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Green Steel pathway would turbocharge Ukraine’s post-war recovery, says new report from St Peter’s Research Fellow

2 July 2024

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Rebuilding Ukraine’s ravaged steel sector - once hostilities cease - presents a golden opportunity to harness the striking economic benefits of low emissions steel production, according to researchers at the University of Oxford. Dr Vlad Mykhnenko, Research Fellow in Sustainable Urban Development at St Peter’s College, is co-author with Dr Alli Devlin of the University of Oxford’s Department of Engineering Science (lead author).

Before the war, Ukraine was the 14th largest global steel producer with 21.4 million tonnes of crude steel output in 2021. But its pre-war steel industry was also one of the dirtiest in the world. In 2020, the Ukrainian steel industry was responsible for 48 Mt CO2: 15% of the country’s entire carbon dioxide emissions. Globally, steel-making produces more CO2 than any other manufacturing and construction industry, comprising around 8% of total global emissions – 2.6 Gigatons of CO2 per year, around eight times more than international aviation transport.

In their new peer-reviewed report, published in the Journal of Cleaner Production, Dr Devlin and Dr Mykhnenko provide a roadmap for rebuilding Ukraine’s steel sector to be near zero emissions by 2050. The industrial decarbonisation pathways assume Ukraine’s eventual accession to the EU. This makes Ukraine’s steel decarbonisation non-negotiable, as Ukrainian steelmakers would be subject to ‘The EU Green Deal’ target for near zero-emission steel by 2030, and open access to essential green export markets.

Dr Devlin and Dr Mykhnenko also note that a robust green steel sector in Ukraine would have ripple effects across the entire economy, for instance through stronger supply chain links. In 2021, for every $1 invested in Ukraine’s basic metals industry, an additional $3.28 was generated elsewhere in the economy.

They find that by 2050 a green steel pathway would generate $164 billion worth of additional GVA compared to one based on traditional coal-based steelmaking. Replacing coal as the main heating source in steel furnaces with renewable energy will radically shift the centre of gravity of Ukraine’s steel industry from eastern regions towards western and southern regions, and accelerate economic growth.

For a full steel production recovery, Ukraine would require investment of $62 billion over 20 years. This capital injection would cover $45.9 billion for renewable energy infrastructure, $6.6 billion for energy storage, and $9.5 billion for iron and steelmaking furnaces, in addition to funds to recover and upgrade the supporting transportation systems.

The most recent analysis by the World Bank of Ukraine’s post-war recovery and reconstruction needs estimates them at $486 billion. Thus, by comparison, Ukraine’s green steel investment needs amount to 6 percent of the country’s total post-war reconstruction needs over the first 10-year period. As well as access to capital, clear climate policies and strong regional trade links will be integral to successful redevelopment of Ukraine’s steel sector, according to the report.

However, according to the report, Ukraine could provide the ideal blueprint for a near-zero emissions steel industry. The country has the clear potential to develop the clean energy infrastructure needed – including a robust supply of renewable energy, and green hydrogen produced using renewable energy. Ukraine also sits on vast reserves of iron ore - the main raw material needed to make steel using virgin materials - and is well located for access to European customers.

Dr Vlad Mykhnenko said:

‘This research is not just another feasibility study. It is a call to action for steelmakers, investors, and politicians to ensure that after the war we really build back better. Investing in a Ukrainian green steel-driven recovery would not be charity. Green steel would become a sustainable growth promotion machine for Ukraine’s post-war development, and would generate almost twice as much economic growth than the traditional coal-based steel. This means more income and higher living standards for all Ukrainians. The capital needed will repay itself many times over, so private investors will benefit, too!’

The study has been published in the Journal of Cleaner Production: Techno-economic optimisation of steel supply chains in the clean energy transition: a case study of post-war Ukraine - ScienceDirect

About Dr Vlad Mykhnenko

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Dr Vlad Mykhnenko is an expert in geographical political economy and sustainable urban development. Since Russia invaded Ukraine in February 2022, he has emerged as a leading voice on the origins of the conflict in Ukraine and how the country might reconstruct and re-emerge post-war. He is frequently called upon to provide expert comment on Ukraine and has presented evidence in Parliament at the Foreign Affairs Committee’s evidence session on recovery in Ukraine.

Read more about Dr Mykhnenko