By mid-March, the first stage of Ukraine’s newest renewable energy project – 19 turbines with a capacity of 114 megawatts – was completed. None of the workers had been killed or injured, and the turbines began to generate much-needed electricity a few weeks later. During a time of war, when Ukrainian infrastructure everywhere was being turned to scrap by Russian missiles, the achievement was nothing short of heroic. 

For DTEK, the Ukrainian energy company that owns the project, the launch of the wind farm – which officially opened this week – was not just an act of defiance in the second year of the Russian invasion; it was an act of strategic desire and necessity. 

DTEK in particular – and Ukraine in general – wants to play a role in the European Union’s clean-energy drive, whose goal is to achieve net-zero emissions by 2050. The company also wants to clean up its own act, since grubby old coal plants provide the vast bulk of its electricity generation. “I am more than confident that we can be one of the main providers of green energy to Ukraine and the EU,” DTEK chief executive officer Maxim Timchenko said in an interview in April in Rome, where he was trying to drum up financial support from international financial institutions at a Ukraine reconstruction conference. 

DTEK is Ukraine’s biggest privately owned generation company, producing about a quarter of the country’s electricity. It’s owned by Ukraine’s richest man, Rinat Akhmetov, who, like many Ukrainian and Russian oligarchs, made his fortune after the collapse of the Soviet Union by snapping up natural resources and heavy industries on the cheap. Forbes magazine put his worth at US$4.3 billion earlier this year, down from more than US$9 billion before the start of the war in February 2022. Many of his most valuable businesses, including the massive Azovstal steel plant in Mariupol, were seized or demolished in Russian offensives in the spring of 2022.  

The effort to keep the lights on has been cruel to DTEK and Ukrenergo, the government-owned national transmission company. (On one of my Ukraine stints in late 2022, while I was covering the war for The Globe and Mail, the electricity and heat in the Kyiv bureau apartment were off nearly half the time). By the end of last year, relentless Russian attacks, initially on the transmission system, then on the generating stations themselves, including a small DTEK solar plant, had cut Ukraine’s total generating capacity by more than half. 

I am more than confident that we can be one of the main providers of green energy to Ukraine and the EU.  

 

–DTEK CEO Maxim Timchenko 

Much of the lost capacity has been restored, though all six of DTEK’s main generating stations in Ukraine-controlled areas have suffered severe damage, and two others were overrun by Russian forces. In the first 15 months of the war, DTEK lost 173 employees on the front lines. Another 474 were injured, 37 missing and five in captivity. Three of them died at plants that came under Russian attack; one died when he stepped on a landmine while repairing a power line near Kyiv. 

The company’s renewables-and-decarbonization strategy began in earnest in 2009, when only about 3% of the country’s electricity supply came from renewable energy. By 2020, the share had increased to more than 12%, with solar leading the mix, followed by hydro, wind and biomass. A hefty feed-in tariff – a guaranteed above-market price for renewable energy delivered to the grid – propelled the rise of wind and solar, which together supplied almost two-thirds of Ukraine’s renewable energy before the war. Ukraine’s pre-war goal, still very much in place, is to raise the share of electricity from renewables to 25% by 2035. 

The war has set back DTEK’s renewable energy rollout by years – but has not killed it. 

As the Center for Strategic and International Studies, a Washington think tank, pointed out, the highest potential for wind and solar development is in areas that are now under Russian control. Ramping up Ukraine’s renewable energy program depends in good part on recapturing those areas, located in the south and the east of the country. At the same time, private financing for these projects dried up, since investors had no interest in supporting projects that could get destroyed by Russian missiles. That left DTEK begging for loans from the World Bank, the European Bank for Reconstruction and Development and other international financial institutions. “The key problem for us is financing,” says Oleksandr Selishchev, the chief executive officer of DTEK Renewables. 

Additional stress came from the Ukraine Ministry of Energy, which, under pressure from a government on financial war footing, froze most payments to wind and solar operators shortly after the war started. Those payments have since climbed, though are still short of normal, breathing some life into near-dead projects. 

