Ukraine

Ukraine has made substantial progress on climate action over the past year despite a difficult political and economic situation. In July 2021, Ukraine submitted its updated NDC to the UNFCCC. The submission includes the target of a 65% reduction below 1990 levels by 2030 including LULUCF, a significant improvement of its previous target of at least a 40% reduction below 1990 level by 2030, and an announcement of “climate neutrality” no later than 2060.

Overall, the CAT rates Ukraine’s climate targets and policies as “Highly insufficient” and its fair share target as “Insufficient”, a step forward from its “Critically Insufficient” rating under the CAT’s former rating methodology.

Between 2018 and 2020, Ukraine significantly increased its renewable energy capacity, excluding hydropower, from around 2 GW to almost 9 GW at the end of 2020. Although an important step in the right direction, electricity generation from renewable sources still accounts for only 8% of Ukraine’s total generation, significantly lower than the EU average of 39%, and in December 2020 Ukrainian authorities handed state-owned gas company Naftogaz the first exploration and development licence for natural gas in a large area in the Black Sea, with production set to start in 2024. On a positive note, at COP26 in Glasgow Ukraine announced to move forward its coal phase-out from 2050 to 2035 as part of becoming a member of the Powering Past Coal Alliance.

Ukraine has particular difficulties in accessing financing for climate action. 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 less than those of many countries which have received funding from the GCF in the past. The NDC modelling undertaken by the government indicates total financing needs of around EUR 540bn in the 2020-2030 decade for implementing Ukraine’s updated NDC. The ongoing war with Russia and economic recession are also major hurdles to advancing climate action.

Ukraine’s energy sector is in severe crisis: although steps have been taken to address the crisis the power sector payment regime is still on the verge of collapse, potentially leading to a power crisis. The generous “green tariff” introduced to attract investment into renewables has led to investment in the order of USD 4.5bn into wind and solar power in 2019 alone. The government, however, had only budgeted to buy roughly half of the renewable power that companies produced in 2020, and in 2021 is still far behind payments for the USD 1.87bn cumulative debt on the electricity market, and roughly the same debt for the gas market.

In April 2021, the Ukrainian parliament appointed Herman Halushchenko, vice president of Ukraine’s state nuclear operator Energoatom, as the new Minister of Energy and Environmental Protection. At his first working meeting, Halushchenko outlined his priority tasks: stabilising the energy system, the adoption of 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 of the coal sector to drive decarbonisation efforts.

The CAT rates Ukraine’s climate targets and policies as “Highly insufficient”. The “Highly insufficient” rating indicates that Ukraine’s climate policies and commitments are not at all consistent with the Paris Agreement’s 1.5°C temperature limit. Ukraine’s updated 2030 emissions reduction target is rated as “Highly insufficient” when compared to modelled domestic emissions pathways and as “Insufficient” when compared with its fair-share contribution to climate action. While this is an improvement from the previous NDC, Ukraine needs to set a more ambitious target for emissions reductions. Their current policies lead to rising, rather than falling, emissions, and are consistent with 3°C to 4°C warming.

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.

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.

To become effective the concept will still need to be supported by concrete policy measures through the National Energy and Climate Plan, which was expected to be completed in the second half of 2020 but as of September 2021 was still not finalised. While the initial 2050 phase-out date for coal set in the strategy is too late, at COP26 in Glasgow Ukraine announced it would move that date forward to 2035 as part of becoming a member of the Powering Past Coal Alliance.

In August 2021, the Ministry of Energy and Environmental Protection published a draft law on setting up an auction scheme for large-scale renewables which aims to resolve the liquidity issues surrounding the state-owned Guaranteed Buyer and the repayment of debts to RES producers under the memorandum between the Cabinet of Ministers and Ukraine’s renewable energy producers from June 2020.

In May 2020, the Ukrainian government approved the Economic Stimulus Program to help stabilise the economy in response to COVID-19. While the document mentions optimising the environmental tax to promote eco-friendly modernisations, links to climate and environmental policy are limited, and money from the economic stimulus funds is used for restructuring the coal industry to save mining jobs.

In addition, in December 2020, Ukrainian authorities handed state-owned gas company Naftogaz an exploration and development licence for natural gas in a large area in the Black Sea, with production set to start in 2024. If Ukraine neglects low carbon development strategies and policies, emissions could rebound and even overshoot previously projected levels by 2030, despite lower economic growth.

The full policies and action analysis can be found here.

In July 2021, Ukraine submitted its updated NDC to the UNFCCC. The submission includes the target of a 65% reduction below 1990 levels by 2030 including LULUCF, a significant improvement of its previous target of at least a 40% reduction below 1990 level by 2030, and an announcement of climate neutrality no later than 2060.

We rate Ukraine’s NDC target as “Highly insufficient” when compared with modelled domestic pathways. The “Highly insufficient” rating indicates that Ukraine’s domestic target in 2030 is 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. The Ukraine could move up its rating by setting its NDC reduction target in line with its planned policies.

We rate Ukraine’s 2030 NDC target as “Insufficient” when compared with its fair-share contribution to climate action. The “Insufficient” rating indicates that Ukraine’s fair share target in 2030 needs substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit. If all countries were to follow Ukraine’s approach, warming could reach over 2°C and up to 3°C.

We do not have sufficient information to assess Ukraine’s climate finance contribution.

Under the UNFCCC, Ukraine is an Annex I country and thus not eligible to receive climate finance through UNFCCC channels such as the GCF. The CAT methodology does not provide a clear answer for the Ukraine’s need for finance, although on balance it shows that Ukraine should, if at all, receive limited climate finance.

We evaluate the net zero target as: Target information incomplete.