Aug. 24 marked Ukraine's 30th year of independence. The country must build on its gained experiences to strengthen its democracy and secure a sustainable market economy. The news of President Volodymyr Zelensky's upcoming White House visit this week comes at a pivotal time for U.S.-Ukrainian relations. President Joe Biden received criticism for his support of the Nord Stream 2 pipeline, ultimately reducing Ukraine's leverage in the region. One vital pillar for bilateral relations is a new agenda for U.S.-Ukraine affairs—to switch Ukraine's narrative from that of a regional problem to regional partner in energy security and energy transition.
Characterized by the tense economic and political situation as well as the spreading COVID-19 pandemic, the past few years have shown that to achieve proper geopolitical security, Ukraine needs to strengthen energy security by diversifying energy sources and supply routes. While the rest of the developed world is calling for action toward minimizing CO2 emissions, Ukraine must do both—develop new energy supply routes and additional clean alternatives. A strong U.S.-Ukraine relationship would support these vital objectives.
One of the critical areas for cooperation will be promoting the U.S.-Ukraine liquefied natural gas (LNG) trade. The development of LNG has forever changed natural gas from regional to one of the most dynamic global energy markets. Currently, the global LNG market volume is estimated at 490 billion cubic meters (bcm). By 2030, its share in the physical volume of world gas exports is expected to reach almost 50 percent, while by 2050 this figure is going to approach 60 percent. In 2020, the COVID-19 pandemic forced the world's leading countries to rethink the role of coal and instead prioritize more environmentally friendly fuels, including natural gas.
As an owner of one of the world's largest and most sophisticated gas transmission systems and equipped with Europe's largest 31 bcm underground gas storage, Ukraine sees strong demand for natural gas. Yet, the unreliability of the Russian gas transition after 2024 creates an urgent need for diversification. LNG offers Ukraine an opportunity to transition from coal as its primary fuel source for electricity generation and simultaneously reduce greenhouse gases emissions. With the growth of gas production during the last decade, the U.S. became the third largest LNG exporting country in 2020, after Australia and Qatar, and has reserves and export capacity for continued growth. A U.S.-Ukraine LNG partnership opens a new market for U.S. exports, and the availability of Ukraine's gas transmission system provides better terms for accessing the world's second-largest LNG consumer—the European Union.
Another area for Ukraine to cultivate a partnership with the U.S. is green hydrogen. Hydrogen development would place the country on the top of the climate change game. By adopting its "hydrogen strategy," the U.S. Department of Energy sent a clear message that it intends for hydrogen technology to be among the keys to the U.S. energy transition up to and beyond 2050. Ukraine, owning one of the world's largest gas transmission systems, is vital to the world transitioning beyond fossil fuels by leveraging the U.S.' hydrogen development.
Finally, Ukraine could establish a powerful international partnership by connecting the local IT market with international businesses searching for green solutions. The cooperation with the U.S. in the context of climate tech is especially promising. Ukraine already hosts one of the most booming IT industries in the world. Employing over 200,000 workers, the IT sector alone generates at least 20 percent of total Ukrainian export services. Over half of the revenue in the Ukrainian IT sector already comes from the U.S., and further cooperation could be beneficial for both countries.
A recent report by PwC showed that climate tech experiences 84 percent growth annually and predicts the sector to achieve even better results in the future. Establishing the Ukraine-U.S. dialogue in the context of climate tech would yield long-term benefits, helping to channel already existing investments of sustainable projects and stimulating innovation to fight climate change, find mineral resources for renewable energy plans and increase energy efficiency.
The scale and pace of the energy transition we are witnessing today are remarkable, despite the COVID-19 crisis. Leading countries worldwide already made critical decisions that promise to change investment portfolios in the energy sector. Namely, the U.S., which recently rejoined the Paris agreement under the Biden administration, aims to finish the transition to net-zero power generation by 2035. This implies a massive shift to renewable energy and significant improvements in energy efficiency by 2030. In this context, Ukraine must hop on the train of green tech to catch up to its Western counterparts.
When the challenge of climate change mitigation requires the world to combine efforts and work together, Ukraine has the potential of strengthening its relations with the U.S., reaching a new level in energy cooperation through developing LNG trade, building up its hydrogen industry and exchanging green tech solutions.
Nataliya Katser-Buchkovska is founder of the Ukrainian Sustainable Fund. She was a member of the Ukrainian Parliament from 2014-2019.
The views expressed in this article are the writer's own.
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