Agriculture & Allied Industries

The time to launch is now – EURACTIV.com

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The European Union has ambitious plans to decarbonise its economy but achieving its goal of producing 35 billion cubic meters of biomethane by 2030 may be unrealistic without leveraging Ukraine’s potential, writes Olga Bielkova.

Olga Bielkova is Director for Government and International Affairs at GTSOU, the Gas Transmission System Operator of Ukraine – and is now based in Brussels. 

Ukraine is fighting a war for our right to exist, and now, the defense of our country, the safety of our people, and the preservation of our values are a singular focus for every Ukrainian. Yet, we can’t postpone the question of reconstruction until after the victory.

Together with our friends and allies around the world, we must find a way to push back the regressor, rebuild critical infrastructure – despite it being targeted by Russia in weekly rocket attacks – and plan for the post-war future. It was the land-lease program that helped allied forces to prevail in WWII, but it was the Marshall Plan that won the peace in Europe.

The senselessness, the ugliness, and the devastation of Russia’s war on Ukraine are not that different from what we suffered in the 1940s. Still, the conditions in which the revitalisation of the Ukrainian economy will take place are new. As we ponder the Marshall Plan for Ukraine, let us account for the interconnectedness of the global economy, the pace of development, and the role of the private sector.

When announcing The European Green Deal Investment Plan, the Commission President, Ursula von der Leyen, was right to emphasise the role of public investment as a key to unlocking even bigger opportunities with private funds.

The European Green Deal Investment Plan was conceived with a very specific goal in mind – to mobilise €1 trillion of sustainable, private sector investments. Its ambition reached beyond environmental concerns and the need to achieve net zero by 2050 – this is how Europe plans to build a competitive and inclusive economy.

We need this in Ukraine! The scale of damage in our country is so extensive that it doesn’t make sense to rebuild what was left of the Soviet times. We can and should leapfrog to tap emerging opportunities where Ukraine has already demonstrated a competitive edge, be it agriculture, manufacturing, or IT sector. Together with our European neighbors and partners, we’d like to implement Ukraine’s twin transition.

There are several sectors of our economy where private investment and participation by major Western corporations could play a significant role:

  1. An immediate priority: Energy & infrastructure.
    Ukraine’s infrastructure, including its transportation and energy systems, has been heavily damaged by the war. Investments in infrastructure projects, such as roads, bridges, airports, and power plants, could help to modernise and improve the country’s infrastructure, which can support economic growth and development, assuring post-war stability and prosperity.
  2. Near-term horizon: Agriculture & investment into global food security.
    Ukraine has a rich agricultural tradition and is one of the largest grain exporters in the world. Investments in the agricultural sector, including in modern farming techniques, storage facilities, and processing plants, could help to improve the efficiency and competitiveness of the country’s agricultural sector. Not to mention, help us feed the world and address the growing food insecurity in some regions.
  3. Medium-to-long term: Manufacturing.
    Ukraine has a large and well-developed manufacturing sector, which includes industries such as textiles, machinery, and food processing. Investments in manufacturing could help to modernise and upgrade these industries, which can improve productivity and competitiveness. A steady flow of FDI into this sector will help ensure a stronger EU-Ukraine integration and greater prosperity for both.

The Ukrainian government is overwhelmed with putting out fires – in our case, quite literally. And that has a direct impact on our capacity to prioritise decarbonisation efforts. Thinking about carbon emissions is just too difficult if one-third of your energy capacity is damaged; your population and industry are facing blackouts on a daily basis.

In September, a Brussels think-tank, Bruegel, published research estimating that the governments in Europe have earmarked nearly €500 billion in the last year to cushion citizens and companies from soaring gas and power prices. European resolve to counter the Kremlin’s gas weapon is to be applauded, but it also helps us put the price of energy security in perspective.

If Ukraine was to achieve energy independence, especially when it comes to natural gas, it would have profound security implications for all of Europe. I’m convinced that this goal is achievable with just a fraction of what our Western neighbors are spending to counter downstream effects of the Russian energy blackmail.

Security is top of mind right now, as it should be, but the head of the International Energy Agency (IEA), Fatih Birol, was right to point out that Russia’s invasion of Ukraine is “also driving powerful structural changes that are set to accelerate the transition to clean energy”.

The European Union has ambitious plans to decarbonise its economy but achieving its goal of producing 35 billion cubic meters of biomethane by 2030 may be unrealistic without leveraging Ukraine’s potential.

One solution is for Western and Ukrainian companies to co-invest in biomethane production in Ukraine using EU green funds. This would allow companies from the member states to take advantage of the same support and incentives for investing in Ukraine as they would have locally, bringing all of us closer to the net zero economic model.

Western governments have many tools to incentivise private sector investments in Ukraine, whether tax breaks, loan guarantees, or grants. At present, those mechanisms haven’t been deployed at the necessary scale, but planning takes time, and we all need to start working on them now.

The private sector must define its preferences, while the governments on both sides should develop additional tools to undress uncertainties. The German Marshall Fund (GMF) makes a very compelling argument for “war insurance” – sovereign guarantees for certain private investments. These incentives can help offset the risks and costs associated with investing in a country even during wartime.

Global multinationals have a role to play, to identify opportunities and initiate projects, but governments and international financial institutions must create a framework. Suppose an Irish company Kingspan didn’t hesitate when it announced a €200 million greenfield investment in June this year before our defense forces liberated Kherson.

But what if a large-scale Ukraine-wide reconstruction program was launched today? How many private sector enterprises would step up to work with us on rebuilding? Given the security situation, we don’t insist that every investor comes to Ukraine in person, or sends a team of expats, we’ll find a way to make things work and deliver on our shared priorities.

While the Ukrainian army is fighting the enemy on the battlefield, the Ukrainian government, with the help of the Western governments, is fighting for the state survival and at least some economic stability. In this context, the global multinationals and national companies of our partner-countries must know that the best way they can help Ukraine is to do business with Ukraine. And the time to start is now.



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