DTEK’s first bit of good news came last November, when the successful Ukrainian counter-offensive liberated Kherson in the country’s south, allowing a 10-megawatt solar plant in the village of Tryfonivka to be returned to Ukrainian hands. At the same time, DTEK was well on its way to completing the Tyligulska wind project to the west, near Odesa. Using turbines supplied by Denmark’s Vestas, the project is one of the biggest of its kind in Europe, with a total cost of US$450 million. The second stage, to be completed in 2024, will take the capacity to 500 megawatts, when 83 turbines are scheduled to be in place. 

Tyligulska has great practical value to DTEK and Ukraine. The turbines will partially compensate for the loss of power in damaged DTEK coal plants and Ukraine’s off-line nuclear plants and should be reliable generators even in times of war. They will be hard to destroy en masse since they are spaced hundreds of metres apart on 200 hectares of land. Well-aimed missiles could take out one or two of the turbines but not the whole project. The symbolic significance is even greater, because it delivered the message to the EU that Ukraine is determined to become a green-energy export power. 

 

The key problem for us is financing.

 

– Oleksandr Selishchev, CEO of DTEK Renewables

 

Ukraine exported electricity to Moldova, Hungary, Slovakia and Poland before the war and recently resumed those sales as it rebuilt its transmission lines and power plants – its grid is now entirely detached from Russia’s and interconnected with Europe’s. The country has obvious competitive advantages to play the green game. Ukraine has ample land, meaning that it is unlikely to see the NIMBY campaigns that have stalled or crippled many wind projects in Europe. Certain parts of the country have high wind speeds, and the permitting process is faster than in Europe. Add in a relatively low cost of labour and energy production, and Ukraine will certainly have a seat at the export table. It also knows that certain European countries are setting themselves up for power shortages. Coal power stations are on their way out, and Germany in April closed the last three survivors of its once vast fleet of nuclear plants. 

To be sure, there are obstacles. Ukraine’s power project will always have a higher cost of capital than those in Europe, and the country needs to institute a robust permitting process that would allow DTEK and other power producers to prove that their renewable energy truly comes from sustainable sources. Then there is the war, which could drag on for years, making it difficult for Ukraine to finance power projects of any kind. 

Still, U.S. Energy Secretary Jennifer Granholm said last year that Ukraine is determined to become “a clean energy powerhouse and energy exporter to the European Union.” The war has slowed Ukraine’s energy revolution. But the completion of the first phase of Tyligulska wind farm and the resumption of electricity exports to Europe, even as the bombs and bullets rained down on the country, showed that Ukraine’s direction is set and carries a distinct shade of green. 

Eric Reguly is the European bureau chief for The Globe and Mail and is based in Rome.  

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But thanks to a combination of preparation and luck, Europe has avoided blackouts and power cutoffs. Instead, less wealthy nations like Pakistan and India have contended with electricity outages on the back of unaffordably high global natural gas prices. As a global energy policy analyst, I see this as the latest evidence that less wealthy nations often suffer the most from globalized oil and gas crises.

I believe more volatility is possible. Russia has said that it will cut its crude oil production starting on March 1, 2023, by 500,000 barrels per day in response to Western energy sanctions. This amount is about 5% of its current crude oil production, or 0.5% of world oil supply. Many analysts expected the move, but it raises concerns about whether more reductions could come in the future.

How Europe has kept the lights on

As Russia’s intent toward Ukraine became clear in late 2021 and early 2022, many governments and energy experts feared one result would be an energy crisis in Europe. But one factor that Putin couldn’t control was the weather. Mild temperatures in Europe in recent months, along with proactive conservation policies, have reduced natural gas consumption in key European markets such as Germany, the Netherlands and Belgium by 25%.

With less need for electricity and natural gas, European governments were able to delay drawing on natural gas inventories that they built up over the summer and autumn of 2022. At this point, a continental energy crisis is much less likely than many forecasts predicted.

European natural gas stockpiles are around 67% full, and they will probably still be 50% full at the end of this winter. This will help the continent position itself for next winter as well.

The situation is similar for coal. European utilities stockpiled coal and reactivated 26 coal-fired power plants in 2022, anticipating a possible winter energy crisis. But so far, the continent’s coal use has risen only 7%, and the reactivated coal plants are averaging just 18% of their operating capacity.

