Highlight of 2025: Emission Trading System (ETS) is a Key Step Towards Achieving Climate Neutrality and EU Accession

On Feb­ru­ary 21, the Ukrain­ian gov­ern­ment approved the action plan for the Emis­sion Trad­ing Sys­tem (ETS), an impor­tant step towards achiev­ing cli­mate neu­tral­i­ty and meet­ing the require­ments for Ukraine’s acces­sion to the Euro­pean Union. This plan was devel­oped with the sup­port of the “Sup­port for the estab­lish­ment of an emis­sions trad­ing scheme (ETS) in Ukraine” project.

The Emis­sions Trad­ing Sys­tem (ETS) is a mar­ket mech­a­nism for reduc­ing green­house gas emis­sions, which is suc­cess­ful­ly oper­a­tional in sev­er­al coun­tries around the world, includ­ing the EU, Chi­na, Mex­i­co, and Switzer­land. It involves set­ting an over­all cap on green­house gas emis­sions for com­pa­nies. Each com­pa­ny receives or buys emis­sions allowances, which it can use for its own needs or sell on the quo­ta mar­ket, which will be cre­at­ed under this mech­a­nism.

The implementation of the ETS and the establishment of an effective greenhouse gas emissions verification system will help:

— Ensure sus­tain­able devel­op­ment in Ukraine and reduce the neg­a­tive impact on the cli­mate.

— Open new eco­nom­ic oppor­tu­ni­ties in the green econ­o­my sec­tor.

— Devel­op inter­na­tion­al coop­er­a­tion and inter­ac­tion with Euro­pean coun­tries and fur­ther inte­grate Ukraine into the EU.

This approach cre­ates the con­di­tions for busi­ness­es to imple­ment ener­gy-effi­cient and sus­tain­able tech­nolo­gies, which, in turn, will enable com­pa­nies to effec­tive­ly meet the require­ments for reduc­ing green­house gas emis­sions.

The approved ETS implementation plan outlines three main stages:

1. Prepara­to­ry Stage (2025–2027) – Devel­op­ment of the leg­isla­tive frame­work and cre­ation of the nec­es­sary tools for the func­tion­ing of the ETS.
2. Pilot Stage (from 2028) – The test launch of the green­house gas emis­sions trad­ing sys­tem.
3. Oper­a­tional Stage – This will begin after sta­ble eco­nom­ic recov­ery, no ear­li­er than three years after the can­cel­la­tion of mar­tial law.

The intro­duc­tion of ETS is cru­cial for ensur­ing the nec­es­sary con­di­tions for reduc­ing fos­sil fuel con­sump­tion, increas­ing pro­duc­tion process effi­cien­cy, as well as achiev­ing prod­uct com­pet­i­tive­ness both in nation­al and inter­na­tion­al mar­kets. This, in turn, will help inte­grate Ukraine’s nation­al econ­o­my with the EU mar­kets for the real­iza­tion of Ukraine’s ambi­tious cli­mate goals and its inte­gra­tion into the Euro­pean eco­log­i­cal and eco­nom­ic com­mu­ni­ty.

The project “Sup­port for the estab­lish­ment of an emis­sions trad­ing scheme (ETS) in Ukraine”, com­mis­sioned by the Ger­man Fed­er­al Min­istry for the Envi­ron­ment, Cli­mate Action, Nature Con­ser­va­tion and Nuclear Safe­ty (BMUKN) and imple­ment­ed by the Deutsche Gesellschaft für Inter­na­tionale Zusam­me­nar­beit (GIZ) GmbH in part­ner­ship with the Min­istry of Econ­o­my, Envi­ron­ment and Agri­cul­ture of Ukraine.