NGOs Centre for Environmental Initiatives “Ecoaction” and Ecoclub are organisations that work in the field of environmental protection, climate change mitigation and adaptation, and promote the use of renewable energy sources.
To fulfil the tasks of the organisations and to support the achievement of Ukraine’s goals in the field of energy, climate and environment, Ecoaction and Ecoclub consider it necessary to appeal to you with the following.
During the Ukraine Recovery Conference (URC2023), which took place in London on 21–22 June 2023, the European Commission announced the creation of a special financial instrument for Ukraine (Ukraine Facility), providing financing of up to EUR 50 billion.
As part of the implementation of this program, the Ukraine Plan is being developed, which will reflect a comprehensive vision of the recovery and development of the country for 2024–2027, which will include sections on European integration, digitalisation, regional development and climate.
The relevant ministries and departments coordinated by the Ministry of Economy are responsible for preparing the Plan. Since August 2023, consultations of specialised and sectoral groups with businesses were held, particularly, in the fields of energy, agriculture and infrastructure.
However, to ensure a more transparent and inclusive approach to decision-making, it is important to involve not only the business community but also civil society organisations in the discussions. We have repeatedly addressed the Ministry of Economy and the Ministry of Development of Communities, Territories and Infrastructure of Ukraine regarding this issue but, as of today, have not received any response.
At the same time, we draw your attention to the fact that representatives of environmental non-governmental organisations received a letter from Virginijus Sinkevičius, the EU Commissioner for the Environment, Oceans and Fisheries, where it is emphasised that the public is a key partner of the European Commission for evaluating Ukraine’s progress in the areas of legislation and implementation. It was emphasised that civil society input is important in the future Ukraine Plan for the Ukraine Facility, as these documents are interlinked.
Ecoaction and Ecoclub have developed a joint position and are sending it for further consideration in the development of the Ukraine Plan.
We express our respect and willingness to be involved in the process of developing the Ukraine Plan for the EU’s Ukraine Facility.
Contacts for feedback:
Ecoaction’s e-mail address: email@example.com
Ecoclub’s e-mail address: firstname.lastname@example.org
Olga Polunina, Executive Director, Centre for Environmental Initiatives “Ecoaction”
Andrii Martyniuk, Executive Director, Ecoclub
Joint Position of NGOs Ecoaction and Ecoclub on the Ukraine Plan
Problem 1: Determination of tariffs for heat and electricity based on market indicators.
Unfortunately, the transition to a market model of regulation of the electricity market, the corporatisation of national gas companies, and the transfer of the right to set tariffs for thermal energy and communal services to local self-government bodies did not lead to the introduction of market mechanisms for determining the cost of thermal and electric energy.
Currently, despite the raising of the upper price caps for the electric energy market and the determination of indicators for the price of gas, the cost of electricity and thermal energy for the population does not cover the economically justified cost of such energy. This, in turn, blocks opportunities for modernisation of existing thermal power plants/combined heat and power plants, creates distorted price signals to consumers and is one of the biggest obstacles to investments in the context of payback in energy efficiency and renewable energy sources (RES) in communities. According to various estimates, administrative intervention in the market work of producers, suppliers, and traders, based on political decisions, leads to losses of GDP at the level of 7% to 15%. In addition, the lack of liberalisation in the tariff policy suspends not only the prospect of reducing energy consumption due to the implementation of energy-efficient measures but also blocks the development of the market for the production of high-quality energy-efficient materials and equipment that are in demand in Europe and the world.
Preparation and implementation of an action plan that will make it possible to determine tariffs following market indicators and not political needs. The anchor points of such a plan should be the consolidation of the following provisions:
- Carrying out an information and explanatory campaign for the population, which will include information about the level of tariffs in other countries, clarification about the impact of tariffs on the modernisation of production equipment, explanations about the impact of the cost of electricity and thermal energy for business on the cost of goods and services, which are ultimately consumed by the population, notification of the possibility of obtaining assistance from the state, in case of inability to pay at higher tariffs;
- Bringing the prices of electricity, gas and central heating to economically justified prices;
- Providing the public with information on state control tools for the implementation of investment programs in the context of spending funds received by producers and suppliers as a result of tariff increases, for equipment modernisation, introducing energy-efficient technologies in industry, etc., and involving the public in the implementation of such tools;
- Increasing the level of responsibility of producers and suppliers for the quality of services (including central heating), through, but not limited to, simplifying the procedures for submitting and considering complaints from consumers and the public;
- Making payment for consumed services in the field of energy only in accordance with the data of metering units;
- Providing exclusively targeted subsidies in monetary form to households that will require them due to the inability to pay for the services consumed at the new tariffs. At the same time, the method of calculating subsidies should encourage recipients to invest in the thermal modernisation of their households and in RES.
