Russia’s war against Ukraine continues, during which buildings, enterprises and infrastructure are being destroyed. This is a difficult time, but we are confident that after the victory, reconstruction will begin, which should be planned now. Returning to normal would be a big mistake – as a result of the recovery, we will be able to modernize various markets and sectors of the economy, including the transport sector. What should be the post-war reconstruction of Ukraine?
Now is the time to be bold and radical in your thinking and politics. Ukraine’s post-war reconstruction is an opportunity to review the transport and spatial aspects of planning that is appropriate for the future and better suited to people’s needs.
The transport sector connects different cities, urban and rural areas, markets, production sites and export ports. It is the locomotive of the economy and its development in terms of production, consumption and trade. At the regional and international level, it connects the country with the rest of the world, including external financial markets, trade, investment flows, supply chains and ideas, modern means of transport and communications.
In order to restore the transport infrastructure in the short term, it is necessary to develop criteria for prioritizing financing and rehabilitation works (construction, reconstruction, capital and current repairs). As the restoration of infrastructure in general seems problematic in the early stages, the restoration of elements that directly affect mobility and security should be funded as a matter of priority.
Market analysis: are private fleet, public transport and freight transport in Ukraine “green”?
In 2020, MEPs supported a set of policy initiatives called the European Green Course (ECP). Its overall goal is to make Europe climate-neutral by 2050, protect biodiversity, and green the economy. The foundations and directions of the development of the ECC are laid down in the communiqué. By synchronizing its policy with the EU, Ukraine intends to achieve climate neutrality by 2060.
Ukraine’s post-war recovery plan must take into account the environmental requirements of European integration, especially in the field of transport. After all, this sector is one of the largest sources of pollution and greenhouse gas emissions. Many of the vehicles operated by Ukrainian drivers and carriers are outdated, inefficient and have a significant negative impact on the environment and, consequently, on the health of citizens. The issue of noise pollution of cities from transport is also one of the serious problems, along with air pollution.
Currently, Ukrainian transport accounts for about 10% of all greenhouse gas emissions (GHG), but accounts for 71% of total oil consumption in Ukraine in 2019. (Ukrstat, 2020a). Over the last three decades, the composition of emissions has changed significantly. The most significant change is the increase in the share of emissions from motor vehicles. In 2017, road emissions accounted for more than 70% of all transport emissions, making this a major challenge for future transport policy.
Currently, Ukraine’s car fleet has about 7.4 million vehicles (OICA, 2021). However, due to the lack of a mandatory roadworthiness test for private cars, these figures should be interpreted with caution – the official system of state registration does not take into account properly disposed or obsolete vehicles.
Used cars make up a significant part of Ukraine’s fleet: according to various estimates, we have between 400,000 and 2 million of them. Although their number among newly registered vehicles has been declining recently, they still account for 40% of new registrations.
A significant problem of the transport sector of Ukraine is the age of its fleet. Objective and comprehensive data on this are difficult to obtain, as are emissions of pollutants from mobile sources. However, the report of the Global Fuel Economy Initiative in Ukraine (2018) indicates the average age of the Ukrainian fleet – about 19 years (as of 2015). Unfortunately, these data do not highlight the categories of vehicles (trucks, cars, buses), but the age of the fleet is an indicator of its low efficiency in terms of CO2 emissions and other pollutants.
With regard to the electrification of the fleet, in recent years in Ukraine there has been an increase in sales of electric vehicles, which was facilitated by stimulating public policy measures. In 2016, the duty on electric vehicles was abolished, and in 2018 the excise tax and VAT on imports of electric vehicles were abolished. As a result, in 2014 only 62 electric cars were sold (0.07% of total sales), in 2016 – 1,148 electric cars (1.5%), in 2019 – 7,012 (7.2%). Currently, Ukraine is among the top 12 European countries in the total number of electric vehicles and demonstrates one of the highest rates of electrification of the fleet.
Ukraine has relatively strict standards for permissible environmental pollution for new vehicles. As of January 2016, only vehicles that met the Euro-5 standard were allowed to register. However, the introduction of the Euro-6 standard, which was planned for 2018, was postponed first to 2020, and recently postponed until 2025. For used cars, Ukraine in 2018 lowered the standard to Euro-2, which harms the environmental efficiency of the entire fleet.
It should also be borne in mind that the Euro standard primarily limits emissions of various pollutants, but does not provide for any restrictions on GHG emissions. Ukraine does not have its own standard to limit these emissions – and it needs to be implemented. The state standard of CO2 emissions for new cars will be able to guarantee the sustainability of the new fleet.
In addition, during the martial law for “zero customs clearance” should be expected influx of used cars of low European standards (Euro-2 restrictions). Such easing by the state is understandable, as according to preliminary estimates, more than 200,000 cars and trucks have already been destroyed during the fighting in Ukraine.
However, it is worth thinking about the future. Although this issue is politically sensitive, an effective tax scheme should be introduced over time to promote small and energy-efficient cars.
