Input Paper “European Green Deal for Ukraine: current status and future”

As part of our project “Eastern Part­ner­ship Plus”, we are pub­lish­ing a second series of input papers on the topic of Perspec­tives and Prior­i­ties European Green Deal (EGD) in Ukraine, Georgia and Moldova. The authors from the region (Nataliya Andru­sevych, Manana Kochladze, Iuliana Cantaragiu) analyse the role of the Euro­pean Union in sup­port­ing the imple­men­ta­tion of the EGD and for­mu­late their polit­i­cal rec­om­men­da­tions for deci­sion-makers in Berlin and Brussel – für englische Seite.

By Nataliya Andru­sevych, Chair of the Governing Board, Resource and Analysis Center “Society and Environment”

Why is the European Green Deal important for Ukraine?

The European Green Deal (adopted by the EU in 2019) has a major impact on attitudes towards sustain­ability and green trans­for­ma­tion in Ukraine. Climate and envi­ron­mental issues are increas­ingly playing a role in the discourse of officials and in the business sector, and are appearing on policy agendas at the highest level. 

For Ukraine, there are several important points asso­ci­ated with joining the EGD processes:

• Ukraine becomes a part of the pan-European process of green transformation;
• Ukraine obtains new oppor­tu­ni­ties for green funding, envi­ron­mental moderni­sa­tion, and coop­er­a­tion on concrete green issues with the EU and its member-states;
• Ukraine receives a new impetus to implement its existing inter­na­tional commit­ments (EU-Ukraine Asso­ci­a­tion Agreement, Paris Agreement, Conven­tion on Biolog­ical Diversity, Energy Community Treaty).

Ukraine has estab­lished an extensive legal and policy basis for sustain­able devel­op­ment. National Sustain­able Devel­op­ment Goals for 2030 have been estab­lished by pres­i­den­tial decree. These nation­ally adapted SDGs are accom­pa­nied by a framework for moni­toring progress, with annual reports. The State Envi­ron­mental Policy Strategy and the more recent National Economy Strategy both identify sustain­able devel­op­ment as a key goal and principle. There are refer­ences to sustain­able devel­op­ment in numerous other national sectoral policy documents.

In practice, these and other strate­gies have had little effect on devel­op­ment trends. This is due to the overall lack of capacity for strategic and policy planning and imple­men­ta­tion in Ukraine. In addition, sustain­able devel­op­ment is usually perceived as simply “stable” devel­op­ment, i.e. contin­uous growth. Tradi­tion­ally, green issues have not been a priority on the political agenda in Ukraine, and the envi­ron­mental component of sustain­able devel­op­ment has received less attention than any other components.

What are the prior­i­ties for and forms of cooperation?

Ukraine has expressed its support for the EGD as well as an ambition to align its policies with the EGD goals. Ukraine initiated the bilateral high-level dialog on EGD and promotes coop­er­a­tion on concrete sectoral issues (such as hydrogen, CBAM, green alliances). Ukraine outlined its vision for future coop­er­a­tion on the EGD in a position paper presented to the European Commis­sion in the summer of 2020. Several policies and strate­gies now include refer­ences to the EGD.

The recently adopted “National Economy Strategy 2030” intro­duced the target of tran­si­tioning to a climate-neutral economy by 2060. The key targets envisaged by the EU policy documents imple­menting EGD in most sectors have been fully or at least partially incor­po­rated into Ukraine’s strategic documents (govern­ment programmes, action plans, strate­gies, etc.). However, Ukraine lags behind in many areas: while the EU is improving existing instru­ments, Ukraine plans to introduce them (for example, emissions trading system, chemicals regu­la­tion or waste management).

Several areas are in the focus of policy debate in the context of the EGD, while some other areas are not on the agenda. The top priority areas are energy, climate change, indus­trial policy in the context of CBAM and energy effi­ciency. The areas of shared interest within the EGD, as defined at the meeting of the EU-Ukraine Asso­ci­a­tion Council, include energy effi­ciency, hydrogen, coal regions in tran­si­tion, industry alliances and climate gover­nance archi­tec­ture. The zero pollution and biodi­ver­sity compo­nents of the EGD have not yet been the subject of much debate.

Increasing the energy produc­tivity of its economy lies very much in Ukraine’s interest and the country is facing a need to modernise its produc­tion base in all sectors. Thus, there are strong drivers for envi­ron­mental moderni­sa­tion, including energy effi­ciency. The business sector is inter­ested in obtaining state support to help modernise produc­tion facil­i­ties and is not prepared to cover moderni­sa­tion costs through private invest­ment alone.

