This is evidenced by the recent “borsch index” from BRDO experts.
When calculating the index, we use the data of Minfin, the portal on finance and investment, on the average monthly prices for products. Unfortunately, at present we cannot confirm the relevance of the index for the regions of Ukraine that are in the zone of active hostilities.
How did the war affect the prices of basic products?
UAH 95 – that’s how much a portion of borscht for four people, prepared according to a traditional recipe, will cost on June 3, 2022. Compared with February 24, 2022 – UAH 81.84 – the price increased by 16.09%.
All borscht ingredients, except for potatoes, rose in price to varying degrees: from a slight 7.7% to a significant 22.56%.
The price of cabbage increased the most. Next on the price scale – pork, carrots and beets.
The only vegetable whose price has decreased is potatoes (-20.11%). Sour cream became slightly more expensive (+ 7.7%).
Infographics допомо will help you to get acquainted with the dynamics of product prices in more detail
What does this data tell us?
Food prices vary considerably depending on the region and even the trade network, as today about 30% of the cost of production is logistics costs, which have risen sharply due to fuel shortages, difficult delivery routes and lack of vehicles.
According to Yulia Korneeva, chief economist of BRDO, the seasonal decline in vegetable prices should not be expected. The suspension of vegetable imports from abroad due to the blockade of Ukrainian ports, as well as the suspension of supplies of vegetable products from the eastern regions creates significant deficits in the domestic market of Ukraine, which causes significant inflationary pressures. The rising cost of fertilizers and their shortage in the market also do not add optimism.
What happens next?
The cost of dairy products will continue to grow due to the influence of a number of factors:
Ukraine is calculating the losses from the war and is seeking help from foreign partners. However, there is another huge threat to the Ukrainian economy, to which the government should respond now. War-induced labor migration can lead to the “washing out” of taxpayers who were forced to flee to other countries during the war.
How do other states view the preservation of the tax residency of Ukrainian migrants? What steps should Ukraine take to keep their taxes in the Ukrainian economy? Igor Samokhodskyi, Head of the IT and Telecom Sector of the BRDO Office for Effective Regulation, answers these questions in the column for SPEKA media.
The Russian Federation’s war against Ukraine has been going on for three months. We are already used to looking at it in the context of infrastructure or industry losses: we calculate kilometers of roads destroyed by the occupiers, stolen tons of Ukrainian grain, billions of hryvnias that Ukrainian enterprises did not earn, and so on.
But we must not forget that the key value of modern economies is human capital. These are people who work for Ukrainian companies or at least pay taxes here. Due to the war, a large number of citizens were forced to leave Ukraine and move abroad, mostly to the EU (to Poland, Germany, the Czech Republic, Romania, Hungary, Slovakia, Bulgaria). Some of them continue to receive salaries or remuneration as private individuals on Ukrainian accounts. At the same time, Ukrainians risk becoming tax residents of EU countries.
The labor migration caused by the war is a challenge for the human capital of Ukraine, to which our state must respond. As of February 24, more than 6.6 million people have left Ukraine, of which 2.9 million have received temporary protection. Assuming that at least 10% of forced emigrants continue to work, this is a huge number of Ukrainians who actually continue to work for our economy. This applies to IT companies, as well as the entire creative sphere, any professionals who can work remotely – graphic designers, analysts, communicators, accountants.
It is important for Ukraine to keep them as part of our human capital and maintain tax revenues in the Ukrainian economy.
After all, Ukrainians who continue to declare and pay taxes in Ukraine are more likely to return home after the war, as they will feel involved in Ukraine and its victory.
Individuals are usually considered tax residents of other countries if they have a permanent residence, center of vital interests or stay in another country for more than 183 days or six months.
In addition, if a citizen of Ukraine works for an international company that has an office in the EU country where he is currently located, he may be at risk due to additional taxation (due to the status of economic employer). This situation creates legal uncertainty and risks that may be the basis for:
The latest innovations of the National Bank of Ukraine, which are unfavorable for IT exporters, also encourage individuals to change the Ukrainian contract to a foreign one, and therefore to the place of payment of taxes.
Regarding legal entities. Even before the war, due to warnings in the media about other countries, the relocation of many Ukrainian companies began, in particular in the field of IT, which did not need to transport large amounts of heavy equipment, warehouses, production infrastructure and more. After the beginning of the active phase of the war, this trend intensified.
