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DiXi Group analysts presented the research «REFORM PURELY (analysis of the implementation of Directive 2010/75/EU)». The document contains an analysis of the potential impact of the implementation of Directive 2010/75/EU on industrial waste in Ukraine and three possible scenarios for the implementation of the policy on reducing, preventing and controlling industrial pollution. The study was conducted between April 2021 and August 2022.

Currently, industrial pollution in Ukraine is regulated at the level of separate components, while different permits are issued for different types of pollution: for emissions of pollutants into the atmosphere by stationary sources, for special water use, for operations in the field of waste management and others.

Such a component-wise approach to issuing permits allows only partial regulation of harmful effects of enterprises on the environment and does not take into account the cumulative impact or migration of pollution between different components of the environment. For example, it ignores issues related to soil protection and groundwater pollution, energy and resource efficiency, decommissioning conditions and restoration of the territory of the industrial site to a safe ecological state, etc.

The standards of emission limit values and discharges in force in Ukraine do not meet the current requirements of the time and are far from EU standards; there are indicators of emission limit values, the values of which are 10, and even 100 times higher than similar EU standards.

The implementation of the policy to reduce industrial pollution in Ukraine in accordance with Directive 2010/75/EU can take place under three various scenarios:

• Conservative scenario, which provides the formal implementation of industrial pollution reform (according to Directive 2010/75/EU).

The scenario implementation results for the electricity generation sector will be the preservation of the current generation structure, where coal will make up a significant share, while the share of RES use will increase to approximately 25% in the period until 2035 and to 32.5% in 2050. The scenario does not envisage attracting additional funding to meet the requirements of the Directive, so it is expected that the amount of capital investments of energy-generating as well as coke-chemical enterprises will remain at the current level. But such an approach will cause a significant increase in emissions of pollutants and greenhouse gases in the long run. 

Enterprises will later be forced to pay a high price of the “carbon border tax” and lose competitiveness. And the state will continue to subsidize the loss-making coal industry.

“Ukraine’s failure to fulfill its obligations to implement the terms and conditions of the Treaty establishing the Energy Community, the Association Agreement, which may have negative political and economic implications up to stopping/slowing down the process of joining the EU”, the research says.

• Basic scenario, according to which full compliance with the requirements of Directive 2010/ 75/EU will be feasible in the 2040-2050s. 

The reduction of emissions planned as part of the NERP is fully implemented, but closer to 2040. The coke-chemical industry will also reduce emissions – partly due to eco-modernization activities and partly as a result of reducing production volumes by approximately 30-35% by 2050. The structure of electricity production is similar to the first scenario until 2025, and in the period after 2025, there will be a gradual reduction in the share of coal-fired TPPs. The growing demand for electricity will be covered by increased production from RES installations and NPPs. 

This scenario contributes to the fulfillment of international obligations to reduce emissions and partly decarbonization, but it is not about achieving the goals of a carbonneutral economy by 2060. 

“Ukraine may be forced to follow this scenario due to the war with the russian federation (depending on its duration and the nature of hostilities), the condition of the Ukrainian economy as a whole and the energy sector in particular, as well as the availability and amounts of external financial support for the implementation of eco-modernization activities”, say analysts.

• Optimistic scenario based on the maximum complete implementation of the requirements of Directive 2010/75/EU in the stated (shortest) terms.

According to this scenario, in the coming post-war years, modern dust and gas cleaning systems are installed at some of the coal-fired TPPs in accordance with the NERP, after which they continue to operate for 15 years, acting as balancing capacities in the UES. At the same time, the other part of coal-fired TPPs/CHPPs is to be replaced by RES (which will reach more than 50% in the structure of electricity production by 2050) with energy storage systems. In the period from 2045 to 2050, coal-fired TPPs were completely abandoned, while these assets are decommissioned. 

In the same way, coke-chemical enterprises modernize part of the coke batteries, allowing them to work for a certain time. And the other part of the coke-chemical industries is gradually decommissioned, reaching a reduction of 90% by 2050, while the metallurgical industry is actively investing in new steelmaking technologies. As a result of the implementation of the above activities, emissions of pollutants and greenhouse gases are reduced as much as possible, which allows approaching the goal of decarbonization of the energy sector in the 2050s. 

Given a number of advantages, this scenario is the most optimal, but there is a risk that due to the war and the weakening of the country’s economy this scenario will not be possible to implement, at least within the declared deadlines.

The full version of the research is available