Ukraine has made signif­i­cant progress in reforming its energy sector since 2014. There is a need for further incen­tives for reform in other areas: agri­cul­ture, transport, envi­ron­ment, climate change, chemicals, industry.

Most of the reforms have been driven by the EU-Ukraine Asso­ci­a­tion Agreement with the help of inter­na­tional technical assis­tance. For example, Ukraine has made progress in liber­al­ising its energy markets. The share in elec­tricity produced from renew­ables increased from 6.2% in 2016 to 12.4% in 2020. The EGD may promote these and other reforms and the decar­bon­i­sa­tion of the national economy, in partic­ular by greening foreign invest­ment by inter­na­tional financial institutions.

Ukraine has made insti­tu­tional arrange­ments specific to the EGD in reaction to the oppor­tu­ni­ties and threats emerging for Ukraine. In 2020, the Govern­ment of Ukraine set up a coor­di­na­tion body specif­i­cally to address climate change within the EGD initia­tive. In 2021, a special working group was estab­lished to deal with CBAM and ensure dialogue with the European Commis­sion regarding the draft regulation.

Further liber­al­i­sa­tion of energy markets, as well as signif­i­cant progress in other sectoral reforms, must be coupled with main­streaming decar­bon­i­sa­tion throughout all sectors. All reforms in the EGD-related sectors will require system­atic revision of the relevant national legis­la­tion, capacity building and invest­ment in infra­struc­ture in order to fully implement EU acquis.

In principle, macro-economic aid and other assis­tance are condi­tioned on carrying through key reforms. Imple­men­ta­tion the EU-Ukraine Asso­ci­a­tion Agreement is subject to contin­uous moni­toring and the results are publicly available. Macro-economic and technical assis­tance are usually subject to specific condi­tions related to specific reforms, such as anti-corrup­tion reforms.

What is the perspec­tive for the future?

All fields encom­passed by the EGD are covered by the provi­sions of the EU-Ukraine Asso­ci­a­tion Agreement, which means that successful imple­men­ta­tion of the Asso­ci­a­tion Agreement will enhance Ukraine’s prospects in the EGD context. The upcoming revision (update) of the Asso­ci­a­tion Agreement will strengthen Ukraine’s progress towards the EGD objec­tives, as well as  improve the prospects for a greater involve­ment of the country in the EGD processes in the EU.

The EGD creates a wide scope for mutually bene­fi­cial alignment of Ukraine’s policy and legis­la­tion with relevant EU policies and legis­la­tion, as well as coop­er­a­tion between Ukraine and the EU in key areas of the EGD. The EGD commu­ni­ca­tion itself and other imple­menting policy documents contain specific refer­ences to priority coop­er­a­tion countries, and to Ukraine in partic­ular. For example, the EU Hydrogen Strategy mentions Ukraine as a key partners. Ukraine already partic­i­pates in a number of green alliances (European Raw Materials Alliance, European Clean Hydrogen Alliance).

The EU has a general new proposal for its Neigh­bour­hood Policy, while Ukraine and other asso­ci­a­tion countries express the need for special “trio” approach, including with regard to to the EGD. It is very important to engage the EaP countries into discus­sions on the EGD in the EU to build the co-ownership of the process, including by taking into account specific circum­stances in each country.

Ukraine is willing to agree on an EGD roadmap with the EU, as are the Balkan countries. The devel­op­ment and imple­men­ta­tion of such a roadmap could provide new impetus for a green trans­for­ma­tion of Ukraine and support the EU’s own green tran­si­tion. The EU and Ukraine should launch flagship initia­tives – mutually bene­fi­cial strategic part­ner­ships or projects on specific issues, including climate gover­nance archi­tec­ture, energy poverty erad­i­ca­tion, climate-oriented agri­cul­ture, hydrogen, Ukraine’s partic­i­pa­tion in green alliances, devel­op­ment of a Natura 2000+ cluster to support biodi­ver­sity protec­tion in Europe. The EU and its member-states should support Ukraine’s inte­gra­tion into new green produc­tion chains through indus­trial dialogue, infor­ma­tion exchange, support for invest­ments in green inno­va­tion and infra­struc­ture. This will promote the inte­gra­tion of Ukraine’s busi­nesses into the new green system of the EU. Separate flagship initia­tives could target green cities, green commu­ni­ties, and more generally citizens of Ukraine (e.g. European Climate Pact and New European Bauhaus).

Nataliya Andru­sevych,
Chair of the Governing Board, Resource and Analysis Center “Society and Environment”

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