Ukraine will get a transformational amount of foreign aid in the next few years as it rebuilds from Russia’s invasion. But it could be its tiny neighbor Moldova that undergoes the greatest post-war transition and revival. This private investment and foreign assistance could transform Moldova—Europe’s poorest country—into the continent’s first truly green country.
With a population of just over 2.5 million people, Moldova is an oft-forgotten country that’s probably the last place many would think could be at the forefront of a green revolution—and for good reason. According to the International Energy Agency, it is one of the least energy self-sufficient countries on Earth. Moldova is utterly dependent on energy imports—99% of its oil and 100% of its natural gas is imported. The country has a single, lone power plant, which is problematically located in the Russian-backed separatist region of Transnistria. This is a recipe for an energy disaster.
Moldova’s gas sector is also almost entirely controlled by a monopoly called Moldovagaz, which is 51% owned by Russia’s gas giant Gazprom. This arrangement has allowed Moscow decades of punitive, sometimes vindictive control. For example, Gazprom claims $800 million is owed by Chişinău via Moldovagaz, although President Maia Sandu announced on Sept. 3 that a Moldovan government audit found no legitimate debts. The ensuing litigation is likely to be long and costly.
Further, even though Moldova isn’t importing any Russian gas directly now, the country is stuck with gas contracts both deeply disadvantageous and legally unnavigable, agreed to by Moldovagaz, that could prove extremely costly to escape. The latest dates to October 2021 and commits Chişinău to five more years of Gazprom. And pro-Russian actors in either the Moldovan government that fell in February 2023, or possibly within Moldovagaz, deleted the files Chişinău needs to break the contract.
Yet it is these deeply unfavorable circumstances that might just prove to be an enviable advantage in the green transition. Whereas countries like Germany and Poland have to dismantle massive energy systems dependent on mostly gas and coal, respectively, Moldova has the counterintuitive luxury of being able to almost start from scratch. At the risk of diminution: Instead of trying to turn a massive tanker in a narrow canal, it must only pilot a dinghy.
Indeed, Moldova barely registers on energy demand. Its overall consumption per capita is approximately half the European average at 1.5 tonnes of oil equivalent, 3 billion cubic meters (bcm) of natural gas, and just 2,000 KWh of power annually. Replacing this with renewable or other clean sources is therefore a relatively small task, and one made easier by the fact that Moldova’s electricity grid and natural gas infrastructure is already connected to its neighbors. A single 300 MW solar or wind farm, for example, could alone decarbonize the power for 300,000 homes. All the country needs to do is attract a few investors into the energy sector and the job will be half done already, and many of those potential investors are already looking at Ukrainian reconstruction projects that could easily incorporate Moldova. To continue the boat metaphor, Chişinău could mostly achieve its energy transition without even having to paddle.
That proverbial little boat is also being outfitted with a massive motor in the form of ample foreign aid. In 2022, over $1 billion was pledged to Chişinău, mostly from the U.S. and E.U. The U.S., for example, gave over $100 million in 2022, of which $40.5 million was energy-related funding and another $30 million was budget support “to help ameliorate the energy crisis.” The assistance has continued to pour in this year. In February, the U.S. announced an additional $300 million in energy support for Moldova. International finance institutions like the World Bank and European Bank for Reconstruction and Development are likewise assisting Moldova. Coupled with potential private investment, this could be an energy transition bonanza.
Thankfully, Chişinău is exploring building a new energy sector reliant on renewables instead of foreign fossil fuels. In late 2022, Western-backed Moldovan President Maia Sandu quietly pitched the E.U. on a plan to make the country carbon neutral by 2035. This would require the development of biomethane, the construction of electricity storage facilities, weatherization of existing buildings, electrification of heating with heat pumps and residential solar panels, and other innovations. Wind farms are also under active consideration.
To do this, Moldova will need an estimated investment of $1 billion per year. That is, of course, what it is now getting, albeit with the restrictions and conditionalities incumbent with foreign aid. But with assistance, supply chains, expertise, and especially private investment from the West, Moldova—including Transnistria—could be successfully pried from Russia’s grasp all while the cause of decarbonization is advanced.
Of course, these plans are easier formulated than implemented, and Chişinău has long gotten in its own way on reforms. There are considerable corruption concerns in Moldova. Decades of being supported by the generosity of foreign governments has created something of a culture of impotence, too. The country has had opportunities to weaken the Kremlin and Gazprom’s stranglehold before but hasn’t taken them.
But President Sandu and her new government have been taking some concrete steps to begin to find a strategy to escape Gazprom. In June, Chişinău brought on as a key advisor Ukraine’s Andriy Kobolyev, who as the head of Ukraine’s gas monopoly, managed to free Ukraine of Russian natural gas dependence—creating a blueprint for Moldova to do the same. His team also bested Gazprom in court amid a legal dispute concerning gas contracts to the tune of $2.9 billion, and got Ukraine paid.
Less promisingly, Chişinău has shown itself to be oddly hostile to private investment in its energy sector. This will make it very difficult for the country to modernize and attract the more flexible capital of the private sector, versus the cumbersome and restricted support of foreign governments. It also means that shifting political winds in Washington, London, or Brussels could stymie Moldova’s plans at any moment. Energy transition ambitions could also be stalled by shifts in Moldovan politics if they rely on bilateral political relationships instead of private contracts.
What’s more, most of the few companies that have bravely invested in the Moldovan energy sector in the last 20 years have been undermined or driven out. Spain’s Gas Natural Fenosa, Moldova’s largest supplier and distributor of electricity, suffered over €102.6 million (($110.06 million) in setbacks amid a long running dispute with the government over electricity tariffs. Experts familiar with the situation believed it was an effort to prevent any profit from accruing to the company by restricting it from charging customers enough to recoup its costs, plus some form of mismanagement or incompetence or the triumph of vested Kremlin interests. Rotalin Gas Trading, the largest private gas company in the country and the only private competitor to Moldovagaz, is now in a similar legal dispute over gas tariffs. In June, Moldova’s energy regulator authorized Moldovagaz to charge higher prices than private investors can charge for the same gas supply services. Few if any renewables investors are likely to enter the Moldovan energy sector until this business climate changes.
But if Chişinău settles the lawsuits by private energy investors, creates an attractive regulatory structure to govern renewables projects, and breaks free of Gazprom, then the resulting wave of investment and the goodwill and foreign assistance from Western governments should be more than enough to help the country transform. To become further attractive to private capital, Moldova could offer incentives to future investors in biofuels, wind, solar, and more. Western governments and international banks should be willing to offer guarantees, too, that would sweeten the deal.
This moment is an unparalleled opportunity for the smallest victim of Russia’s centuries of energy persecution and dominance. Chişinău has the vision of a clean, green, carbon neutral future, and it has the money and prospects with which to fund the transition. Becoming Europe’s first green country would only accelerate Moldova’s bid to join the E.U. And what better way to stick a thumb in Vladimir Putin’s eye than to become energy self-sufficient and eschew the fossil fuels that help line the Kremlin’s coffers? Chişinău could pave the way.
More Must-Reads From TIME
- Why Cell Phone Reception Is Getting Worse
- The Dirty Secrets of Alternative Plastics
- Israeli Family Celebrates Release of Hostage Grandmother
- We Should Get Paid for Our Online Data: Column
- The COP28 Outcomes Business Leaders Are Watching For
- The 100 Must-Read Books of 2023
- The Top 100 Photos of 2023
- Want Weekly Recs on What to Watch, Read, and More? Sign Up for Worth Your Time