The action plan defined above is proposed to be fixed as a legislative act, which would provide for the introduction of changes in the relevant regulations and the development of the necessary secondary regulation.
The implementation of the action plan will be a positive signal for investors, who will understand the source of return on investment and will contribute to the development of a civil society that bears financial obligations but influences the control of the use of paid funds.
Problem 2. Lack of a strategic vision for the development of central heating.
In the cities of Ukraine, centralised heating supply (CHS) is mainly preserved. This asset allows for a significant reduction in the costs of switching to low-carbon heating. However, a significant part of the infrastructure of centralised heating supply in Ukraine is outdated and has not been modernised for many years. Besides, the predominant fuel of CHS systems is natural gas, which makes the country dependent on a limited resource with a high price, the use of which has a negative impact on the environment and climate. Accordingly, prices for services and regulation in the field of central heating prompt both local authorities and consumers to abandon central heating.
- To adopt at the state level a position document on the need to preserve central heating systems as a way to provide heating to the population, with the determination of the possibility of implementing diversification options to avoid risks associated with military actions.
- To develop and adopt a new legislative regulation that will include:
- Economic incentives both for representatives of local self-government bodies and for end consumers to use the CHS;
- Requirements for modernisation and updating of the CHS infrastructure;
- Diversification of energy sources for heating and the transition to (a) electric heating with the use of heat pumps or (b) sustainable biomass;
- Stimulating the use of biomass for the production of biogas fuel, which should become a carbon-neutral alternative to natural gas.
- To create support programs at both the state and local levels for heat pump installation to provide heating in multi-story buildings.
The implementation of such a program will make it possible to abandon gas for heating and water heating, while the corresponding savings will be up to 80%. Currently, most European countries subsidise the installation of heat pumps, thus contributing to their own energy independence. According to the European Heat Pump Association (EHPA), about 16% of residential and commercial buildings in the EU are equipped with these devices. According to the RePower EU plan, which envisages reducing the dependence of EU countries on fossil fuels, heat pumps are the main technology for replacing natural gas in residential and commercial heating.
Problem 3: The need for different-from-declarative support for the development of electricity production from renewable sources.
Currently, the Laws of Ukraine “On the Electric Energy Market,” “On Alternative Energy Sources,” and the Energy Strategy of Ukraine until 2050 have the goal to support the production of electricity from RES and to use renewable sources.
However, the level of payments for electricity produced from renewable sources does not exceed 50% of the cost of produced electricity, while tariff coefficients, formulas for calculating the cost of imbalances, and support conditions as such are constantly changing for producers. The connection of new installations is complicated by the lack of transparency of the current connection procedures and the lack of codification of building regulations in the context of requirements for the construction of RES generation objects.
The lack of stability in the regulation of the energy sector is the main problem for attracting investments in it, and the complication of procedures by introducing new complex mechanisms does not promote the implementation of such mechanisms on the part of the public.
- Ensuring full and timely current settlements with RES producers by:
- Refusal to artificially restrain electricity prices and provide the Guaranteed Buyer with the opportunity to ensure the maximum income from the sale of electricity;
- Opening export of electrical energy from RES;
- Timely adjustment of the transmission tariff for prompt consideration of additional income or adjustment for the amount of the deficit;
- Cancellation of regulatory documents regarding payment restrictions on the market;
- Adjustment of the mechanism for calculating the cost of the RES development service and approving its cost, which will not make RES producers dependent on the actions of the Guaranteed Buyer and the transmission system operator.
- Implementation of parliament members’ control over the correct implementation of secondary legislation on the implementation of the Law of Ukraine “On Amendments to Certain Laws of Ukraine Regarding the Reconstruction and “Green” Transformation of the Energy System of Ukraine.”
- Simplification of the joining procedure for future RES generation facilities and codification of requirements for their construction.
- Creation of a simple and accessible access procedure to the self-generation mechanism to develop distributed generation;
- Implementation of effective state programs to support participants in the self-production mechanism by providing affordable loans;
- Consolidation of unchanged support conditions for renewable energy.
Problem 4: The need to consider the challenges of climate change that are already taking place in Ukraine.
