry supply chains, Ukraine can differentiate itself and give investors the confidence to back its reconstruction. By offering a ready-made market, EU-based green industry companies could expand their operations in Ukraine and benefit from accelerated learning curves that will reduce their costs.
Rebuilding Ukraine with net-zero compatible standards and technologies will provide the country with a more sustainable future by leveraging Ukraine’s significant natural resources for renewable energy generation and nuclear expertise. The country’s strong nuclear presence can provide services for green hydrogen, while its metalworking tradition and low-cost labor force can fill a supply shortage in green steel, chemicals, and lithium processing.
The road ahead towards Ukraine’s recovery and transformation will not be straightforward, and many challenges need addressing. Political leaders and investors alike need to strike a balance between government oversight and private-sector entrepreneurship to achieve the desired outcome. A top-down approach with clear direction is critical to maintain coherence, avoid excessive bureaucracies, and channel investment resources towards the most critical areas.
The time for action is now. While the international community’s attention may wane, Ukraine’s need for reconstruction and transformation remains. It is an opportunity to pave the way towards a sustainable and greener future, making Ukraine a hub for Europe’s green transition.
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In the first place in the minds of Ukrainians and their friends is the need to win the war. But delaying preparations for what comes next could risk losing peace. Kiev is aware of this and economic plans are being formulated for a post-war Ukraine. Ukraine’s recovery conference in London this month will be an opportunity for the country’s friends to join the plans, metaphorically and literally.
The most ambitious vision is to transform Ukraine into a promoter of Europe’s green transition. Carbon-free energy should be a key target for investment in rebuilding the country, according to Rostyslav Shurma, deputy head of the Ukrainian president’s office in charge of economic policy.
With the EU “at the peak of the green transition,” Ukraine offers a number of benefits, he told me in Kiev in April: geographical proximity, significant natural resources for renewable energy generation, and a nuclear sector that can service of green hydrogen. The country’s strong metalworking tradition, combined with a relatively cheap labor force, means it can fill a supply shortage in manufacturing and processing as the EU seeks to diversify from China. Shurma listed green steel, chemicals and lithium processing as examples.
This vision makes strategic and economic sense for the EU and Ukraine. The relevant expertise is there: Ukraine has undoubted nuclear expertise, and has managed to connect its electricity grid with that of the EU in times of war. Even after Vladimir Putin’s winter campaign to bomb its energy infrastructure, Ukraine has once again become a net exporter of energy to Europe.
Seeing Ukraine as a hub for Europe’s green transition would provide the narrative and conceptual coherence needed for a wholehearted commitment to rebuilding the country. Once the immediate drama of war is over — hopefully soon — less of Europe’s political attention will be focused on Ukraine, let alone the United States which may be in the grip of isolationist temptations or worse. THE plans underway in Brussels for a four-year budget support pledge intended to push Washington into something similar, they are welcome.
But there is not yet a strong political will to mobilize the much broader financial support that reconstruction will require beyond ordinary budgetary aid. Without confidence in sufficient public funding, private investment will fall short of the required amounts. (Shurma expects 70-80 percent of total reconstruction spending, more than the $400 billion in an estimate led by the World Bank — will consist of private money.)
So just as the US saw Marshall aid as the tool to shape postwar Europe in its image and create new markets for its booming output, Europe today must see Ukraine’s rapid recovery as essential to your interest. To secure voter and corporate support for Ukraine’s strong long-term support, look not to their altruism but to their advantage of having a decarbonized energy supplier, a substitute for China’s green industry supply chains, and a contributor to the hydrogen economy, right at the EU border and finally inside it.
This ambition would help focus planning and allocation of reconstruction spending, bridge divisions in Ukraine and between the country and its donors over what to finance, and signal clearly to the private sector where investment opportunities lie. If, furthermore, Ukraine is rebuilt at the admittedly higher initial cost of net-zero compatible standards and technologies, such as proposed from the US think tank’s German Marshall Fund and others, EU-based green industry companies would have a ready-made market into which to expand. This should accelerate learning curves and reduce costs for their home markets as well and help them keep up with or catch up with Chinese competitors faster.
Questions about these plans can legitimately be raised, such as the risk of excessive dirigisme in a country working to get rid of the remnants of its Soviet legacy. But the biggest risk would be the lack of top-down direction. Even in the West, the era of leaving things to the market is over. All countries need to find the right role of government in leading structural transformation.
Another question is whether this is too ambitious and long-term to meet Ukraine’s most pressing needs. All the more reason to agree on the direction now, so Kiev can invite investors to propose projects for pre-authorization, so as to start building as soon as security allows. Economic predictability, meanwhile, requires support ranging from war insurance to security guarantees and boosting Ukraine’s air power.
Ukraine’s military prowess, its diplomatic agility and the unity of the West in its support have all exceeded expectations. Their economic policy must now do the same.
https://www.ft.com/content/8d231ec5-85e4-45a2-bbe0-9114be993dfb
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