Why Ukraine Needs the NETS
The introduction of a market-based mechanism to reduce greenhouse gas emissions is designed to ensure Ukraine's compliance with its European integration obligations and to create appropriate conditions for industrial decarbonization.
Key benefits of launching the NETS include:
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Alignment with EU climate legislation under Chapter 27 "Environment and Climate Change";
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Mitigating the financial burden within the EU Emissions Trading System (ETS);
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Protecting Ukrainian exporters from the impact of the European environmental tax, CBAM (Carbon Border Adjustment Mechanism);
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Creating domestic funding sources for decarbonization;
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Supporting industrial modernization and energy efficiency.
Revenues generated from the system's operation are planned to fund decarbonization, energy efficiency projects, and the deployment of new technologies through the Modernization Fund of Ukraine.
Phased Implementation and Business Protection
The Ministry emphasizes that the draft law does not impose a sudden financial burden on businesses. The system will be implemented gradually over several phases.
Furthermore, operators of NETS installations will be exempt from a double financial burden, meaning they will not be required to pay for allowances and the CO2 emissions tax simultaneously.
The Ministry of Economy has invited business representatives, relevant trade associations, and experts to participate in the public discussion of the draft law. As a reminder, on May 15, the Ministry already presented the key provisions of the document and the approaches to the phased rollout of the system.
Timeline for System Launch
The establishment of a national emissions trading system is mandated by a number of Ukrainian regulatory and legal acts. Specifically, the Law of Ukraine "On the Main Principles of State Climate Policy" sets a target to achieve climate neutrality by 2050 and introduces market mechanisms for carbon pricing. The EU-Ukraine Association Agreement also stipulates Ukraine's obligation to implement an emissions trading system, including monitoring, reporting, and the allowance registry.
According to the current government action plan, the first operational phase of the NETS is scheduled to launch in 2028. The second phase will commence no earlier than three years after the termination or cancellation of martial law.