To receive European investments, post-war reconstruction plans must meet the criteria set by EU legislation, in which adaptation to climate change must be integrated into sectoral and local policies, taking into account the impact of climate change on society, the economy, infrastructure, and the environment. It is necessary to integrate climate adaptation measures into strategies for the recovery of local economic and social development, which will take into account the inevitable consequences of climate change. Under the optimistic scenario, by 2040, an increase in the average annual temperature in Ukraine is expected within the range of 0.8–1.1°C; there is also an increase in the redistribution of precipitation during the year within the range of ± 20% with an increase in the cold period and a decrease in the warm period; the number and frequency of spontaneous hydrometeorological phenomena will also increase. Such changes will lead to the need to rebuild the infrastructure of settlements and communities within the next 10–15 years. Therefore, it is more effective to carry out post-war reconstruction taking into account adaptation measures.
Some communities in Ukraine, which are signatories of the Covenant of Mayors, have already developed detailed plans for reducing carbon emissions and developed adaptation measures. These Sustainable Energy Development and Climate Action Plans (SECAPs) calculate the community’s ability to reduce carbon dioxide emissions based on real indicators and propose specific measures to achieve this goal. Measures contain a description of the necessary steps and an economic rationale. A large part of the adaptation measures do not require significant investments, provided that they are taken into account at the planning stage (for example, the colour of buildings, the arrangement of nature-oriented adaptation measures in the road infrastructure, such as green belts for the accumulation and drainage of rainwater, to reduce the risk of flooding of highways , etc.).
- Consolidation at the legislative level of the main provisions of the already developed action plan with the fixation of the following necessary steps and components:
In the short term — 2023–2024:
- Approval of the state methodology for assessing vulnerability to climate change;
- Approval of the state methodology for the development of adaptation measures to climate change;
- Conducting an assessment of vulnerability to climate change in each of the regions of Ukraine;
- Conducting a vulnerability assessment in communities that are already preparing recovery plans based on regional assessments;
- Ensuring the possibility of public participation in the process of preparing proposals and recommendations for the development of the National Energy and Climate Plan, which should become part of the larger post-war reconstruction plan.
In the medium term — 2025–2027:
- Conducting a vulnerability assessment in all communities of Ukraine based on regional assessments;
- Development of a community adaptation plan to climate change in all communities of Ukraine;
- Integration of vulnerability assessment results into all community strategic documents, including recovery plans;
- Implementation of adaptation measures in the communities in which they were developed.
In the long term — 2028–2033:
- Conducting a reassessment of the results of implemented adaptation measures and assessing the vulnerability of communities to climate change every 4 years from the moment of its approval;
- Implementation of adaptation measures in the communities in which they were developed.
- Training of local government representatives on vulnerability assessment and development of adaptation plans in cooperation with specialised civil sociaty organisations and the Covenant of Mayors.
- Providing communities with access to climate and statistical data and consultations with specialists.
- Creation of a special body (department, position) in the structure of the city council, which will be responsible for the development of the vulnerability assessment, coordinate the implementation of adaptation measures and organise the monitoring of implementation and review of the vulnerability assessment (once every 4 years).
Problem 5. The need to reform environmental impact assessment.
Environmental impact assessment (EIA) is a key tool for public participation and consideration of environmental protection requirements when planning activities that may threaten the state of the environment and/or human health. However, appeals against EIA decisions, public dissatisfaction, protests and court proceedings are precedents that indicate that the approach to implementing the EIA procedure in Ukraine has the following shortcomings:
From the public:
- Limited public access to information and participation in the EIA procedure (limited access to the EIA register; information on post-project monitoring is not displayed; representatives of authorised bodies do not always have time to process public applications, respond to them, and provide relevant information);
- Low level of responsibility for violation of requirements for EIA;
- Limited personnel, financial and expert resources of the relevant bodies, which are objectively unable to give a qualified assessment of the EIA report.
- Search for competent report executors;
- The authors of the EIA report are not responsible for the information provided;
- Excessive requirements for low-risk projects;
- Money and time (delay in implementation).
From the authorities:
- Insufficient rigidity and effectiveness of sanctions stipulated by law;
- Lack of mechanisms for monitoring compliance with EIA requirements.
- The procedure is limited for the duration of the war (in particular, it is cancelled for the territories affected by hostilities, when the consequences of the war are eliminated, there are no physical public discussions, and some activities are cancelled for the EIA);
- Inadequate quality of EIA reports and lack of responsibility for this.
- Carrying out the reform of the environmental impact assessment as per Directive No. 2011/92/EU and taking into account the need to implement measures that will ensure the swift completion of procedures for low-risk objects and will not miss risks regarding objects that potentially pose a significant danger to the environment and public health. Basic reform of EIA may include:
- Confirmation of the executors of the responsibility for the prepared EIA report;
- Free access to materials of post-project monitoring, as well as to actual data of indicators of monitoring observations in the EIA register;
- Introduction of screening at the early stages to identify low-risk projects;
- Institutional capacity, openness and availability of inspection and control bodies, accredited and certified performers, analysing laboratories, etc.;
- Qualified personnel support in sufficient quantity in the structural divisions of the authorised central bodies and authorised territorial bodies, which deal with EIA issues, depending on the workload and the number of prepared EIA conclusions. Continuous training of personnel through courses (related to environmental protection, sustainable development, and the best available technologies), etc.
