The Green Transition: Three Priority Investment Areas

A high-level panel discussion with the World Bank and European Commission leadership was held today at the IMF and World Bank Group Annual Spring Meetings. At the roundtable, Finance Ministers from around the world, including Ukrainian Finance Minister Sergii Marchenko, talked about the features and conditions of post-pandemic recovery for a green transition in Europe and Central Asia (ECA).

COVID-19 in 2020 forced policymakers to focus on targeted projects: health care and education reform, job creation, assistance to businesses, and the like. The pandemic has changed the strategic development goals of almost all countries in the world, and today they are already actively working on the transition to an inclusive "green" economy.

During the meeting, Finance Ministers from the region shared their experiences in using COVID-19 recovery programs to accelerate the transition to low-carbon and sustainable economies.

"In Ukraine, we are witnessing an extremely rapid increase in renewable energy generation: over the past three years, the share of renewables in the energy generation mix has grown from 1.7% in 2018 to 7.7% in 2020, with the figure doubling in 2020, driven overwhelmingly by private investment. However, this dynamic has natural limits if the system only develops within the country. That is why we started working on integrating our power grid with the network of the European Union to become part of the global market of countries with the same environmental goals. We are grateful to the World Bank and other international financial institutions for their support because their financing is crucial for this project," said Sergii Marchenko.

The Minister also spoke about investments in storage capacities. He noted that such investments are necessary so that with the growth of the share of renewable energy in Ukraine has its own market, which will increase the amount of private investment in this sector.

One of the spheres of state investments, which the Ministry considers promising, is hydrogen energetics. Ukraine has the technical potential to create 500-700 GW of capacities based on renewable energy and can produce around 500 billion cubic meters (45 million tons) of hydrogen.

The Minister of Finance said: "This is not only an efficient way of using the growing generating capacity of renewable energy sources but also an opportunity to use the existing hydrocarbon transit infrastructure for the new green economy without writing off the investments made over the last decades. The European Commission already views Ukraine as a key partner in hydrogen production and transportation, as part of a long-term plan to develop the continent's energy sector with a course toward a low-carbon economy".

Summarizing, Sergii Marchenko noted that now, more than ever, it is a good time to focus investments on a more sustainable future. The global community needs to think about joining forces to create a completely new low-emission environment on a transboundary scale.