The European Green Deal is a roadmap of actions aimed at transforming the European Union into an efficient, sustainable, and competitive economy. It outlines the means to make Europe the world’s first climate-neutral continent by 2050, fostering economic development, improving health and quality of life, and transforming climate and environmental challenges into opportunities across all areas and policies of the EU. It ensures a fair and inclusive green transition.
The Green Deal was officially presented by European Commission President Ursula von der Leyen to the European Parliament on December 11, 2019.
Key areas of the European Green Deal (EGD) include clean energy, climate action, construction and renovation, sustainable industry, sustainable mobility, reducing environmental pollution, biodiversity, and sustainable agricultural policy (the "Farm to Fork" Strategy).
The EGD pertains not only to climate policy but also to a green concept of economic modernization and growth, aiming to ensure human life in harmony with the planet and its resources.
In 2020, internal discussions began in Ukraine with business circles regarding the EGD, which presents both challenges and opportunities for Ukrainian and European businesses. Given the broad range of areas covered by the deal, it will have a significant impact on our trade and economic cooperation with the EU.
Notably, the forthcoming Carbon Border Adjustment Mechanism (CBAM) is currently under consultation within the EU. The Ukrainian government proposes that the EU consider Ukraine alongside the EU in the implementation of this mechanism, as Ukraine has already committed to implementing relevant EU legislation.
If the EU adopts an individual approach to Ukraine, considering national specifics, CBAM could create certain competitive advantages for Ukrainian exporters compared to other third countries. However, if the EU does not accommodate us in this matter, CBAM may become an additional barrier to trade.
Some effects of the EU's green initiatives on trade will only become apparent in the long term.
The Circular Economy Action Plan, which aims to make sustainable products the norm in the EU, will eventually lead to decreased demand for industrial products due to extended product lifespans. In light of this and the encouragement of the use of secondary raw materials, a proportional reduction in demand for raw materials can be anticipated.
Agricultural sector initiatives and the transition to a sustainable food system in the EU are likely to raise standards for agricultural and food products, which could become an additional trade barrier and negatively impact Ukrainian exports. On the other hand, the promotion of organic products in the EU will create new market opportunities for producers.
In the context of supporting European small and medium-sized enterprises (SMEs), leading EU business associations believe that the European Commission should provide support for SMEs in the "green transition," ensure a flexible regulatory environment for SME development, facilitate regular consultations between the European Commission and relevant business associations, provide SMEs with necessary liquidity for business operations, and stimulate employment.
The energy transition is one of the greatest challenges facing SMEs. According to business associations, entrepreneurs need decisive support in this transition. The European Commission must also carefully assess the cumulative impact of new (investment) obligations on SMEs arising from the European Green Deal (EGD). Business associations and their members fully support the European Commission’s green ambitions but request that the financial and economic situation of many SMEs be considered when developing new "green" policy measures that will affect them.
The implementation of the Green Deal in Ukraine is expected to positively impact the energy balance and foster sector development, particularly considering the need to:
- Create a fully competitive environment in the Ukrainian energy market;
- Transition thermal generation to renewable energy sources and achieve a full transformation of coal regions, which involves the gradual closure of unprofitable enterprises while simultaneously creating alternative job opportunities in these regions;
- Provide consumers with proportional tariffs;
- Develop a proportional tariff policy for the use of renewable energy sources to ensure growth in the share of renewable energy and maintain a favorable investment climate in this sector;
- Preserve a high share of nuclear generation, taking into account the need to meet operational deadlines, ensure safety, and prevent technogenic risks.
The European Commission highlights the special role of research and innovation in achieving the goals of the European Green Deal. Under the "Horizon Europe" program for 2021-2027, the expected budget for research and innovation may exceed 30 billion euros. This creates a multi-year stable demand for innovations in this area. The scope of themes under the "Green Deal" is very broad and related to the fundamental transformation of the economy, transportation, energy, construction, agriculture, and much more. Innovations will be needed not only in applied physical fields but also in economic theory, management, social transformation, psychology, and others.
A specific priority of Horizon 2020 is projects aimed at involving SMEs and startups. New elements of the framework program—Partnerships and Missions—are crystallized mechanisms for uniting scientists, businesses, and large industries to achieve ambitious goals. A significant portion of Partnerships and Missions will be dedicated to the green sector.
Ukraine has access to participation in these projects, which can not only provide funding but also facilitate the transfer of modern European technologies to Ukraine.
