Ukraine

Country Information

Important Dates

MRP first draft submission: 
May 2014
Allocation of Implementation Funding: 
August 2014

Key Documents & Presentations

Most Recent
Document Language Date
PDF icon Ukraine: PMR Project Implementation Status Report 2017 English October 2017
PDF icon Ukraine: PMR Project Implementation Status Report English October 2016
Market Readiness Proposal
Document Language Date
PDF icon Ukraine: Final MRP English August 2014
PDF icon Ukraine: Final MRP Presentation English August 2014

Market-based Approach

Ukraine plans an MRV system with focus on electricity and industry because they:

  • have easily identifiable, large point sources which make up most of the emissions in the sector;
  • release a significant portion of GHG emissions (17%, 25% respectively);
  • provide a numerous reduction opportunities which are largely profitable;
  • have ambitious targets for decreasing dependency to exported fuels and increasing competitiveness, respectively; and
  • are subject to many regulations and reporting requirements, so this will not create significant incremental burden.

Draft MRV Law provides authority to mandate MRV for GHG emissions. While this law is under review and the consultation process on this law is starting, secondary and complementary legislation is necessary with regard to:

  • Procedure for realization of MRV of GHG emissions (monitoring, reporting, verification);
  • Procedure for accreditation of independent expert organizations that carry out verification of GHG emission monitoring reports;
  • Procedure for state registration of installations carrying out GHG emissions; and
  • Procedure for state control over MRV of GHG emissions.

Ukraine’s activities with the PMR will be focused on the two areas in support of the Ukraine’s Energy and Low Carbon Policies:

  • Development of a GHG emissions monitoring, reporting, and verification system in Ukraine as a first step towards the ETS; and
  • Development of assessments to support an informed decision making process on the use of market based instruments for Ukraine.

The PMR will support Ukraine to:

  • Design an installation-level energy sector MRV; and
  • Lay out a road map toward implementation of an ETS.

Sources: PMR Organizing Framework submitted by the State Environmental Investment Agency of Ukraine, October 28, 2011; Status of MRP (October 2013)

Emissions Trading

In November 2010, a draft of the Ukrainian Law “On the energy efficiency regulation” passed the first reading in Verkhovna Rada (Ukrainian Parliament), which included the proposal for a cap-and-trade system. The three fundamental building blocks to be defined for UkrETS are

  • Definition of basic policy decisions;
  • Infrastructure; and
  • Governance & Regulation.
Scope and Coverage
  • Imposing restrictions on CO2 emissions for entities of the power industry and metallurgy. Further the number of participants will gradually expand (chemical industry, cement industry, pulp and paper industry etc.);
  • An individual installation will be a subject to regulation. The enterprise may consolidate its several installations for allocation of carbon units and monitoring of emissions;
  • Within the PMR project it is necessary:
    • to determine the capacity and value (plus costs) of emission reductions;
    • to explore the readiness of the sectors to participate in the carbon market;
    • to assess the possible consequences (economic, environmental, social) from participation of these sectors in emission trading; and
    • to determine main barriers in the way of implementing these initiatives.
Setting a Cap
  • Absolute cap on the quantity of emissions in sectors;
  • Historical emissions in a certain base period to be used as basis for determining total cap
  • Approach of cap determining – bottom-up;
  • Sectoral cap adjustment taking into account sector specifics and national plans for improving energy efficiency.
  • Within the PMR project it is necessary:
    • to evaluate various approaches/principles/methods to set limits for target industry sectors; and
    • to analyze correlation between ‘rigidity’ of the cap and economic consequences for sectors.
Allocation of Allowances
  • Free allocation on the ground of historical emissions in the base period (grandfathering);
  • gradual transition to auctions and allocation based on specific industry factors (benchmarks) are foreseen in the future;
  • establishment of the database of the best available technologies for a gradual transition to the auctions and benchmarking;
  • Within the preparatory stage of the PMR project it is necessary:
    • to analyze alternative approaches and methods of allowance allocation, as well as possibilities, feasibility and timing of transition to the auctions and benchmarking; and
    • to determine optimal mechanisms of allowances allocation among the new participants, take into account early activity and avoid double counting.

Source: PMR Organizing Framework submitted by the State Environmental Investment Agency of Ukraine, October 28, 2011

Other Activities to Support the Development of Market-based Mechanisms

Ukraine will conduct analysis to support development of carbon pricing instruments will be focused on:

  • The cap and trade options, and other existing direct carbon pricing mechanisms;
  • ETS vs. Carbon tax;
  • The transition from one instrument to another; and
  • The key challenges of introducing ETS as opposed to other policy instruments

National Context

Ukraine ratified the UNFCCC and the Kyoto Protocol in 1997 and 2004 respectively and the country’s commitments under the Kyoto Protocol are not to exceed the emission level of 1990. By 2020, it aims to reduce GHG emissions by 20% than the base year, and by 50% by 2050.

Energy sector remains the main source of GHG emissions – it accounts for 70% of emissions, but its share in the aggregated emission structure is gradually decreasing: In 1990, the energy sector accounted for almost 74% of total emissions but in 2009 decreased to 69.7%. The share of agricultural sector decreased from 11.3% in 1990 to 9.3 % in 2009. On the contrary, the share of industry has grown from 13.9% in 1990 to 18.5% in 2009. The share of the waste sector also increased by almost 3 times during this period but still remains low (2.6% in 2009).

