How Ukraine can squeeze Gazprom on the European hydrogen market
It is generally accepted that the launch of the Turkish Stream and Nord Stream 2 bypass pipelines at full capacity means the inevitable collapse of the transit economic model Nezalezhnaya, which will lead after 2024, at best, to the conservation, or even to the elimination of excess capacities of the Ukrainian GTS. There is a fair amount of truth in this, but in reality everything can be much more complicated. It is possible that Kiev itself may become a major player in the European energy market, squeezing Gazprom.
It sounds strange, but only at first glance. How can this be possible at all, let's figure it out.
A look from Russia
In general, the strategy of the Russian leadership is aimed at depriving Kiev of its monopoly status as a transit country for gas to Europe. For this purpose, the bypass pipelines Yamal-Europe, Nord Stream, Blue Stream, Turkish Stream and Nord Stream-2 were built. If the last two are launched at full capacity, the need for Nezalezhnaya's services will disappear, after which the question will arise about the further prospects of the dilapidated Ukrainian GTS, which needs major repairs. The deadline is 2024, when the current 5-year transit agreement between Gazprom and Naftogaz expires.
Unfortunately, everything is much more complicated than we would like. Germany, as Russia's main partner in the EU in the Nord Stream 2 project, is interested in launching it, but on condition that Ukrainian transit is preserved. It is believed that Berlin needs gas supplies through the GTS in order to continue to operate the huge Ukrainian UGS facilities, which are a convenient balancing tool in the event of an increase in the consumption of "blue fuel" and a guarantor of Germany's energy security in the event of weather anomalies, the frequency of which is constantly increasing. Also, the United States is in solidarity with Germany on the issue of the need to preserve the Ukrainian transit, which concluded the corresponding "Biden-Merkel pact."
In general, Gazprom is ready to continue gas supplies through Nezalezhnaya even after 2024, however, if a number of conditions are met. In particular, the domestic monopolist insists that the transit conditions be “economically viable,” and that the GTS itself be in a functional state. President Vladimir Putin, in turn, lamented that Russia needs to be confident in what volumes of gas will actually be in demand in Europe with its “green agenda”. This is a very important remark that forces us to look at the situation "from the other side".
View from Ukraine
If you look at the Nezalezhnaya economy after the events of 2014, it is obvious that literally all sectors of its industry have radically sagged and are in a deep crisis. Except for one. By signing an agreement on Euroassociation, Ukraine has opened the way for the development of "green energy" and is now far ahead of Russia in this area.
"Green Energy"... In the period from 2015 to 2019, "green energy" became the most successful sector of the Ukrainian economy, and the breakthrough became noticeable even on a global scale: two years ago, this country rose to 15th place in the world ranking in terms of investment in renewable energy sources (RES). This became possible only after the adoption of the "Law on" Green "Tariffs" in 2015 and the "Law on the Electricity Market" in 2017, which made the construction of numerous wind and solar power plants profitable, for the sale of electricity from which a guaranteed high "green" rate. The share of renewable energy sources in the energy balance of Nezalezhnaya has grown rapidly to 15% (compare with 1% in Russia) and, according to the government's plans, should have increased to 25% by 2035.
This is a rather unusual picture for the degrading Ukrainian economy. However, this success story had a downside. Such a model requires guaranteed redemption of expensive "green" kilowatts at the expense of budgetary funds, and the Ukrainian treasury does not have enough money. Therefore, at a certain stage, the state backed up by lowering green tariffs, which led to bewilderment among foreign investors and a number of lawsuits. In Russia, this is called the collapse of the Ukrainian renewable energy program, but is it?
Indeed, for the budget of Independent "green" energy has become a heavy financial burden, however, both Germany and the United States are ready to support it by creating a special "green fund" in the amount of $ 1 billion. This measure was announced as one of the possible forms of compensation for the loss of gas transit from the launch of Nord Stream 2. And then it becomes quite interesting.
"Hydrogen energy"... Hydrogen energy is considered the most promising area today. Depending on which Technology and from what raw material it is produced, hydrogen is “green”, “blue”, “yellow”, “gray” and “brown”. Europeans are most interested in “green”, produced by electrolysis from plain water using renewable energy sources, “blue”, obtained from methane by capturing carbon, and “yellow”, also produced by electrolysis of water, but using atomic energy. Russia, having both the resources and the appropriate technologies, has good prospects for conquering a significant share of the European hydrogen market. However, here we may face unexpected competition from Ukraine.
Yes, Nezalezhnaya has everything to generate and export "multi-colored" hydrogen to the EU:
At first, in this country there are four nuclear power plants that can be used in the production of "yellow" hydrogen, as well as large hydroelectric power plants and a large number of wind and solar power plants built in the period from 2015 to 2019, which can be used to generate the most popular "green" hydrogen ...
Secondly, Kiev is located on the EU border and has its own GTS, which may no longer be needed for the transit of Russian gas. It is simply impossible to convert the main pipeline to hydrogen, it will need major repairs and strengthening of the inner walls, but this is a completely feasible task. It can be simplified if you start pumping not pure hydrogen, but its 20% mixture with methane. This will certainly require technical and legal preparation, but nothing is impossible in such a project, and Germany has already shown interest in converting the Ukrainian GTS to Ukrainian hydrogen.
Thirdly, Nezalezhnaya can supply the so-called "multi-colored" hydrogen not through the main pipe, but in the form of LNG along the Danube. Then the task will be even more simplified.
Thus, if the EU and the United States support Ukraine, it has a chance to become a supplier of environmentally friendly fuel to the European Union, pushing Russia out of it.
- Sergey Marzhetsky
- www.p Pixabay.com
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