The consequences of accelerated climate change prompt the need to highlight, among existing issues, particularly the agricultural sector. Accordingly, provisions regarding the achievement of eco-goals of the European Green Deal are enshrined within the framework of the EU Common Agricultural Policy (CAP) reform and the EU strategies on biodiversity and "From Farm to Fork."
Primarily, it is anticipated that the use of pesticides (by 25% by 2030), fertilizers, and antibiotics (by 25% by 2030) in agriculture will be reduced, and a ban will be introduced on the import of food products from markets where countries do not comply with EU environmental legislation.
The emphasis of EU agricultural policy on food security and reducing the environmental impact of agriculture will significantly heighten the requirements for Ukrainian food exporters from EU member states. This represents a challenge for Ukraine, particularly for its agricultural exporters. Therefore, there is an urgent need to align the agricultural sector with EU requirements. Efforts should be initiated now to shift towards environmentally-friendly agri-food production and the development of smart farming practices.
In addition to organic production, Ukraine, as one of the leading IT nations, is focusing on smart agricultural practices. We should initiate cooperation with the EU in this area and involve Ukrainian IT companies in developing and providing relevant IT platforms for EU farming enterprises.
This direction aligns with Ukraine’s adherence to EU environmental legislation. By implementing these measures, we will achieve compliance with EU environmental standards for agricultural products. As a result, traditional Ukrainian exports will remain in demand in the EU market.
A key aspect of achieving the ambitious goals of the European Green Deal is the greening of the transportation sector. The EU's strategy for sustainable and smart mobility will focus on implementing the objectives of the European Green Deal (EGD), as well as the EU’s priorities in industrial cooperation and biodiversity.
Thus, emissions in the transport sector must be reduced by 90% by 2050. The transition to zero-emission vehicles is expected, along with the integration of electric and hydrogen technologies.
The key priorities of the Strategy align perfectly with Ukraine’s goals in cooperation with the EU. Therefore, we will continue to work jointly with the EU on the development of high-speed rail transport, multimodal transport, digitization of the transport sector, and shifting the load from road freight transport to rail and water transport. The Strategy also envisions the completion of the Trans-European Transport Network (TEN-T), which can only be achieved by including Ukrainian internal waterways.
Another priority for Ukraine within the EGD framework is controlling pollution in the Black Sea to preserve its biodiversity and support the restoration of ecosystem functions.
It is critical for Ukraine to reduce plastic pollution in the Black Sea (83% of marine litter found in the Black Sea consists of plastic). It is important to expand monitoring programs for litter, including microplastics, which pose the most serious threat to the fauna and flora of the Black Sea.
Ukraine actively participates in the implementation of the Black Sea Common Maritime Agenda (BS-CMA) and the Strategic Research and Innovation Agenda for the Black Sea (SRIA-BS) to achieve the eco-goal of healthy marine and coastal ecosystems in the Black Sea.
The EU has a clear understanding that regions and cities play a vital role in achieving national and overarching European climate and energy goals. They are the main executors of the European Green Deal. Its success will largely depend on the capacity of local and regional authorities to implement policies adopted at the European level, as well as on the ability of national governments and EU institutions to understand and address the specific needs of each region and territory.
The European Union directly involves cities and regions in the development and implementation of investments related to the Green Deal, particularly through the EU Committee of the Regions. This enhances the cohesion mechanisms and regional funds for cities and regions to gain direct access to EU resources, as local and regional authorities are best positioned to understand the actual situation on the ground.
Currently, the EU is implementing a range of initiatives to support local and regional authorities that wish to be active in the Green Deal’s implementation, including: the Covenant of Mayors, the Covenant of Green Cities, the Challenge for 100 Smart Cities, the Declaration of European Cities on Circular Economy, the Just Transition Platform, and others.
In June 2020, the Committee of the Regions established a new working group called "Green Deal Going Local" to ensure the direct involvement of EU cities and regions in defining, implementing, and evaluating numerous initiatives outlined in the European Green Deal to achieve climate neutrality by 2050.
In February 2023, the European Commission published the Green Deal Industrial Plan, which introduces a new approach to the EU's industrial transformation with a focus on transitioning to zero-emission industrial technologies. The plan places primary emphasis on sectors that traditionally produce significant greenhouse gas emissions: power generation, energy and transport infrastructure, and manufacturing industries.
The new EU plan is based on four key elements:
- Predictable and streamlined regulatory environment.
- Accelerated access to finance.
- Skill development incentives.
