How to Reform Energy Sector and Environmental Sphere in Ukraine for EU Accession

Thursday, 16 November 2023

On 8 November in Brussels, the European Commission adopted a long-anticipated but still interim decision regarding the start of Ukraine's EU accession negotiations.

The EC report, however, brought not only pleasant news for Ukraine. This document systematises the state of Ukraine's European integration sector by sector.

Read more about Ukraine's energy sector reform and actions in environmental protection in the article by Maryna Denysiuk, the expert on energy and climate – Reform under Shelling: What EU Expects from Ukraine in Energy and Green Agenda.

Ukraine's energy sector was rated "good", getting 4 out of 5. This is a very high score. Ukraine has only four "fours" among 33 negotiating chapters. However, in the environmental and climate sector, its rating is lower – "two," which means "some alignment with EU law."

Meanwhile, progress over the past year has been distributed differently. The changes in energy over the year were deemed "some progress" in EU terminology. Ukraine got a high rating in the "ecological" chapter, ending the year with a "good progress."

The EC emphasises that Ukraine's first step should be the rapid restoration of damaged generating capacities, electricity transmission and distribution systems, as well as municipal services, transportation infrastructure, schools, and healthcare facilities.

Simultaneously, the focus is on investments. Ukraine needs to improve its state procurement processes, reduce barriers to project implementation, reform planning processes, and strengthen administrative capacity for investment management to achieve that.

The EC summarised an intermediate rating for the energy sector with only "some progress."

2023 was a year of constant shelling of the energy infrastructure due to measures related to the state of war, leading to a decrease in transparency and independence in the energy sector.

Ukraine must simultaneously develop three crucial directions to improve the rating:

First, promote green energy transition and green reconstruction.

Second, move energy markets towards economically justified pricing.

Third, implement changes in the market regulator's operation.

In terms of environmental protection and natural resource management, the EC acknowledged good progress over the year. The overall assessment of Ukraine's compatibility with EU law is still intermediate. It has not changed this year. Therefore, Ukraine has a significant list of recommendations for further steps.

In conclusion, the most challenging and costly in the energy sector is the restoration of infrastructure. Regarding the environment and climate, the weakest link is Ukraine's low administrative capacity since it requires focused attention and effort.

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