Since the full-scale Russian invasion, Ukraine’s climate policy has been at the intersection of war-induced devastation, pressures imposed by European Union accession, and the broader challenge of reconstruction. EU integration has become a guiding vision for Ukraine. The Ukraine Facility Plan (2024–2027) alone will provide 50 billion euro for reform projects, including some aimed at climate and energy targets.
Maryna Larina is a researcher specialising in climate and energy policy, with a particular focus on the implementation of climate policy in Ukraine across broader political, economic and societal dimensions.
The emissions trading system (ETS), a precondition for EU accession and further aid, remains a challenge for Ukraine. The country’s war-torn economy cannot support high carbon prices akin to the ETS in the EU (currently at roughly 70 euro / tCO₂ and expected to rise) without risking “carbon shock therapy”, as Maryna Larina introduces here. Imposing a carbon price and seeking to align it with the ETS rate in the EU in the first and most fragile phrases of post-war reconstruction could trigger inflation, interest rate hikes, socio-political backlash, and significantly slow down the recovery process.
The EU Carbon Border Adjustment Mechanism (CBAM), set to impose tariffs on carbon-intensive imports into the EU starting 2026, poses an acute risk to Ukraine’s export-heavy and technologically outdated industries. Ukraine’s steel industry is particularly vulnerable, accounting for 93% of CBAM-affected exports. By 2030, the CBAM alone could reduce Ukraine’s GDP by 6.4% and exports to the EU by 9.8%, according to industry estimates. Although force majeure clauses within the CBAM could hypothetically allow for a temporary exemption, there are currently no consultations or exemptions in place. The Ukrainian government has resisted seeking special treatment, fearing it might jeopardize its credibility while applying for EU membership.
The EU’s strategy for aiding Ukraine is a private sector model, which emphasizes attracting private capital. Yet Ukraine’s needs far exceed what the private market could realistically deliver. Given the massive investments necessary, decarbonization of Ukraine’s energy and industry sectors, as well as sustainable construction practices will likely be limited without robust security guarantees and state-led coordination.
A plan for Ukraine’s just transition would mean more than just a coal phase-out, but the EU’s plan has a very narrow focus on exactly that. It overlooks broader disruptions of the war and displacement and loss of Ukraine’s industrial base. Instead of this narrow one-sided focus, Larina argues for a more systemic and just transition. This would necessarily address issues related to housing, energy, employment, and the collapse of rural and regional economies, which affects not only the workers left in coal towns. Carbon pricing, if introduced without any protections, would increase food and energy costs for Ukrainians. Households already spend about 50% of their income on food. Redistribution models used in the EU may not translate effectively into Ukraine’s context of widespread poverty and destruction. Generally speaking, there is much room for improvement.
In conclusion, Larina notes many recommendations for the upcoming years. One major point is that the EU should pivot from loans to grants, restructure Ukraine’s debt, and use frozen Russian assets to support the reconstruction effort. Furthermore, pushing for more flexibility within ETS and the CBAM could even facilitate earlier EU membership and build investor confidence for green, modern, and social investments. Above all, Ukraine’s transition must be a state-led effort with sufficient safety nets, not dictated solely by private investors or driven by carbon-market logic.
Ultimately, Ukraine’s green recovery must balance EU compliance with realistic expectations and timeframes as well as the need for social justice. A purely market-driven approach is unlikely to meet the needs of the population and their urgent needs for a strong, resilient, sovereign, and low-emission reconstruction.