81318145-Supporting Ukraine with data and analytical work to align with Paris Agreement and EU Environment and Climate Change goals

The project has been commissioned by the German Federal Ministry for Economic Affairs and Climate Action (BMWK). It supports Ukraine in implementing the Paris Agreement (PA) on climate change by enabling the country to transition to low-carbon development pathways and building a climate resilient future. In its 2021 updated Nationally Determined Contribution (NDC), the Ukrainian government set a target to reduce greenhouse gas emissions by 65% below 1990 levels by 2030 and become climate neutral by 2060. The project's focus is on two Ukrainian ministries, the Ministry of Environmental Protection and Natural Resources (MEPR) and the Ministry of Energy (MinEnergo), whose capacities are to be strengthened to plan, implement, and monitor the transformational change amid current political, economic, and social challenges. Data and analytical work are to be provided for evidence-based decision making and elaborating long-term low greenhouse gas emission development strategies (LTS) towards just transitions. Moreover, the project will support data-based sectoral CO2 reduction and pollutant reduction strategies for high emitting industries to demonstrate the economic benefits of investing in decarbonisation.

One important aspect of Ukraine's post-war recovery plan is to make the Ukrainian (export) economy fit for the EU markets. In line with the European Green Deal policy initiatives, including the Carbon Border Adjustment Mechanism (CBAM), rapid decarbonisation is of great importance for Ukrainian companies that are highly energy intensive and have a large CO2 footprint of their products. It is also important for the country"s targeted political association and economic integration with the EU, to transpose important EU energy and climate policies, particularly, the Industrial Emissions Directive 2010/75/EU (IED), and the Emission Trading Directive 2003/87/EC. The German-Ukrainian Energy Partnership (EP) and its working groups provide a framework for discussions and high-level decision making.

Against this background, the project comprises three outputs: Output I focuses on improving the climate governance capacities at MEPR. MEPR employees are capacitated to fulfil the monitoring and reporting requirements of the Enhanced Transparency Framework under the PA, quantify the effects of the country's mitigation policies, and participate actively in the UNFCCC (negotiation) processes. With a view on rising financing needs, the project supports MEPR to elaborate incentive instruments, such as co-financing modernisation in companies through carbon tax revenues. In Output II, the project provides the EP with analyses and impact assessments to ensure further evidence-based decision making and assess the environmental and socio-economic impact of decisions and setting realistic targets for the energy transition. The project also provides capacity development and continuous analytical support to align the current LTS with upcoming NDC updates (next is due in 2030) or adjustments in the context of Ukraine's green recovery after the Russian war of aggression. Besides, it supports effective coordination with line ministries and subordinated institutions and engagement with non-state stakeholders, in particular with the "Ukraine Climate Office". In Output III, the project supports the provision of data, models, and scenarios to demonstrate the economic benefits of investing in decarbonisation. Private sector companies in high emitting sectors such as iron, steel, cement, aluminium, or chemistry are engaged in the development of sectoral climate mitigation strategies and to facilitate the implementation of the IED.