Ukraine will be able to increase industrial efficiency and reduce energy consumption. What should be the plan for the post-war reconstruction of our economy in order to achieve these goals?
For more than a month now, Russia has been bombing Ukraine, destroying industrial facilities, infrastructure and residential buildings. On the one hand, the devastation caused by the war is a huge loss for our economy, but on the other hand, during the post-war recovery we will have a unique chance to take the economy to a new technological level.
European countries are increasingly implementing energy efficiency policies and programs as part of a broader process of decarbonizing the economy. One of the main indicators in determining the energy efficiency of each country’s economy is the energy intensity of its GDP. The higher this figure, the higher the cost of energy per unit of output, the more expensive these products and the lower the competitiveness of both individual enterprises and the economy as a whole.
Before the war, Ukraine had the most energy-intensive economy in Europe. This was connected to several factors:
- the structure of our industry – because the key positions in it have energy-intensive industries such as metallurgy;
- large energy losses in housing and communal services – due to the low quality of buildings, other structures and their utilities;
- huge losses during the transportation of thermal energy due to wear and tear of networks.
To reduce the energy intensity of Ukraine’s GDP and increase the competitiveness of the Ukrainian economy on the world market, it is necessary to carry out radical modernization in all sectors of the economy. It is also a necessary condition for the further European integration of our country, as the recently approved new EU environmental policy provides for increasing the energy efficiency of the economies of all member states.
In 2020, the European Parliament supported a set of policy initiatives called the European Green Deal. Their common goal is to make Europe a climate-neutral continent by 2050, to protect biodiversity, and to green the economy. The foundations and directions of the development of Green Deal are laid down in the communiqué. By synchronizing its policy with the EU, Ukraine intends to achieve climate neutrality by 2060.
It is obvious that the post-war plan for Ukraine’s reconstruction should be based on certain principles, the observance of which will allow bringing our economy to the level of advanced countries of the world, in particular, reduce its energy intensity and increase energy efficiency.
What should be the principles of Ukraine’s economic recovery after the war?
First of all, it is a question of observance of such principles of the European green course as refusal of fossil fuels (first of all, coal), reduction of CO2 emissions, increase of energy efficiency of economy and reduction of energy losses. The state should support the development of high value-added sectors and new industries, such as:
- construction of energy efficient housing;
- carbon-neutral agriculture and food production;
- production of steel based on hydrogen or electrothermal technology;
- energy efficient mechanical engineering;
- renewable energy;
- electronics and electric car industry.
As a basis for the reconstruction and further sustainable development of the modern “green” economy, Ukraine needs to build its own new industrial base and means of production that will not rely on fossil fuels. In general, the reconstruction program of the affected regions should include:
- Prohibition of repair of damaged buildings and structures (residential, public, health care and educational institutions), as well as new construction, with energy losses during operation higher than required by European rules and regulations.
- Financial assistance for the rehabilitation and start-up of the Green Deal-compliant industries, i.e. use the latest technologies (e.g., electrothermal smelting instead of open-hearth), abandon coal and minimize the use of natural gas in technological processes, use renewable energy sources and energy products from low CO2 emissions.
- Rehabilitation of energy generating facilities in accordance with the principles of the Green Deal: abandonment of coal, reduction of CO2 emissions, use of renewable energy sources, in particular, waste, hydrogen, etc.
- Abandonment of traditional fuel for public transport. Electric vehicles and vehicles running on biofuels and hydrogen should replace carbon-fuelled transport in cities. To implement this item, it will also be necessary to create networks of charging stations for public and private electric vehicles.
At the restored and newly built enterprises it will be necessary to implement the main energy saving measures:
- organization of accounting for energy costs at all stages of the production process and automated management of energy consumption;
- use of secondary energy resources for heat and electricity production, use (recovery) of heat from exhaust gases and exhaust steam, cooling energy of units, etc.;
- introduction of energy-efficient production technologies, installation of highly energy-efficient equipment.
Comprehensive implementation of investment, innovation and organizational measures during the post-war reconstruction will allow Ukraine to reach a new level of efficiency in all sectors of the economy. This will increase the competitiveness of both the products of individual enterprises and our economy as a whole. Today our main task is to win.
This publication was produced with the financial support of the European Union. Its contents are the sole responsibility of BRDO and do not necessarily reflect the views of the European Union.