The Biggest Obstacles for Ukraine Climate Policies: Lack of Needed Capital Investment and Widespread Corruption

The Biggest Obstacles for Ukraine Climate Policies: Lack of Needed Capital Investment and Widespread Corruption

This Post was submitted by Climate Scorecard Ukraine Country Manager Anastasiia Bushovska

The biggest obstacle for Ukraine in reaching its climate goals is in the lack of needed economic resources. For the gradual transition to a climate-neutral economy, Ukraine needs 102 billion euro of capital investment through 2030. There is currently no plan on how such investments are going to be attained. The absence of a plan on how needed financial resources are to be acquired brings a risk of not meeting Ukraine’s 2030 and 2050 carbon-neutrality goals.

Specific financial mechanisms are needed to support industry modernization. Currently, the slow introduction of new mechanisms is observed. For example, the mechanism of “green electrometallurgy” introduced a year ago was aimed at waiving metallurgic factories with lowered emissions from having to make additional tax payments. However, no company has yet to receive such a waiver though some have complied with the emission reduction requirements.

Another issue is the slow passage of laws that could help implement Ukraine’s NDC pledge, for example the proposed Laws on Industrial Pollution and Waste Management. These laws take years for final approval. The process of making amendments to the Waste Management Law in the past also involved at least one investigation around a bribe associated with passage of the law.

Widespread corruption undermines Ukraine’s financial and institutional ability to implement new policies. For example, companies often are charged with fines imposed by Ecoinspection for not complying with current environmental laws. Paying the fine is cheaper than complying and modernizing the facilities. Alternatively, the companies bribe government officials to avoid having to pay such fines. Therefore, the budget under recovers the money that could have been used to strengthen climate mitigation policies.

The ongoing conflict between Ukraine and Russia requires financial resources to be able to further defend the country’s borders. That is also one more factor impacting the ability of Ukraine to mobilize enough resources towards environmental causes.

Possible approaches for creating stronger climate policies include:

  • Increasing Ukraine’s carbon tax and redirecting it to environmental causes (currently it goes to the general budget). The amendments for the increase in carbon tax still need to be approved
  • Enabling already existing industry emissions reduction policies and introducing such mechanisms for other industries
  • The introduction of a Climate Fund which would provide financial resources needed to reach Paris Agreement goals
  • Increased anti-corruption efforts and regulation of lobbying

With governmental support of the European Green Deal, Ukraine needs to undertake urgent and ambitious climate actions. Such actions are needed not only to stay competitive in the European Market but to keep its population healthy, safe, and protected from the effects of climate change.

Contact Persons

Shmygal Denys – the Prime Minister of Ukraine,

Radina Anastasiia – the Head of the Verkhovna Rada of Ukraine Committee in questions of anti-corruption policy,

Abramovskyy Roman – the Minister of Environmental Protection and Natural Resources of Ukraine,

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