- Trade and sustainable supply chains.
In Ukraine, the adaptation of environmental legislation to EU norms and standards is ongoing. Most of the environmental reforms being carried out under the Association Agreement with the EU have a distinct regional component – they impose new functions on local authorities and create new opportunities for regions.
Similar to the EU, Ukraine needs to establish effective dialogue between central and regional authorities, local self-government, civil society, and expert communities to collaboratively develop approaches and solutions for necessary transformations and achieving ambitious environmental goals that will positively impact the lives of every Ukrainian.
Ukraine’s Integration into the Green Deal
Ukraine shares the EU’s climate policy goals. In the current context, cooperation between Ukraine and the EU is an important factor for regional security and reliability of critical imports for both parties. Ukraine’s involvement in the European Green Deal will create new opportunities for joint projects during the post-war reconstruction phase.
The implementation of the European Green Deal (EGD) in Ukraine should be comprehensive: environmental and climate issues must be addressed across various sectors, including energy, industrial policy, agriculture, transport, finance, and others.
On August 13, 2020, Ukrainian Prime Minister Denys Shmyhal sent a position paper to the European Commission regarding Ukraine’s participation in the European Green Deal. In the document, among other things, the Ukrainian Government proposed establishing a structured and regular dialogue with the EU on the modalities for early Ukrainian involvement in the development and implementation of policies under the European Green Deal, developing a joint Roadmap for Ukraine’s participation in the EGD, and identifying promising areas for cooperation within the EGD framework.
On January 19, 2021, a meeting of the Interagency Working Group on Climate Change Coordination, as part of the European Commission’s “European Green Deal” initiative, was held under the chairmanship of Ukrainian Prime Minister Denys Shmyhal. During the meeting, the formation of the Ukrainian Green Deal based on the European Green Deal was discussed, and priorities in its key areas were presented. A key task for the Ukrainian Government is to balance the perspectives of various ministries and agencies, considering the views of the business community, and to develop a unified Government position on determining the level of climate ambitions and domestic actions that align with the stated goals.
On February 2, 2023, Ukrainian Prime Minister Denys Shmyhal and European Commission President Ursula von der Leyen signed a Memorandum of Strategic Partnership between Ukraine and the EU in the fields of biomethane, hydrogen, and synthetic gases. The strategic partnership will focus on the green transition and decarbonization of energy sectors in Ukraine and the EU, and specifically support the production, transportation, storage, and use of biomethane, renewable and low-carbon hydrogen, its derivatives, and other synthetic renewable gases.
On March 18, 2024, the Ukrainian Cabinet of Ministers approved Order No. 244-р, endorsing the Ukraine Plan necessary for implementing the EU “Ukraine Facility” initiative, amounting to €50 billion for the 2024-2027 period. These funds will be allocated to financing the state budget, stimulating investment, and providing technical support for program implementation.
The overall agenda of reforms for 2024-2027 in the Ukraine Plan outlines the need to address issues related to the adoption of relevant EU legislation, integration of commitments regarding the European Green Deal across all policy areas and government institutions, as well as implementation and enforcement of legislation.
Recognizing global trends and challenges, Ukraine is committed to undertaking reconstruction based on a green, i.e., low-carbon, circular, nature-preserving, and zero-pollution approach, and in accordance with EU standards. This will lead to increased prosperity and competitiveness in the short and medium term, invaluable benefits for citizen health, flora, and fauna, as well as enhanced resilience to natural disasters and the adverse effects of climate change.
Combating climate change, ensuring environmental protection from pollution, improving waste management towards greater circularity, and protecting biodiversity are all integral elements of the Ukraine Plan.
On June 25, 2024, the Cabinet of Ministers of Ukraine approved Order No. 587-р, which endorses the National Energy and Climate Plan (NECP) for the period up to 2030. The NECP is a strategic document aimed at aligning environmental, energy, and economic policies for sustainable development in Ukraine.
Ukraine developed the NECP in accordance with the requirements of Regulation (EU) 2018/1999 and considering best practices from EU member states, within its obligations as a contracting party to the Energy Community and during the process of EU accession. This document will serve as a plan for the green reconstruction and recovery of Ukraine, stimulating support from the international community.
Useful Links:
The European Green Deal (europa.eu)
The European Green Deal – European Commission (europa.eu)
The European Green Deal Investment Plan and Just Transition Mechanism
Commission Communication on the Sustainable Europe Investment Plan
Proposal for a European climate law