This article was updated on 6 November 2024 to reflect the recent adoption of the ETS legislation. The original article was published on 24 July 2024.
On 8 October 2024, the Ukrainian Parliament approved the “Law on the Basic Principles of Climate Policy” in the final reading, mandating the establishment of an ETS as one instrument to reach the nation’s climate policy objectives.
The Ukrainian government initially submitted the draft law to Parliament in May 2024 and simultaneously launched a public consultation to gather feedback on a draft strategy that outlines the timeline and roadmap towards the adoption of the Ukrainian ETS.
The “Law on the Basic Principles of Climate Policy" details the principles of the country’s climate policy, which includes the establishment of a national ETS. The law specifies that the ETS will have an absolute cap on emissions for covered sectors and will be established by governmental decree. It also reiterates the goal of 65% GHG emission reductions by 2030 as compared to 1990 level.
In parallel, on 5 June 2024, the Ministry of Environmental Protection and Natural Resources of Ukraine (MEPNR) launched a one-month long public consultation on the “Draft Strategy for the Implementation of a GHG ETS in Ukraine until 2033”. The government has not yet published information on the next steps. This strategy outlines a three-stage process for preparing and launching the ETS:
- 2024-2025 – Preparation stage: This includes the adoption of the ETS law and necessary secondary legislation; improving MRV infrastructure and building capacity of the institutions and stakeholders to be involved in the ETS implementation.
- 2026-2028 – ETS pilot phase: This phase aims to test the readiness of the system, identify potential issues and correct any problems in the system’s functioning.
- 2029-2033 – Full functioning and further development: This stage involves the full operation of the ETS, potential sectoral expansion, and preparation to link with the EU ETS.
According to the Ministry’s Draft Strategy, one of Ukraine's strategic goals is to ensure the effective functioning of its ETS, which should account for national circumstances while aligning with the European Union ETS. In recent years, Ukraine has made significant preparatory efforts toward establishing this system. The introduction of an ETS is one of the commitments under the 2014 Association Agreement between Ukraine and the EU, and an important element of the EU-Ukraine integration process.