- Provision of free online access to monitoring water and land resources data.
- Ensuring continuity of observations at monitoring points.
Problem 6. Implementation of projects and reforms in animal husbandry and agro-industry without compliance with environmental requirements.
Through the responsible Ministries, Ukraine continues to define the development of animal husbandry as a priority task of the agricultural sector. According to the Strategy for the Development of the Agro-Industrial Complex (hereinafter referred to as the “Strategy”) for the next 10 years, which was presented at the Ukraine Recovery Conference in London in June 2023, as one of its goals, Ukraine plans to increase meat production twofold in the next 10 years. Besides, according to the Strategy, a 40% increase in the average application of fertilisers per 1 ha, i.e. to 180–290 kg/ha, is planned, which does not meet the goals and aspirations of the European Green Deal.
At the same time, the use of fertilisers, the intensive development of animal husbandry and the generation of a huge amount of waste without proper management pose serious risks to the quality of water, air, soil, biodiversity and human health. Such cases are not just risks but real disasters that communities face today. Agriculture — both plant and animal husbandry — is one of the sources of nitrate pollution of water (surface and underground water). Within the framework of public testing of water quality in rural communities of Ukraine, Ecoaction became convinced that despite the insufficiently developed system of monitoring the state and quality of water, the problem of nitrate pollution, in particular, of groundwater, is widespread in Ukraine.
- Updating and improving environmental requirements and standards for farming, as per European Union strategies.
- Establishment of the appropriate infrastructure for handling waste and by-products of the industry (storage, transportation, disposal, processing, etc.) according to the best practices of the EU, following the Nitrates Directive and the Directive on the prevention of industrial pollution.
- Implementation of an effective system of monitoring and control over the activities of agricultural enterprises, as well as over the state of the environment (soil, water, in particular, underground) and timely prevention of their pollution by agricultural producers.
- Implementation of affordable and modern training for farmers (small and medium), and agricultural advisors to reduce the negative impact of their activities on the environment and human health.
The implementation of the above should apply not only to new enterprises but also to those whose activities pollute the environment and harm people’s health for many years.
Problem 7. Increasing the minimum energy-efficient standards of buildings.
Pursuant to the Association Agreement with the EU, Ukraine undertook to carry out energy efficiency reform under the EU Directives On Energy Efficiency and On Energy Performance of Buildings. According to the latter, Member States must ensure that all new buildings are nearly zero-energy buildings by 31 December 2020; and after 31 December 2018, new buildings owned by public authorities were nearly zero-energy buildings. Besides, amendments to the Directive, which will define a new standard for buildings — ZEB (zero-emission building) — are currently being considered. ZEB requirements must apply from 1 January 2030 to all new buildings, and from 1 January 2027 to all new buildings occupied or owned by public authorities.
Ukraine is only discussing the implementation of the NZEB standard requirement from 2027. It should be noted that the reconstruction of the destroyed housing sector has already begun and takes a large share of capital investments, however, the construction process is carried out according to the existing energy-efficient standards, and in a few years, it will be necessary to seek financing for thermal modernization again.
- Acceleration of the start of measures for the implementation of NZEB standards or the beginning of the development of the implementation of more ambitious zero-emission building standards, with a mandatory ban on connection to the gas infrastructure, replacing such connection for installation of heat pumps, connection of buildings to centralised heating or other RES-based solutions.
- Creation of a financial program or support mechanism for construction companies to stimulate the implementation of pilot projects for the construction of energy-efficient buildings (commercial, residential and public) with a NZEB/ZEB standards. Such a program will help remove pressure and investment risks from businesses.
- Implementation and support of measures to improve the qualifications of Ukrainian builders who will construct buildings according to new energy efficiency standards.
- Creation of mandatory minimum energy efficiency criteria in public procurement, which is a requirement of the European Green Deal, especially when purchasing building materials for new construction.
- Stimulation of localisation of own production of energy-efficient building materials and renewable energy sources. This could provide new jobs in the sector that is growing rapidly and is critical to the post-war reconstruction process. The positive effects will be felt both for local economies, where new enterprises will be opened (for example, in carbon intensive regions where extraction/production facilities are planned to be closed) and for the energy transition of the entire country. Own production of building materials and RES equipment will allow to meet both domestic Ukrainian needs and enter the European Union market, helping to diversify EU countries’ dependence on China.