The U.S. role

Record-high U.S. energy exports in the summer and fall of 2022 also buoyed European energy security. The U.S. exported close to 10 million cubic meters per month of liquefied natural gas in 2022, up 137% from 2021, providing roughly half of all of Europe’s imported LNG.

Although domestic U.S. natural gas production surged to record levels, some producers had the opportunity to export into high-priced global markets. As a result, surpluses of summer natural gas didn’t emerge inside the U.S. market, as might otherwise have happened. Combined with unusually hot summer temperatures, which drove up energy demand for cooling, the export surge socked U.S. consumers with the highest natural gas prices they had experienced since 2008.

Prices also soared at U.S. gas pumps, reaching or exceeding US$5 per gallon in the early summer of 2022 – the highest average ever recorded by the American Automobile Association. The U.S. exported close to 1 million barrels per day of gasoline, mainly to Mexico and Central America, plus some to France, and consolidated its position as a net oil exporter – that is, it exports more oil than it imports.

Much like Europeans, U.S. consumers had to pay high prices to outbid other global consumers for oil and natural gas amid global supply disruptions and competition for available cargoes. High gasoline prices were a political headache for the Biden administration through the spring and summer of 2022.

However, these high prices belied the fact that U.S. domestic gasoline use has stopped growing. Forecasts suggest that it will decline further in 2023 and beyond as the fuel economy of U.S. cars continues to improve and the number of electric vehicles on the road expands.

While energy prices were a burden, especially to lower-income households, European and American consumers have been able to ride out price surges driven by the war in Ukraine and have so far avoided actual outages and the worst recessionary fears. And their governments are offering big economic incentives to switch to clean energy technologies intended to reduce their nations’ need for fossil fuels.

Developing nations priced out in energy crisis

The same can’t be said for consumers in developing nations like Pakistan, Bangladesh and India, who have experienced the energy cutoffs that were feared but didn’t occur in Europe. Notably, Europe’s intensive energy stockpiling in the summer of 2022 caused a huge jump in global prices for liquefied natural gas. In response, many utilities in less developed nations cut their natural gas purchases, creating price-related electricity outages in some regions.

Faced with continuing high global energy prices, countries in the global south – Africa, Asia and Latin America – have had to reevaluate their dependence on foreign imports. Increased use of coal has made headlines, but renewable energy is starting to offer greater advantages, both because it is more affordable and because governments can frame it as more secure and a source of domestic jobs.

India, for example, is doubling down on renewable energy, unveiling plans to produce hydrogen fuel for heavy industry using renewable energy and moving away from imported LNG. Several African countries, such as Ethiopia, are fast-tracking development of hydropower.

Energy prices and climate justice

The energy challenge that the Russia-Ukraine crisis has bred in developing countries has intensified global discussions about climate justice. One less examined impact of giant clean tech stimulus plans enacted in wealthy nations, such as the United States’ Inflation Reduction Act, is that they keep much of the available funding for climate finance at home. As a result, some developing country leaders worry that a clean energy technology knowledge gap will widen, not shrink, as the energy transition gains momentum.

Worsening the problem, members of the G-7 forum of wealthy nations have tightened their monetary policies to control war-driven inflation. This drives up the cost of debt and makes it harder for developing countries to borrow money to invest in clean energy.

The U.S. is supporting a new approach called Just Energy Transition Partnerships, in which wealthy nations provide funding to help developing countries shift away from coal-fired power plants, retrain workers and recruit private-sector investors to help finance decarbonization projects. But these solutions are negotiated bilaterally between individual countries, and the pace is slow.

When nations gather in the United Arab Emirates in late 2023 for the next round of global climate talks, wealthy nations – including Middle East oil producers – will face demands for new ways of financing energy security improvements in less wealthy countries. The world’s rich nations pledged in 2009 to direct $100 billion yearly to less wealthy nations by 2020 to help them adapt to climate change and decarbonize their economies, but are far behind on fulfilling this promise.