Restructuring the economy under the low carbon growth scenario is one of Ukraine’s top priorities as energy efficiency in Ukraine is 2.1 times lower than in the world’s average and 4 times lower compared to developed countries. Ukraine is also one of the leaders in terms of the amount of investments under the flexible mechanisms of joint implementation and emissions trading.

In collaboration with the PMR, Ukraine plans to focus on two target sectors: electric power and metallurgy having the highest economic, technological and institutional capacity of emission reduction. These two sectors were chosen based on three criteria: sector share in the total GHG emissions, size of the sector companies and potential emission reduction.

Sources: PMR Organizing Framework submitted by the State Environmental Investment Agency of Ukraine, October 28, 2011; Status of MRP (October 2013)

The State Environmental Investment Agency (SEIA), formerly National Environmental Investment Agency of Ukraine (NEIA), was established by the regulation #977 of June 30, 2007 as the central executive body guided and coordinated by the Minister of Environmental Protection of Ukraine.

Flagship climate change legislation is National Action Plan on Implementation of the Kyoto Protocol that was enacted in 2005. The main tasks under this plan are to:

  • Improve the national GHG emission and absorption inventory system;
  • Create favourable conditions to implement the "flexible mechanisms" of the Kyoto Protocol in Ukraine;
  • Prepare and publish national reports on climate change issues;
  • Develop National plans on adaptation and climate change impact mitigation;
  • Evaluate GHG emission reduction potential to 2020, strategic forecast and the assessment of climate change impact on various economy sectors, on the population and ecosystems;
  • Create a data bank on ecologically safe technologies that allow reducing emission volumes and increasing GHG absorption volumes; and
  • Implement measures on training and qualification improvement within the scope of UNFCCC and its Kyoto Protocol, for State employees, preparing personnel, and informing the public on climate change issues.

Flagship energy legislation is Ukraine’s Energy Strategy to 2030 targeting:

  • Reducing energy intensity of GDP by 50%;
  • Increasing the share of renewable energy from 3% to 19%;
  • Reducing electricity consumption in transportation through power grids from 14.7% in 2005 to 8.2% in 2030; and
  • Reducing energy intensity of steel industry by 30% in 2017 compared to 2007.

Besides, in the November 2010 draft of the Ukrainian Law “On the energy efficiency regulation" passed the first reading in Verkhovna Rada (Ukrainian Parliament), which included the proposal for a cap-and-trade system.

Currently, the legislative process initiated by the SEIA with draft MRV law which was submitted to the Ministry of Environment and Natural Resources is still under review and the consultation process on this law is starting. This law was planned to be reviewed and submitted to other governmental bodies for review and submission to the Parliament later this autumn.

Sources: PMR Organizing Framework submitted by the State Environmental Investment Agency of Ukraine, October 28, 2011; State Environmental Investment Agency of Ukraine; Status of MRP (October 2013)

Focal Point

The State Environmental Investment Agency (SEIA), as the central executive body, has the following main responsibilities:

  • to participate in establishing and providing for the execution of the state national investment policy in the environmental protection sector area as well as and the state policy in the field of regulation of anthropogenic adverse negative impact on climate change;
  • to execute the provisions set in the United Nations Framework Convention on Climate Change and implement the mechanisms of the Kyoto Protocol including implementation of greenhouse gases (GHG) mitigation projects, attracting investments to environmental protection; and
  • to establish and ensure the operation of the national system for the assessment of the GHG emissions and absorption.

Other relevant government bodies are Cabinet of Ministers of Ukraine, Ministry of ecology and natural resources, Ministry of fuel and coal, Ministry of economy, Ministry of industrial policy, and NAER.

Sources: PMR Organizing Framework submitted by the State Environmental Investment Agency of Ukraine, October 28, 2011; State Environmental Investment Agency of Ukraine

All Documents & Presentations

Country Work
Document Language Date
PDF icon Ukraine: Status of MRP English October 2013
PDF icon Ukraine: Update on MRP Progress English October 2012
PDF icon Ukraine: Organizing Framework English October 2011
PDF icon Ukraine: Country Update (May 2011) English May 2011
PDF icon Ukraine: Expression of Interest Letter English February 2011
PDF icon Ukraine: Expression of Interest (EoI) English February 2011
Technical Work
Document Language Date
PDF icon Ukraine: Status and Challenges to Monitoring National GHG Emissions English September 2014
Resolutions
Document Language Date
PDF icon Resolution PA/IP/2014-2 Allocation of Implementation Phase Funding to Ukraine English September 2014
PDF icon Resolution ORG-3: Implementing Country Participants' Participation English April 2011
  • Photo gallery of the State Environmental Investment Agency of Ukraine is available here.
  • Ukraine is engaged in the following initiatives:
    • UNDP, Germany and Eastern European Partnership: low carbon strategies
    • UNDP: “Capacity Building for Low Carbon Growth in Ukraine”
    • EU: legislative system adaptation
    • EBRD: “Preparedness for Emissions Trading in the EBRD Region (PETER)”
    • USAID: “MRV for Enterprise-Level GHG Emissions in energy sector in Ukraine”

Source: Status of MRP (October 2013)

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