The European Commission has issued recommendations to Ukraine regarding amendments to the draft law on the national public service broadcaster

The European Commission’s Directorate-General for Climate Action has provided a series of recommendations and comments on the Ukrainian draft law ‘On the Principles Governing the Operation of the National Emissions Trading System’. These relate to the system’s architecture, pricing mechanisms and the use of revenues. Ukraine is advised to bear in mind that its National Emissions Trading System (NETS) will effectively cease to exist from the third phase onwards, having been integrated into the EU ETS; consequently, most of the changes are aimed at eliminating differences and inconsistencies.

EcoPolitics learnt of this during a working meeting at the Ministry of Economy, Environment and Agriculture.

The ministry notes that the comments are of a working nature and are not subject to full publication. At the same time, the overall assessment of the draft law is positive: the European Commission has noted Ukraine’s significant progress in establishing its own emissions trading system.

Full Integration

The key principle insisted upon by European experts is that Ukraine's model should be built from the outset following the logic of the EU ETS. This means aligning as closely as possible with EU rules in terms of scope, sectors, monitoring mechanisms, and pricing.

The document must be fully compatible with European regulations to ensure a smooth transition to the ETS. The EU Council will separately approve transitional periods in accordance with established procedures that align with the principles of accession.

The draft law envisions three phases for the system's launch. The first two are transitional, while the third involves Ukraine's actual integration into the European ETS following accession to the EU. However, Brussels considers that the third phase should not be treated as a separate national stage, since after accession, the Ukrainian system will cease to exist independently and will be supplanted by European Union rules.

Incentives and transparency

A separate set of comments concerns so-called decarbonization credit certificates. The European side warns that excessive use of this mechanism could distort the market, as operators may opt for them instead of fully purchasing allowances at auctions.

Another key recommendation is to introduce clearer price regulation. The European Commission advises revising the minimum and maximum allowance price mechanisms to make them more predictable, and to gradually align them with the European market level.

At the same time, to encourage decarbonization, it is recommended to establish an aggregate emissions cap from the very first phase.

Allocation of allowances

The comments also relate to the free allocation of allowances for sectors at high risk of carbon leakage. European experts propose that Ukraine should not create unique national rules, but rather refer to the list of sectors already defined in the EU. Their argument is straightforward: special conditions in the European Union apply only until 2030, while Ukraine’s integration is likely to occur after this period.

Separate attention is paid to maritime transport and aviation. Brussels recommends from the earliest stages to establish comprehensive obligations for these sectors concerning the cancellation of allowances for verified emissions, to avoid legal gaps during future integration.

Use of funds