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Yurii Taranyuk:
KNESS Co-Founder. Chief Operating Officer Advisor, KNESS Group


Humanity is coming of age
Yes, it is coming of age. Indeed, if human beings realize the responsibility for their deeds, understand a relation between the cause and the effect, including the effect of their own behavior - it means they are coming of age.
In the most developed countries, an attempt to leave our planet in its initial condition, the way it was before, is high on the agenda. Not only the economic expediency in choosing development paths is getting more popular in the world. Environmental issues form «red lines» that are virtually a taboo in decision-making. A threat faced by humanity in the form of the environmental catastrophe is caused by its lifestyle. It is not something abstract anymore; perspectives of significant climate changes are just several decades ahead in the temporal dimension.

I do not want to repeat myself about СО2 emissions and СО2 impact on the planet's climate. And we should understand where Ukraine is in this situation. Can it be here?

Everyone who comes to power in our state faces a stigma of the poorest European country. We constantly hear slogans and promises to bring tariffs down. I am not saying this is bad; however, promises to reduce tariffs are voiced not to build a new energy system that would provide such an opportunity. We constantly hear that problems of high tariffs are caused by corruption in this field. But all of us understand perfectly well that the energy industry in Ukraine predominantly uses last-century technologies. And now everything is virtually reduced to attempts to milk the existing system for all its worth, artificially restrict tariffs, and introduce the rules of the game aimed at quick gains in terms of price reduction.

A reform introducing the electricity market in the energy industry should look impressive. However, currently, a notion of price ceiling has been introduced in the industry, which, by logic, contradicts an idea of the market. In the market, prices should be set as a result of the competition, not through imposed restrictions.

Another interesting fact is provided by the comparison of the «hand- set» RES tariffs with totally «hand- set» tariffs for nuclear and thermal power plants. Manipulative conclusions of those comparisons are striking.

The energy sector development strategy that is in effect in our country, is an extremely interesting document. It envisages the development in all directions: from intensified extraction of fossil fuels to the RES development. This is an exemplary case of the multivariate dualism. A good-for- nothing document from the point of selecting a development vector.

In this situation, conducting changes in the legal framework to encourage RES development is very revealing: on the one hand, the state support is granted; on the other, the quota limits may be so insignificant that a new, young industry will simply cease to exist.
In my opinion, all those problems exist for a simple reason. All thoughts of those who establish the rules of the game in the market, do not go beyond a 5-year horizon. Where is that leading? First of all, to the lack of strategic thinking. A short-term perspective does not need a strategy, and what is not needed, is not viable.

What I am getting at… Humanity is coming of age, but we are still dealing with local urgent issues not in the context of growing up, but rather that of fire-fighting. The nuclear units have their lifetime extended? Not to worry, we still have 20-30 years ahead! Thermal units are using obsolete technologies, pollute the environment and produce huge СО2 emissions? Not to worry, we do not affect the global environmental situation! Our businesses are not energy efficient? That's fine, let's bring tariffs down to support them! The current energy system cannot arrange for connecting soaring RES facilities? That's fine, we will simply restrict their growth.

I am not trying to lobby for RES, nor to campaign for the creation of special conditions for RES.
Overprotection creates an artificial environment that results in the rise of non-competitive players. I am saying about a need in the serious, weighted and thought-out writing of the development strategy for the energy sector of Ukraine. I think that the most important thing is to understand that it should not be an abstract, populist document, but rather a real roadmap to the vision that we will accept; a practical guide that will lead us to the goal set, step by step. Currently, we, on the one hand, are trying to dovetail with a popular environmental trend; on the other, we compromise, and compromise quite significantly, to deal with our urgent economic problems. We are not an actor yet. This situation makes it impossible to construct a new energy sector model. At the same time, our society does not realize how serious global environmental problems are today. However, it should seem, who if not us after the Chornobyl catastrophe must understand the values of environmental protection.

Another important question. What is the role of the state in formulating such a development strategy? Till now, this role has been quite exhaustive, only the state is entitled to form such a strategy. An
attitude to the business as a subject of the industry in many respects resembles an attitude to nouveau riches who only want to get rich quickly through speculations. For instance, in our country, corporate social responsibility is not too vivid, but it is one of the cornerstones. We are arriving at that; many things are changing. How old are we? Is the country 28? This is not much. But both political elites and businessmen start to understand now that it is safe and comfortable to leave at home, in a successful society. If you live in a society that is not successful, many risks and discomforts arise. A successful society requires social responsibility. We are going in that direction, bit by bit. The society is growing up. I think that the biggest value is in the understanding shared by most people in our country that they can change something. Fewer people are looking for a «good king», somebody who will deal with all our problems. And this factor must not be neglected. Respectively, the responsible business can and should be involved in the development of such a strategy; indeed, this business will have to implement it in the future.

Another serious argument is the steady progress. No matter how the steam engine resisted to the combustion engine in the past, it was not able to survive a massive emergence of new technologies. The same will happen in the energy sector: the world is changing very quickly; we already have severalI can say what I believe in. We have conducted a huge reform. I have talked a lot about the flaws of this reform, but this is like not to have a car or to have a car. In any case, this is a big step forward. We have many problems with the electricity market, many formalities, many restrictions. But the market has finally emerged. This is our chance to overcome the natural monopolists, at least some of them. I hope that issues of the monopolization of the electricity market will be resolved; this opens opportunities for everybody: both to the «green», and the «non-green» alike. This is how the free market forms. I am sure that in the nearest future RES technologies will become completely competitive. I believe that people will think about the future perspectives of the planet. Most important, it seems to me that people's values are changing. Would anybody think about waste sorting 10 or 15 years ago? Nobody! Today, this is a real trend; I come to the small town where my parents live, and there are waste sorting bins near the houses. I am not speaking about Europe; this is a must-have over there. We are looking now at how they live; we like it, we are attracted by that. With all the changes in psychology. And this directly correlates with how the industry and energy sector should develop. People want not only to gain more, but to live in

The only remaining question is: whether we will transit to the new principles of the energy system architecture independently and prudently, having developed a vision and a strategy, or whether we will remain in the old uncompetitive, in terms of the economy and values, system, and will be dragged into the new world.

Unfortunately, I cannot propose a clear path to resolve this problem. However, I think, there is no easy solution here, as it is a matter of creating a fundament to enable the development of the whole sector; moreover, of the innovative fundament. The task is to create something new. Something that the leading countries of the world only start creating. On the one hand, this is extremely difficult; but, on the other, it opens many opportunities.

Summing up, I would like to stress an urgent need in the visionary and strategic planning of the development vector, coupled with the creation of such a program that will be trusted by everybody. And the responsibility for the development of this program should rest not only with the state but with all stakeholders of the energy sector.