Nord Stream 2 could be Ukraine’s silver lining. Canada can help.
Western analysts lament the end of the Nord Stream 2 pipeline saga. Undoubtedly, the near-completed natural gas infrastructure cements Germany’s energy dependence on Russia. It will also undoubtedly be militarized against Europe by Russian President Vladimir Putin. Despite the hypocrisy of the European Union (on the environment, democratic values and the principles of solidarity and determination), there is a glimmer of hope.
If Ukraine is the main victim of all this, the country also has the opportunity of a generation, which it has not yet enjoyed. Russia has always used energy as a weapon against Ukraine. Putin further reinforced this intention at the International Economic Forum last month in St. Petersburg. And Putin’s A 5,000-word article from July 12 titled “On the Historical Unity of Russians and Ukrainians” highlights his obsession with making Ukraine obey his orders. Unfortunately, this reality is not something Ukraine can change.
Instead of bemoaning the likely build of Nord Stream 2, however, Ukraine should seize the opportunity and make the most of a bad situation. The deal between the United States and Germany that allows the Nord Stream 2 pipeline to continue included a provision that Germany will also contribute $ 175 million to $ 1 billion for a “green fund for the Ukraine”. Considering that Ukraine will lose around US $ 3 billion in transit fees after 2024, this is not enough. But it is a start.
At the last Climate Ambition summit, Ukrainian President Volodymyr Zelensky stressed that Ukraine “seeks to align its climate policy and legislation with the European Green Deal” and to reduce greenhouse gas emissions by 58-64% .
Such ambitious goals will require more comprehensive support from Ukraine’s allies. Zelensky is expected to point this out when he meets with US President Joe Biden at the White House on August 30.. It should also seek further concessions on aid for technology transfer and development. In view of the American acquiescence to German interests – which is already criticized at home and abroad – these should be granted.
There is also room for Canadian success in such a scenario. We Canadians have our fair share of pipeline sagas experience. The Trudeau government has taken dramatic steps to accelerate our transition to green energy and to set ambitious carbon reduction targets. Canadian businesses now have the right incentives to succeed and grow. Canada has the opportunity to contribute to Ukraine’s energy security while strengthening our own green economy. Since the early 1990s, Canadian technology has played a key role in globalization and created thousands of jobs in Canada.
The Canada-Ukraine Free Trade Agreement is woefully underused. I should know: in 2017 my company, TIU Canada, was the first Canadian investor under the regime. We have created a $ 65 million solar energy company, and I continue to be one of the largest Canadian investors in the country. It was and is not easy. The challenges are many, but the opportunities for Canada abound.
In order to adequately counter the damage caused by Nord Stream 2 and achieve his green ambitions for his country, Zelensky also has to face some key internal challenges: the complete desoligarchization of the economy, the reorganization of judicial bodies and courts, and the settlement of existing foreign investors are measures that would go a long way in ensuring that Ukraine reaches its full potential. And let me be clear: such potential, and not overt Western support, is the only sure defense against continued Russian aggression.
Ukraine’s green energy sector is a litmus test for this. Its growth is a matter of national security for the country, not just a laudable environmental goal. From 2018 to 2019, the sector went from almost zero to 10% of the energy mix. Unfortunately, the Ukrainian government still owes investors almost US $ 600 million for this growth. It is paying too slowly, and in violation of its own rules, to honor the commitments made by Zelensky.
The entrenched oligarchic interest in coal, oil and gas also makes it difficult for the political will to resolve this issue. But Nord Stream 2 is as existential as it gets for Ukraine. The transit fees lost due to the new route of Nord Stream 2 alone castrate the Ukrainian state budget. This is in part Russia’s goal, and one of the reasons analysts regularly cite “arming” energy in Europe.
If Ukraine, inspired by Nord Stream 2, managed these factors correctly, it would have more than enough wind, solar, biofuel and hydropower to completely cut Russia out of the energy mix. It should be a national security goal.
Canada and Canadian businesses can help, but only if Ukraine cleans its own house. If Zelensky takes these challenges seriously, Nord Stream 2 can be a silver lining for Ukraine, as well as Canada.
Michael Yurkovich is the CEO of TIU Canada, which has invested over $ 65 million in Ukrainian solar power over the past four years.
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