Record growth in energy prices points the way towards the new energy development.
There are three key trends that are shaping the new energy right now. The first trend is the clustering of the global economy. Borders around the world were closed during the pandemic encouraging protectionism. However, the strongest economic relations have tied the countries together in clusters. Cluster Asia has brought together the economies with the total GDP of $50+ trillion. It is followed by cluster America “weighing” about $35 trillion and Europe, of which Ukraine is a part, with $18 trillion. It is cluster Asia that is the most powerful driver behind the growing demand for energy resources and, consequently, a sharp spike in energy prices.
The second trend is decarbonization. This year, the EU has for the first time given the full play to the instruments of market influence related to the environment and decarbonization. China has also announced about joining the program to reach net zero greenhouse gas emissions by 2060.
Following the surge in demand, stock exchange prices for gas reached $2,000 per 1,000 cubic meters. Indeed, the market will correct the current imbalances in energy markets. It will take some time, though it is the market developments and not the government interventions and administrative restrictions that will address the situation.
The third trend is a steady growth in energy consumption. The world will continue to increase energy consumption. The global outlook is that by 2050 the energy consumption will grow by 60%.
Before 2050, the natural gas will be the baseline source of energy. However, during the transition period it will be gradually supplemented with other types of clean energy, i.e. hydrogen and biogas. The sources of these gases are not tied to wells and storage facilities. They will be produced depending on the economic viability. It is the strategic requirement towards the distribution systems to integrate all energy sources and to supply them to the customers.
Ukraine’s gas distribution system, one of the most powerful in Europe, shall be prepared to work on hydrogen and biogas, as is the case in Germany, France, the Netherlands, the Czech Republic and other European countries. In total, the hydrogen and biomethane can add an equivalent of 10 bcm of gas which will allow Ukraine to abandon its import.
RGC hydrogen and biomethane projects are intended to implement the global energy trends in Ukraine’s energy infrastructure. This October, the first models of gas equipment of Ukrainian origin produced by RGC Production have successfully passed H2 tests. The next year, biomethane will come on stream in Ukraine's gas distribution networks and in two years we plan to start testing the supply of hydrogen and gas mixtures containing 20% of hydrogen.
Investments of UAH12 billion annually are needed to redesign the gas distribution system of Ukraine and get it ready to work on clean types of energy. Ukraine’s economy will receive an upgraded infrastructure that will provide it with clean energy and make it a full participant in international trade.