By tightening car registration rules, controlling the circulation of unregistered cars, customs clearance for imported cars and emission standards for already registered cars, the number of old cars in the Ukrainian fleet could be gradually reduced. In addition, reliable structures are needed for regular technical inspections of cars. These checks can be used to certify cars for their safety as well as emissions.
II. Public transport
Half of the world’s population already lives in cities, and by 2030 the urban population could be 2/3 of the world’s. Cities are becoming increasingly important, and urban transport is becoming increasingly important and requires an integrated transport policy. As Ukraine already has an extensive local public transport system, expanding and improving its quality has the greatest potential for reducing traffic and emissions. The trend towards reducing the number of public transport passengers needs to be reversed.
As of the end of 2018, there were 19 operating tram networks in Ukraine (32 in 1991). Over the last 30 years, the number of trolleybus networks has decreased less markedly, from 45 to 41. There are currently three metro networks in the country – in Kyiv, Kharkiv and Dnipro.
At the same time, the rolling stock is being renewed too slowly and about 90% of the fleet of trams and trolleybuses has already exceeded its maximum service life. Since the 1990s, the total number of trams and trolleybuses has decreased by 54% and 49%, respectively, and the number of metro cars by 50%.
At the same time, the number of electrified public transport passengers has fallen sharply, especially for trolleybuses and trams. Only the metro shows a large flow of passengers. Because data on travel by car and bus are missing or fragmentary. At the same time, the number of car owners and emissions from private cars have increased in recent years, so it can be assumed that part of the passenger flow has shifted to cars.
Obviously, each city needs to find its own solution to this problem. For the municipal government, this will be costly, but it is important that local and national authorities work together to achieve a common goal of reducing traffic and emissions, as well as improving the quality of transport services.
Tram lines, as well as electric trolleybuses with separate lanes for traffic are quite cheap and effective way to expand public transport services. The metro should be considered as a transport solution only for very congested areas and only in the absence of another practical option. After a long time of planning and construction, metro services cannot reduce traffic and emissions, and high short-term investment costs will also be an obstacle.
The TomTom 2019 traffic index included four Ukrainian cities in the list of the 25 largest congested cities in Europe. Kyiv ranks 3rd in Europe and 12th in the world. The city of Odesa ranks 7th in Europe (18th in the world), Kharkiv 13th (29th in the world), Dnipro 23rd (47th in the world). Interestingly, the Dnieper, a city with a population of about 1 million, is only one place behind London, the largest city in Britain with a population of 8.9 million (as of 2019).
Given the high level of emissions on the roads and the level of congestion in the cities of Ukraine, the system of “congestion payments” should be considered as a solution to these problems. The potential system can be implemented in Ukrainian cities with a population of over 500 thousand people (Kyiv, Kharkiv, Odesa, Dnipro, Donetsk, Zaporizhia, Lviv, Kryvyi Rih). Together, these 8 cities have 9.4 million inhabitants, which is almost a quarter of Ukraine’s population.
There are different models of road congestion charges in the world: the London model charges drivers a daily fare for using the city’s roads regardless of when they enter the area, while the Stockholm model provides different fares for road use at different times of the day.
It is also important to consider separate systems of privileges for entry into the city of vehicles with low levels of harmful emissions, buses, vehicles owned by non-residents of the city, etc. The congestion charge model, which includes benefits for greener cars (such as hybrids and electric cars), may in particular help to upgrade Ukraine’s fleet and thus increase the overall energy efficiency of the transport sector. In order for the model to be socially just, tariffs can also be calculated individually, according to the income of car owners.
In order for “congestion pay” to work as an effective solution to transport problems and not become a tax burden for the population, urban residents must be offered alternative types of quality public transport.
The costs of implementing such a system vary greatly from city to city and are therefore difficult to predict. However, international experience has shown that “congestion pay” is a long-term, cost-effective municipal solution that pays off within a few years of implementation. At the same time, the system will help reduce traffic, and at the same time will be a source of funds for the local budget to improve public transport.
Along with traffic regulation and the improvement of public transport, local governments should encourage different types of micro-mobility. Citizens will choose to walk or cycle only if created by local authorities power safe conditions for this. The promotion of active modes of transport is a cheap and important addition to the urban transport system.
III. Freight and passenger transportation
Most freight traffic in Ukraine has always been by rail, but its share has fallen from 95% in 1990 to about 78% in 2019. A large number of traffic is currently carried out by road (21%), a small number – by water (1%). (OECD, 2020). We are slowly moving towards the “western model” of freight transport, which is dominated by road transport, and the share of rail is smaller. A similar model was formed in Poland, which is now ahead of Germany and France in terms of the share of road freight transport.
In 2021, the shares of modes of transport in the total volume of transported goods were distributed as follows: rail – 51%, road – 32%, water – 1%, pipeline – 16%, aviation – 0.02%.
At the same time, rail transport is one of the most environmentally friendly modes of transport for freight and passenger traffic. Railways provide transportation of 7% of cargo and 8% of world passengers. At the same time, the railway sector accounts for only 2% of the energy consumed by transport in general.
Rail transport is more energy efficient than road and air transport (on average 12 times – in terms of final energy per passenger, 8 times – per ton of cargo).
