Policies & action
We rate Ukraine’s policies and actions as “Highly insufficient” when compared to their fair share contribution. The “Highly insufficient” rating indicates that Ukraine’s policies and action in 2030 lead to rising, rather than falling, emissions and are not at all consistent with the Paris Agreement’s 1.5°C temperature limit. If all countries were to follow Ukraine’s approach, warming could reach over 3°C and up to 4°C.
In our rating methodology, we rate a government’s policies and action against the framework that is more favourable to it – fair share or modelled domestic pathways. Ukraine’s policies and action rate more favourably in comparison with its fair share contribution (“Highly insufficient”) than modelled domestic pathways (“Critically insufficient”), hence the former is incorporated into Ukraine’s overall rating, but both are relevant for understanding the country’s progress.
Ukraine’s planned policies would let emissions stabilise roughly at today’s level. If we were to rate the planned policies, we would rate them “Insufficient”, moving closer to a 2°C compatible pathway but it would still require substantial additional measures to be in line with a 1.5°C Paris-compatible pathway.
Policy overview
Between 1990 and 2000, emissions in Ukraine dropped by 55% from 942 MtCO2e to 427 MtCO2e excl. LULUCF. From 2001 to 2007, emissions started to increase again moderately, followed by a steep decline during the financial crisis in 2009 and further declines in recent years as a result of the conflict in Eastern Ukraine. The CAT estimates that Ukraine’s 2020 emissions (excl. LULUCF) were 66% below 1990 levels excl. LULUCF or 319 MtCO2e in total. That is 13 MtCO2e or 4% less than in 2019.
Currently implemented policies and the impact of the COVID-19 pandemic are expected to lead to an emissions level of 375-386 MtCO2e excl. LULUCF in 2030, which is above the NDC target of 323 MtCO2e excl. LULUCF. Planned policies would lead to an emissions level of 282-290 MtCO2e excl. LULUCF in 2030, overachieving Ukraine’s NDC target.
In July 2021, Ukraine submitted its updated NDC to the UNFCCC. The submission targets a 65% reduction below 1990 levels by 2030 including LULUCF, a significant improvement on its previous target of at least a 40% reduction below 1990 level by 2030, and for the first time includes an announcement of climate neutrality no later than 2060 (The Government of Ukraine, 2021).
The updated NDC was developed with a team of national and international experts, including broad public participation through a working group comprised of representatives of all relevant ministries, scientific institutions, business associations and non-governmental organisations, and is substantiated by an analytical review and modelling report.
Ukraine is in a difficult situation, as it struggles to access sufficient climate finance. The modelling undertaken to derive Ukraine’s NDC indicates total financing needs of around EUR 540bn in the period 2020-2030 for implementing Ukraine’s updated NDC (IEF, 2021). Since Ukraine is an Annex I country, it is not eligible for GCF financing, although its GDP per capita is among the lowest in Europe and below those of many countries which have received funding from the GCF in the past (Lo, 2021). Since it is also not a member of the EU, Ukraine is also not eligible for initiatives like the Just Transition Fund, which is helping coal-reliant countries like Poland to move away from fossil fuels.
Ukraine’s ongoing war with Russia and economic recession are major hurdles to overcome and the COVID-19 pandemic has additionally severely impacted Ukraine’s economy, leading to a drop in greenhouse gas emissions and accelerating the country’s energy crisis which had slowly been building for years. The quarantine measures enacted slowed down the country’s economic activity, and GDP dropped by 8.2% in 2020 (IMF, 2021). Both energy demand and production had been decreasing and brought the power sector payment regime to the verge of collapse (Prokip, 2020).
In May 2020, the Ukrainian government approved the Economic Stimulus Programme to help stabilise the economy in light of the COVID-19 pandemic (Government of Ukraine, 2020a). The programme included a number of short and medium-term measures for supporting Ukraine's economy for the period 2020-2022. While the document mentions optimising the environmental tax to promote eco-friendly modernisations, links to climate and environmental policy are not only limited, but money from the economic stimulus funds could even be used for restructuring the coal industry to save mining jobs (Government of Ukraine, 2020a; 350.org Ukraine, 2020; Zasiadko, 2020).
