For a Safer Earth, Healthier Climate

Post-War Rebuilding Of Low-Carbon Economy Will Cost Only 5% More Than Fossil Fuel Economy – Study

By Ruth Tene Natsa, Abuja

The Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine has conducted a study on Ukraine’s post-war recovery, presenting two potential scenarios.

The first scenario involves restoring the pre-war fossil fuel-based economic model, while the second scenario is focused on achieving complete decarbonization of the economy by 2050, in line with the European Green Deal.

A statement by RAZOM WE STAND stated that the research findings have demonstrated that Ukraine’s post-war recovery based on the principles of decarbonization would only be 5% more expensive.

Moreover, it would help Ukraine to eliminate its dependence on fossil fuel imports, which would have a positive impact on the balance of payments. This transition would also decrease deadly emissions of ash dust from coal-fired power plants by 69%. By reducing environmental pollution, the corresponding morbidity and mortality would also decrease by 0.7%-1.3% of GDP, equivalent to USD 1.1-2.1 billion per year.

Moreover, a sustainable economic recovery is essential for maintaining the competitiveness of the Ukrainian industry, while also adhering to the Paris Agreement by limiting global warming to a maximum of 1.5°C. Plans for achieving this include adjusting to the EU’s potential carbon border tax (CBAM).

The modelling results demonstrate that ambitious decarbonization goals can be achieved without incurring significant additional costs. In fact, making the transition to a green economy would only cost 5.1% more than a fossil fuel-based economy.

A leading researcher at the Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine, co-author of the TIMES-Ukraine model, Oleksandr Diachuk, says  “The war in Ukraine has triggered a significant shift towards accelerating the energy transition in Europe. A silver lining in this crisis is that it presents an opportunity to move away from outdated, fossil fuel-based energy and industrial technologies.

By investing in newer, sustainable solutions, Ukraine can rebuild its lost and damaged industrial capacities without relying on environmentally harmful methods. We can achieve this transition by adopting a renewable energy-based approach, in line with the European Green Deal. This will not only facilitate economic recovery but will also minimize the negative impact on the environment and citizens’ well-being,” he said

The cost comparison between modernizing the energy system using fossil fuels and decarbonization scenario that aligns with the Paris Agreement’s goal of limiting global warming within 1.5 degrees Celsius reveals the latter’s marginally higher cost. The baseline scenario would amount to €810.7 billion over 2020-2050, while the decarbonization scenario would cost an additional €26.3 billion or 3.2% over that period (at a 5% discount rate). However, the benefits of the low-carbon economy scenario are manifold. Cumulative emissions for 2025-2050 from power generation are remarkably reduced by 69% for fly ash, 54% for nitrogen oxide (NOx), and 45% for sulfur dioxide (SO2).

Director and Founder of Razom We Stand, Svitlana Romanko notes that “Ukraine and the global community must prioritize two urgent needs: defeating the control of oil, gas, and coal, and making significant investments in renewable energy for the sake of peace and justice. Russia’s actions have resulted in over 750 billion in losses to Ukraine, and the reconstruction alone will be over 1 trillion, which is almost equal to what was invested in renewable energy and energy efficiency worldwide last year.

These much-needed funds must come from not only private investors, but also Russia’s compensation and reparations, confiscation of frozen Russian assets abroad, and the excessive profits generated by the fossil fuel industry during the war. Transitioning to renewable energy sources and accelerating the post-war reconstruction of Ukraine will cost nearly as much as restoring it to its previous state. This fact highlights that business and political leaders have no excuse not to act; it is purely a matter of political will and appropriate regulation,”she added

The authors of the Report emphasize that realizing the potential for building a carbon-free economy will require significant political efforts. Specifically, it is essential to increase the carbon tax, remove cross-subsidization in the electricity sector, implement targeted support programs for the population, and establish and expand relevant production chains within the country, with a high degree of localization (including equipment, spare parts, and energy services). This approach is critical not only from an economic perspective but also for enhancing energy security.

Advocacy Manager at Razom We Stand, Olha Yevstihnieieva,noted that“Prior to the war, it was apparent that the 90% of TPP units were in dire need of replacement, Ukrainian coal-fired generation created the most pollution in Europe, contributing significantly to illness and mortality rates. However, there is an opportunity for Ukraine to transform its energy sector.

By 2030, it is possible to eliminate fossil fuel imports and implement renewable gases. Furthermore, restoring compromised utility infrastructure with heat pumps and solar panels can save up to half of energy resources. Alongside this, the development of wind energy could pave the way for hydrogen technologies. At Razom We Stand, as part of the Re-Energy Communications Network, we strive towards green decentralization, and aim to make these changes possible through climate governance in order to restore Ukraine’s energy sector,”  

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