U.N. Secretary-General Antonio Guterres has called on developed nations to tax fossil fuel companies, which reported record profits in 2022, and use the money to fund climate adaptation in low-income countries. New solutions are needed, because without some kind of major progress, wealthy nations will continue outbidding developing nations for the energy resources that the world’s most vulnerable people desperately need.

Amy Myers Jaffe is the director at the Energy, Climate Justice, and Sustainability Lab, and a research professor, New York University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Senior officials in the Biden administration revealed last week that the world’s biggest historical carbon polluter had “decided to support formal UN negotiations over possible compensation and assistance to countries that suffer devastation from storms, floods, and droughts made far worse by climate change,” Bloomberg writes. That decision closes some of the negotiating gap between at least one major emitter and the call from small island states for a “response fund” for vulnerable nations.

“But while the U.S. is supporting dialogue on the issue,” Bloomberg reports, the country’s negotiators at the COP “are discouraging any explicit push for new aid or funding in an agenda item framing the talks. That would put the U.S. at odds with a large group of vulnerable nations which will be led at the talks by Pakistan, where floods have left more than 1,700 dead and caused some $30 billion in losses.”

While Bloomberg says the devastation in Pakistan “has given the politics of loss and damage a new urgency,” the discussion has been going on for decades, with painfully little progress.

“After decades of insufficient action from big, powerful, and wealthy nations,” the “unfortunate reality of today is that loss and damage have become the paramount issue for climate policy,” said Saleemul Huq, an advisor to the 55-nation Climate Vulnerable Forum. “Loss and damage punishes above all the poor, the vulnerable, and those least responsible for—and least equipped to handle—the severe and mounting catastrophes brought about through the climate crisis.”

“It is more than 30 years since vulnerable nations first demanded support to address the losses and damages caused by fossil-fuelled storms, floods, and sea level rise,” Climate Home News writes. “Rich countries, wary of endless liabilities, pushed back. But with costs of extreme weather mounting, the issue has become unavoidable. It is set to dominate negotiations in Sharm el-Sheikh.”

The plan put forward by the Alliance of Small Island States (AOSIS) for a Loss and Damage Response Fund “is an evolution of the ‘facility’ proposed by developing countries and opposed by wealthy ones at the COP 26 Glasgow summit last year,” Climate Home says. But “discussions on how to provide financial support to developing countries hammered by worsening climate impacts remain one of the most contested issues in the talks.”

Leading into the conference, the V20 bloc, representing the countries most vulnerable to climate impacts, is demanding a plan to fund the response to extreme weather, The Guardian reports. “The reason we are talking about loss and damage is that we have failed on adaptation finance for years,” said Maldives Environment Minister Shauna Aminath.

Funding shows what matters

Aminath put the world’s richest countries’ slow uptake on the climate emergency in stark contrast to their response to the COVID-19 pandemic and Russia’s war in Ukraine.

“It’s very obvious that it’s not a lack of money, or a lack of technology, that is the problem,” she said. “The issue is the lack of political will and the refusal to see the climate crisis as an emergency.”

With that contrast front and centre at the third COP ever held in an African nation, “many observers believe it is possible that the developing countries will make a dramatic stand at the talks over how their plight has perpetually been placed on the back burner by their more powerful treaty partners,” Inside Climate News writes. “COP 27 could even end in no agreement, they warn, because of the rift between rich and poor nations.”

Aminath added that international financing must go beyond the immediate physical damage from a hurricane, flood, or heat wave to include impacts on health and education, particularly as climate response erodes vulnerable countries’ fiscal base and their ability to fund human services.

“These are the social issues that are left behind after the donors leave [in the aftermath of disaster],” she told The Guardian. “There is also internal displacement, and the resulting problems with social integration, which are very important.”

India will also be emphasizing climate finance during COP 27 negotiations, The Hindustan Times reports, beginning with the US$100 billion in international climate finance that wealthy countries promised in 2009 and have consistently failed to deliver. Last week, Germany increased its annual commitment to €5.3 billion, Clean Energy Wire writes.

A ‘geopolitical hurricane’

Quite apart from the urgent issues on the COP 27 table, delegates in Sharm el-Sheikh will have a “geopolitical hurricane” to navigate, Bloomberg Green reports.