Indeed, in June 2020, the Cabinet of Ministers adopted an order prioritising coal use in Ukraine’s power sector, aiming to strengthen the domestic coal industry and preserve 20,000 mining jobs (Government of Ukraine, 2020c). The Ukrainian government should take into consideration that if low carbon development strategies and policies are not rolled out in the economic stimulus package, emissions could rebound and even overshoot previously projected levels by 2030, despite lower economic growth (Climate Action Tracker, 2020).
In March 2020, more than two-thirds of the Cabinet of Ministers were dismissed, which left the Ministry of Energy and Environmental Protection with an interim minister and no clear policy direction for the energy sector (Krynytskyi & Savytksyi, 2020). In April 2021, the Ukrainian parliament appointed Herman Halushchenko, vice president of Ukraine’s state nuclear operator Energoatom, as the new minister (Polityuk & Zinets, 2021). At his first working meeting, Halushchenko outlined his priority tasks: stabilising the energy system, adopting an effective market model that provides affordable electricity for citizens and profits for energy companies, integration in the European market and diversification of energy supplies as well as restructuring the coal industry to drive decarbonisation efforts (Polityuk & Zinets, 2021).
Ukraine is also looking to attract national and international investments for tapping natural gas reserves in its onshore blocks and in the Black Sea. In December 2020, Ukrainian authorities granted state-owned gas company Naftogaz a 30-year exploration and development licence for a large area in the Black Sea, with production set to start in 2024 (Afanasiev, 2021; Hornby, 2021). While locally-produced gas would lower Ukraine’s dependence on Russia, the country should rather focus on increasing its renewable energy generation to move towards a Paris-compatible pathway and avoid technology lock-in and the risk of stranded assets.
The ongoing cost reduction of renewables and the development of battery storage and renewable hydrogen will lead to the disruption of business models for gas-fired power plants in the longer term. This could result in higher electricity costs for customers if Ukraine were to invest in new natural gas projects (Krynytskyi & Savytksyi, 2020).
In January 2020, the Ministry of Energy and Environmental Protection published Ukraine’s 2050 Green Energy Transition Concept (Ukraine Green Deal) and presented it to EU officials as the country’s to meeting the objectives of the European Green Deal (Ministry of Energy and Environmental Protection Ukraine, 2020b; Mitsovych et al., 2020). It was the first Ukrainian strategy document that integrates climate and energy policy and that is based on the long-term energy system model developed for the second NDC (Mitsovych et al., 2020). To become effective, the concept will still need to be supported by concrete policy measures through the National Energy and Climate Plan (NECP), which was expected in 2020 but in September 2021 was still not finalised (EU4Climate, 2021).
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 document sets a 70% target for renewable energy by 2050, while modelling done in 2017 showed that Ukraine could reach a 91% renewable share by the same date (Diachuk et al., 2017; Morgan, 2020).
In July 2018, Ukraine published its 2050 Low Emission Development Strategy. This strategy provides emission reduction pathways for the energy and industry sectors based on four scenarios containing different ambition levels of decarbonisation measures and policies. The Ministry of Energy and Environmental Protection indicated that an update of the strategy together with Ukraine’s Green Deal, published in January 2020, might replace the current Energy Strategy of Ukraine 2035 (Mitsovych et al., 2020).
Since 2011, Ukraine has a carbon tax that applies to CO2 emissions from stationary sources in the industry, power, and buildings sectors. In November 2018, the Ukrainian parliament decided to steadily increase the carbon tax rate (currently 0.02 USD/tCO2) from January 2019 onwards. But even with this increase the rate remains far below 1USD/tCO2 in 2021 and still is among the lowest carbon prices in the world, and therefore unlikely to have an impact (Ministry of Finance of Ukraine, 2018; World Bank Group and Ecofys, 2018). New instruments for taxing carbon emissions are currently being discussed by the Ukrainian government, with one of the options being fuel-based taxation, i.e. taxing primary energy production and imports (Mitsovych et al., 2020).
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