by Victoria Hubareva
Translated by Alastair Gill
We analyze the main outcomes and critique opportunities presented by Kyiv at the recent Ukraine Recovery Conference in London, which appeared to have discarded the ambitious plans laid out at last year’s event in Lugano.
Held in London on 21-22 June 2023, this year’s Ukraine Recovery Conference (URC) was devoted to mobilizing international support for the economic and social stabilization of Ukraine, as well as the process of repairing the damage caused by Russia’s invasion. Emergency assistance for urgent needs was also addressed at the event, as was the financial participation of the private sector in the rebuilding process.
More than 40 countries and roughly 20 international organizations took part in last year’s conference in Lugano, which resulted in a declaration of support for Ukraine in the form of a $750 billion “Marshall Plan” to help the country along the road to recovery over the next decade. However, the recovery program presented by Ukraine caused widespread indignation among Ukrainian conservationists.
The intention was that this year’s conference would be used to unveil the Ukraine Recovery Plan for Environmental Security, which the Ministry of Environmental Protection and Natural Resources of Ukraine announced back in February. The intention was to discuss financing and further assistance.
However, the plan was never presented – even after the conference. When the UWEC Work Group requested clarification, the Ministry replied that the document was still under development.
Ukraine Business Compact 2023 and $60 billion in recovery aid
On the whole, this year’s Ukraine Recovery Conference focused on private businesses and international financial institutions, and more specifically on attracting international investment for rebuilding Ukraine in three main sectors: subsoil resources, forests, and energy. The main results can be summarized quite briefly:
- Almost 500 businesses from 42 countries have signed on to the Ukraine Business Compact 2023
- Partners have promised Ukraine over $60 billion, of which 50 billion euros is to come from the EU in the next four years through a new financial mechanism.
We asked environmental experts who closely followed the conference or attended it to share their analysis of happenings at URC23.
No environmental agenda, but it was still ‘better than Lugano’
According to Konstantin Krynitsky, head of the energy department at the NGO Ecoaction (Ecodia), who attended the conference, there was no “environmental” agenda as such. For instance, the Ukrainian Minister of Environmental Protection and Natural Resources Ruslan Strilets did not speak at the main conference. This was surprising, since according to Anna Ackerman, a board member of the Ecodia Center for Environmental Initiatives, a Ministry of Environmental Protection and Natural Resources working group on restoration convened just a week before the conference, with the understanding that the minister would be in London to present certain strategic projects and focus areas to the event’s international audience.
Krynitsky remarked that this year’s event avoided what he called the “Lugano shame” of 2022:
“On the whole it went better than last year in Lugano. And it’s remarkable that this year nobody mentioned the Recovery Plan that was presented then, but in any case that was not about sustainable development,” he said.
Energy Strategy 2050: ‘There were a lot of figures. Ambition is a good thing, but it scares off investors’
As Krynitsky noted, Energy Strategy 2050 “was essentially not presented as such, only as a general vision.”
Maksim Babayev, an expert on renewable energy, fully concurred with Krynitsky’s assessment.
“The leitmotif of the London conference was the involvement of private business,” he explained. “That’s where most of the resources will be coming from. And it’s here that there are certain disagreements: on how private businesses assess their prospects and on how we announced this.”
According to Babayev, the Ukrainian energy sector has no real vision or strategy. “There’s Energy Strategy 2050, which is classified as ‘secret’. It has never been discussed publicly, either before the meeting in London or at the conference.” Accordingly, what was presented at the URC for systemic investors working at a very high level in terms of analytics and planning was insufficient, and amounted to little more than an extravagant set of “wish lists” and big, ambitious goals.
“For example, forecasting the development of the energy sector assumes that there will be a certain energy balance, there will be a certain growth in energy consumption and production over time. But these goals were not part of the presentation, though there were a lot of other figures. Ambition is a good thing, but if it is unfounded, it often scares off investors,” he said.
Babayev also noted that there has been much talk of financial instruments in order to make it easier for businesses to invest and cover risks, the cost of loans, and so on – but this talk remains on paper.
What about subsoil resources?
The presentation by German Galushchenko, Ukraine’s Minister of Energy, mentioned the possibility of producing carbon-neutral electricity, as well as the creation of an “EU hydrogen hub” in Ukraine (aimed not only at local consumption, but also for export), certified gas storage facilities, and the production of energy equipment. Ukraine also confirmed that it plans to phase out coal by 2035.
According to Galushchenko, “green” steel, hydrogen, green ammonia, green electricity, biomethane and natural gas will be the principal areas of focus for the development of Ukraine’s energy sector.
However, Krynitsky noted that everything described above by the Ukrainian side as “green” involves producing or mining for export, with the focus on “making money.”
“The government presented important potential areas of focus for the development of industry and the manufacture in Ukraine of products with high added value. For example, batteries, electric cars, and energy equipment. However, in one of the discussions they said ‘let’s start with mining, and then we’ll talk about the full production cycle’,” added Anna Ackerman.
Of course, such ambitious plans for the use of subsoil resources in Ukraine give rise to fears that the country may become a commodity exporter, which will involve environmental risks.
“However, if we’re talking about mining [resources] for the European Union, it’s unlikely that we’ll be able to develop such production without the implementation of the new EU standards,” said Ackerman.
It is also encouraging that the recently signed Ukraine Business Compact 2023 sets out that environmental criteria must be met, with a subsequent transition to sustainable development.
Pivoting smoothly toward rebuilding communities
Alexandra Azarkhina, Deputy Minister for the Development of Communities, Territories and Infrastructure of Ukraine, noted the importance of setting up a fund to repair damage sustained as a result of Russian military aggression and talked about developing a methodology for prioritizing projects.
Crucially, the new DREAM portal (Digital Restoration EcoSystem for Accountable Management) was presented as a means for communities to manage projects and engage in direct dialogue with international financial organizations. Experts see future prospects in the development of communities and restoration “on the ground”.
“Communities should be the leaders of the recovery, we need to support the weak,” explained Azarkhina.
What next: Expectations and the central theme for URC24 — recovery in communities
The next stage will be the 2024 recovery conference in Berlin, where leaders will focus on decentralized projects and community support for recovery.
As Ackerman noted, inclusivity should play a key role. We must listen to the opinions of vulnerable communities recovering after the trauma of war, as well as the voice of public organizations ready to offer support in any form.
Krynitsky concurred. “We hope that it will have a focus on communities, and will necessarily include questions of damage to the environment and what to do about it. Because no private investors will do this, and we are talking about tens of billions of dollars,” he summarized.
Recovery Plan 2.0 is still under development
In response to our request, the Ministry of Environmental Protection and Natural Resources of Ukraine reported that “at present, the body is working on the ‘Environmental Safety’ part of the draft Action Plan for post-war restoration and development of Ukraine,” but this will only be possible to view once it has been finalized.
At present only a draft plan – the first, unadapted version – has been published on the Ukrainian government portal.
The most recent discussions of the Plan were held in January this year at the initiative of the public organization Agency for Recovery and Development which called for the talks as part of the “Voice of Civil Society” project.It is unclear whether any public discussions are planned in the near future. The likelihood is that this issue that is vital for protecting the Ukrainian environment is on hold for now, in anticipation of more active public action.
Main image source: ONOVA. Ukraine’s Renovation League