The COVID-19 pandemic has severely impacted Ukraine, currently leading to lower greenhouse gas emissions and accelerating the country’s energy crisis that had slowly been building for years due to a lack of long-term energy policy planning. Ukraine could reach its “Critically insufficient” commitment under the Paris Agreement based on current policy trends outlined in the 2050 Low Emission Development Strategy. If all policies in the strategy were to be fully implemented, Ukraine’s emissions would be significantly lower than its Paris target emission levels - even more so when taking into account the impact of COVID-19. Therefore, Ukraine has ample room to ratchet up its 2030 ambition in the near future. At this moment Ukraine falls into the group of countries whose Paris Agreement targets are so weak that it would take little to no effort to achieve.
We expect Ukraine’s GHG emissions in 2020 will be 6% lower than in 2019: pre-COVID-19 they were projected to be 5% higher. Restricted travel mobility, reduced energy demand and production as well as a slowdown in industrial production due to the COVID-19 pandemic are leading to this projected drop in emissions.
In May 2020, the Ukrainian government approved the Economic Stimulus Program to help stabilise the economy. While the document mentions optimising the environmental tax to promote eco-friendly modernisations, links to climate and environmental policy are limited, and local environmental NGOs argued that money from the economic stimulus funds could be used for restructuring the coal industry to save mining jobs. If Ukraine neglects low carbon development strategies and policies, emissions could rebound and even overshoot previously projected levels by 2030, despite lower economic growth.
Ukraine’s energy sector is in severe crisis: due to quarantine measures both energy demand and production are decreasing, and the power sector payment regime is on the verge of collapse, potentially leading to a power crisis. The generous “green tariff” introduced to attract investments into renewables has led to investments in the order of USD 4.5 billion into wind and solar power in 2019 alone. The government, however, had only budgeted to buy roughly half of the renewable power that companies are likely to produce in 2020, and is now looking at a cumulative debt on the whole electricity market of about USD 1.87 billion and roughly the same for the gas market.
In January 2020, the Ministry of Energy and Environmental Protection published Ukraine’s 2050 Green Energy Transition Concept (Ukraine Green Deal). Overall, the concept focuses on reducing GHG emissions through improving energy efficiency and boosting the deployment of renewable energy. While this is a step in the right direction, the 2050 phase-out date for coal is too late, and under the current plan Ukraine will achieve carbon-neutrality only by 2070. To become effective the concept will still need to be supported by concrete policy measures through the National Energy and Climate Plan, which is expected to be completed in the second half of 2020.
After the July 2019 elections, the former head of the Ukrainian Association of Renewable Energy, Oleksiy Orzhel, was appointed Minister of Energy and Environmental Protection, which sent a positive signal. In March 2020 however, more than two-thirds of the Cabinet of Ministers, including Orzhel, were dismissed and leave behind a mixed legacy: while the publication of the Ukraine Green Deal was a step forward, there was limited progress on other urgent matters such as coal phase-out, electricity market reform or a clear shift away from natural gas. The changes in government, followed by the COVID-19 pandemic have left the Ministry with an interim minister and no clear policy direction for the energy sector.
According to our analysis, Ukraine will easily meet its proposed targets with currently implemented policies.
The most recent historical data from 2018 shows that emissions excl. LULUCF have declined by 64% below 1990 levels. However, Ukraine’s current climate target would see its emissions grow substantially from present levels, at a time when they should continue to steadily decrease, under all approaches consistent with limiting warming below 2˚C. There is some uncertainty surrounding Ukraine’s NDC and its implementation of its climate policies, in part because of its political instability, but the work on updating the NDC is ongoing and a methodology has been approved by EBRD (Mykhailenko et al., 2019). In January 2019, a working group including about 80 representatives from government agencies, non-governmental organizations, local communities, academia, and business was established.
Ukraine has not yet defined which LULUCF accounting method it will adopt. Its NDC states that an approach to including LULUCF in its climate change mitigation structure “will be defined as soon as technical opportunities emerge, but no later than 2020.” Clarity on which accounting method it plans to adopt would be in the interests of transparency.
Ukraine’s projected emissions in 2030 taking into account the additional impact of the COVID-19 pandemic result in a range of 20% to 26% lower than the NDC target of 544 MtCO2e. In 2018, Ukraine published its 2050 Low Emission Development Strategy that in combination with additional measures quantified in Ukraine’s Sixth National Communication could reduce emissions to 21% to 42% below the NDC level in 2030.
Ukraine has stated that it will actively participate in current and future international market mechanisms, but its current emissions reduction target does not take these market mechanisms into account. When revising its NDC, Ukraine should elaborate on its intended accounting on both LULUCF and international market mechanisms, which would improve the transparency of its target and enable clearer comparisons with other NDCs.