“The last time world leaders got together for a climate summit, the backdrop was thoroughly menacing,” the news agency recalls. “A pandemic had decimated national budgets. Poor countries were up in arms over the hoarding of COVID-19 vaccines by the same wealthy nations whose fossil fuel consumption did most to warm the planet. Relations between the two largest emitters, the U.S. and China, had devolved into zero-sum skirmishes over everything from trade to Taiwan.”

And “those were the good old days,” write reporters Marc Champion and Salma El Wardany.

In the last year, “the geopolitical context that shapes all international diplomacy has gone from tense to precarious,” they explain. “The war in Ukraine has divided nations over what some saw as a fight between Russian and Western interests, and supercharged an energy crisis that risks shredding COP 26’s most concrete achievement: a global consensus to cut down on coal.”

A coal phasedown and an end to economically “inefficient” fossil fuel subsidies were two of the main takeaways from last year’s climate negotiations. But now, “COP 27 is to be convened while the international community is facing a financial and debt crisis, an energy prices crisis, a food crisis, and on top of them the climate crises,” said Egyptian Foreign Affairs Minister and COP 27 President Sameh Shoukry.

“In light of the current geopolitical situation, it seems that transition will take longer than anticipated.”

COP 27 will also see the bizarre spectacle of Ukraine and Russia each trying to claim responsibility for greenhouse gas emissions—from a chemical plant in Armyansk, to diesel fuel burned during Russian military operations—in Crimea and other Ukrainian territory that Moscow currently occupies, The Washington Post reports.

“Ukrainian policy-makers say their goal is not to look as good they can on climate rankings,” the Post says. “Instead, they want UN discussions to reflect their legal claims over what the vast majority of the world continues to recognize as Ukrainian land, even if Russia is in possession of the territory.”

“It’s not about the climate arguments—it’s about our territory. Russia is trying to use all venues to legitimize the illegal annexation,” said Ukraine’s former deputy energy minister Alex Riabchyn, a member of the country’s COP negotiating team since 2015. “Every single document that doesn’t have footnotes, that doesn’t say Crimea is Ukrainian, is a hybrid diplomacy strategy of Russia to legitimize this.”

Egypt’s presidency under scrutiny

The Egyptian COP Presidency is also taking heat for key aspects of its communications strategy for the COP, after months of concern about tortuous conference registration rules, exorbitant hotel costs for cash-strapped delegates, and hostility toward civil society participation. On Friday, openDemocracy reported that Egypt has hired Hill+Knowlton, a PR giant whose clients include colossal fossils ExxonMobil, Shell, Chevron, and Saudi Aramco, to manage communications.

“The COP presidency should use a PR firm committed to achieving the goals of the Paris agreement,” said Kathy Mulvey, accountability campaign director at the Union of Concerned Scientists. “All bad actors involved in climate deception—including the PR industry—must be held accountable.”

Hill+Knowlton, she added, has a “shameful track record of spreading disinformation” on behalf of oil companies.

Last week, as well, Megatrends Afrika published a heavily-annotated exposé on the role of Egypt’s General Intelligence Service (GIS) in orchestrating the COP.

“Officially, the GIS will not play a role in the climate conference,” the news story states. “Behind the scenes, however, the GIS is pulling the strings. This is suggested by reports from various non-governmental organizations, which criticize the Egyptian government’s considerable harassment of their peers. Voices critical of the government were deliberately excluded from the conference,” and the conference centre where the COP will take place apparently belongs to the GIS.

Megatrends Afrika connects its concerns to recent media trends under the “authoritarian leadership” of President Abdel Fatah al-Sisi.

“In recent years, the GIS has successively taken control over various private media companies in the country and merged them under the holding company United Media Services (UMS),” Megatrends writes. “Through these outlets, the foreign intelligence service exerts significant influence over domestic reporting, also in the context of the climate conference. For example, in such media, human rights organizations including Human Rights Watch are denigrated as the mouthpieces of terrorists.”

The COP represents “a welcome opportunity for the GIS to further expand its media activities,” with financial support from Saudi Arabia, Megatrends states.

This article is republished from The Energy Mix. Read the original article.

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