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

Foto: Yannick-Morel­li/ shutterstock.com

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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