Based on the above, we can draw an intermediate conclusion: over the past ten years, road transport has been quite successful in expanding the Ukrainian freight market, while its competitors are weakening their position. This trend is extremely threatening from the point of view of Ukraine’s movement towards the EPC, as it is rail and water transport that need to increase their market shares.
Trucking is a commercial business, ie profit-oriented. However, logistics companies have broad powers over the mode of operation and supply chains, and therefore they must play a leading role in the decarbonisation of road freight. These companies have a personal interest in improving operational efficiency to reduce costs. Fleet owners, shippers, retailers, loaders and other stakeholders will invest in improvements if the rate of return, payback period and level of risk are attractive enough. In order to change the behavior in the industry, it is necessary to make a business case of new logistics practices, as well as to point out their benefits to society.
Ukraine needs to ensure that its rail links can be competitive with other freight services and can be integrated into multimodal freight transport chains. In general, future infrastructure expenditures should be directed primarily to the railway system. In order to increase the efficiency and competitiveness of the railway, investments are needed to attract a significant share of freight.
Regarding long-distance passenger traffic, the number of passengers by rail decreased from 465 million in 2002 to 155 million in 2019. At the same time, aviation has increased the number of passengers from 2 million to 14 million. Analyzing in terms of passenger-kilometers, we see how Ukrainian aviation has caught up and even overtaken passenger traffic by rail in 2019. Between 2002 and 2019, aviation increased the number of passenger-kilometers from 2,400 to 30,200, and rail reduced it from 50,400 to 28,400. rather low number of passengers, but high rates of passenger-kilometers.
Emissions from domestic aviation decreased significantly in the 1990s and then increased again in the 2000s. The recent crisis of 2014 reduced emissions again, but since then we have seen a steady increase in domestic aviation emissions.
The railway system should become a strong competitor to domestic and intercity road passenger transport. Ukraine’s transport strategy for 2030 envisages the renewal of domestic airports and strengthening Ukraine’s integration into international air services. Although these measures and goals may have positive regional effects, domestic aviation should be viewed with skepticism. The examples of many countries show that an efficient high-speed train system could compete with and perform domestic flights. However, efficient and high-speed train systems require significant investment, especially in countries that do not yet have such infrastructure.
New investments should focus on railways, not new air transport infrastructure. Railways play a key role in reducing emissions from domestic flights, long-distance road travel and freight transport.
State policy: how to make the transport segment of Ukraine’s economy “green”?
Among the priority areas for Ukraine in the framework of the UES is the greening of transport. These include reducing greenhouse gas emissions in the sector by 90%, increasing the share of sustainable modes of transport such as rail and inland waterway, tightening pollutant emission standards for vehicles with internal combustion engines, and developing infrastructure for electric vehicles. The UES envisages a 90% reduction in transport emissions by 2050, which should be facilitated by all modes of transport (road, rail, water and air).
Reducing emissions of pollutants from vehicles (especially in cities with high traffic, port cities and communities with airports) will have a positive impact on the lives of people living in such areas. The use of cleaner modes of transport will have the effect of improving air quality and at the same time meeting the mobility needs of the population.
Ukrainian politicians should consider implementing a policy that promotes the modernization of the existing passenger fleet. It is important that this policy is implemented in a socially acceptable way and offers citizens affordable alternatives, such as a strong public transport system. The focus should also be on developing an integrated strategy that combines road, rail and air transport: while different levels of government and government should be coordinated vertically, decarbonisation of the transport sector should be considered horizontally with decarbonisation of other sectors.
Ukraine has published two policy documents aimed at guiding the transport sector towards a low-carbon future: the Low Emissions Strategy for Ukraine 2050 and the Transport Strategy 2030. While the Low Emission Strategy sets broad goals, the Transport Strategy lists specific measures. However, it remains unclear how these measures fit into the broader cross-sectoral strategy. It does not make sense to solve problems separately, as different measures are interdependent. That is why Ukraine should consider integrating certain transport policy measures into a comprehensive strategic structure that covers all sectors of the economy.
If we approach the restoration of transport infrastructure in terms of long-term prospects and from the standpoint of the “green course”, then a number of questions arise. In particular, it is necessary to decide whether it is important to invest in the development of roads and, accordingly, trucking. It is also necessary to assess the feasibility of investing in high-speed rail transport instead of developing aviation infrastructure and domestic air transport. The most green and energy efficient modes of transport, such as water and rail, should be a priority for development. In both cases, the primary challenge is the deterioration of infrastructure, and for the railway also the problems of effective management and implementation of unbundling.
Finally, the state should expand access to statistics and other data, especially on road transport, and improve their analytical use for the policy of decarbonisation of road freight transport. Relevant data for the correct assessment of critical indicators are available in many countries, but they are mostly owned by companies. Therefore, public organisations’ access to private data is important and should be taken into account for commercial interests and privacy issues.
This publication was produced with the financial support of the European Union. Its contents are the sole responsibility of BRDO and do not necessarily reflect the views of the European Union.