Summary:

Ukraine risks significantly falling behind on implementing the National Emission Reduction Plan (NERP), a binding obligation towards the Energy Community (EnC). A debate about a possible revision of the NERP has started in Ukraine but so far focuses on relaxing the requirements of the NERP, including the deadlines already extended especially for Ukraine. Such a course of action appears highly risky with regard to the necessary agreement of the EnC’s Ministerial council. This paper aims to analyse Ukraine’s obligations and options to get implementation of the NERP back on track.

Our analytical work shows that the current NERP, which provides for the modernisation and replacement of coal-fired power plants, is too expensive and leads to significant overcapacities. The costs of the electricity system can be reduced by scaling down the number of coal-fired power plants and replace them by open cycle gas turbine plants with simultaneous expansion of renewables. The saving potential amounts to EUR 14.7 bn of investment costs and EUR 3.1 bn of annual costs. Furthermore, carbon emissions can be substantially reduced.