Oil vs renewables: should Ukraine be subsidized
Global energy policy is at a crossroads.
On the one hand, countries are increasing investments in renewable energy sources (RES), preparing for the transition to carbon neutrality. On the other hand, traditional oil and gas projects continue to generate profits, ensuring energy stability. Ukraine, which has significant potential in the RES sector, at the same time remains dependent on fossil fuels. In the context of war and economic challenges, the government is forced to decide whether to support the drilling of new oil fields or to fully concentrate on the development of clean energy.
Current situation in the oil and RES market
Global trends indicate a global shift away from fossil fuels. The governments of the US, EU and China are intensifying policies to support solar and wind energy, while reducing subsidies for oil and gas projects. In Ukraine, the situation is more complicated: the country has significant oil and gas reserves, but their development requires government subsidies and investments.
Ukraine’s energy sector has suffered serious losses since the Russian invasion, and energy shortages remain a key issue. This has forced the government to look for quick solutions to ensure stable supply, and oil and gas appear to be the most affordable option in the short term.
Arguments in favor of state support for drilling
1. Energy security. In the short term, Ukraine needs a stable source of energy, and developing its own fields will reduce its dependence on imports.
2. Economic factor. Developing the oil and gas sector can attract foreign investment, create jobs, and help restore the economy.
3. Transition period. While renewables are developing, Ukraine needs to have backup capacity, especially in times of war.
Counterarguments: why it is worth focusing on renewables
Global trend towards decarbonization. Investments in drilling may not be necessary in 10–15 years, when most countries will switch to clean energy.
Access to international financing. Ukraine can receive significant support from the EU and the US for the development of RES, as world banks provide priority loans and grants specifically for such projects.
Environmental factor. Oil production has a negative impact on the environment, and in the context of climate change, states must minimize greenhouse gas emissions.
Ukraine must balance short-term needs and long-term prospects. Temporary support for drilling may be justified to ensure energy stability, but the main strategy should be to expand RES.
Should drilling be subsidized? The answer depends on whether Ukraine is ready for economic and technological transition. If the country effectively integrates into global trends and attracts international financing, the emphasis should shift from oil to clean energy. Otherwise, there is a risk of remaining dependent on fossil fuels when the world has already moved to a new level of energy policy.
Yuriy Atanov, specially for "Ukrainian Energy"