Legislation in other countries often requires the registration and payment of taxes for a company if it has an office in that country or if it actually controls or manages its business or business. There are also usually requirements for the registration of an individual company or its permanent establishment as a prerequisite for doing business.
For example, these requirements may apply to an IT company that has moved to one EU country, rented an office and hired staff. In this case, the requirement for re-registration in an EU country may come from both the tax service of the country and the compliance service of the customer of the IT company.
This encourages businesses to create new legal entities / permanent establishments in the host country, to renegotiate contracts on their behalf, to transfer payments abroad.
The practice is different. Estonia, for example, believes that Ukrainian migrants should be tax residents of their country from the first day they stay on its territory. Ireland has the opposite view and says it will not make Ukrainians working remotely from the country Irish taxpayers.
Most countries, including EU members, have not yet decided on a tax residency approach for temporarily protected Ukrainians who have moved to the country due to the war and received temporary protection status. This is our window of opportunity.
Right now, the Ukrainian state must ask foreign partners for help, but not only with recovery, but also to prevent the destruction of Ukraine’s economy. To do this, as many countries as possible should follow the example of Ireland.
I offer the following arguments for maintaining the tax residency of Ukraine by persons abroad:
It is critical for Ukraine that financial flows remain in the country, as they form the tax base (ie budget revenues), GDP, affect bank liquidity, and add foreign exchange earnings.
The time to resolve this issue is running out. People and companies have to think about what they will do next, right now.
On behalf of the top political leadership of Ukraine, it is necessary to formulate an appeal to the EU countries not to recognize as tax residents Ukrainians who are under temporary protection and receive income in Ukraine.
This message should be conveyed first of all to European countries, where most Ukrainians emigrated. You should also contact the European Commission. Although it cannot impose a certain model of taxation on EU member states, it can help Ukraine advocate for this issue.
The result we need is an explanation from foreign tax authorities that they do not consider Ukrainians who are under temporary protection and receive income in Ukraine to be their tax residents. This will be an important step in preserving Ukraine’s economy and the basis for its reconstruction.
Ukraine introduces simplified rules for doing or starting a business for the period of martial law. Better Regulation Delivery Office supported by the European Union actively joins in the development of timely solutions to simplify doing business in Ukraine.
“During the military aggression of the Russian Federation against Ukraine EU4Business programmes reoriented their usual activities towards urgent support of business and state institutions. We support the aspiration of BRDO to join the development of regulatory solutions and policies that will significantly ease doing business and preserving economic activities in these hard times”, said Chloe Allio, Head of Section “Economic Cooperation, Energy, Infrastructure and Environment” of the Delegation of the European Union to Ukraine.
The recent new solution for business cancels the necessity of submitting permitting documents, and now it is enough to submit only a declaration of conducting economic activity. This declaration is now available for submission online. The new e-service is introduced on the state portal Diia for individual entrepreneurs as well as other legal entities.
To make this online service a reality, BRDO experts together with the Ministry of Digital Transformation of Ukraine and the Ministry of Economy of Ukraine have developed a package of legislative acts, including Resolution 314 regarding conducting economic activity during martial law as well as amendments to the Resolution.
“The above-mentioned amendments simplify the organisational structure of submitting such declarations. They would be submitted directly to the respective licensing bodies, permitting bodies, and subjects that provide public (electronic public) services. There is only one exception: communal enterprises and local authorities’ bodies declarations would be submitted to respective state regional administrations and then would be redirected further,” commented Oleksii Dorogan, CEO of Better Regulation Delivery Office.
The declaration is submitted online in three minutes. A user authorizes on Diia portal, submits a short questionnaire and chooses the necessary permitting document, and then signs the newly formed declaration with an electronic signature. At the same time, the declaration could be submitted offline in Administrative Service Centres (TsNAP), regardless of the registered place of residence or place of business.
Nevertheless, conducting some types of economic activities still requires receiving permitting documents. This includes activities in nuclear energy and production of weapons. The full list of such activities is included in Resolution 314.After martial law is ended, entrepreneurs should apply to the relevant licensing bodies, permitting bodies, and subjects that provide public (electronic public) services and obtain the relevant permits in the manner, within the time and under the conditions provided by applicable law, without stopping (suspending) activities already started.
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.
“When the situation with diesel will stabilise?”, a question that was probably asked by every Ukrainian in the last few weeks. However, while economists and politicians are feeding us forecasts, the cost of fuel at gas stations has crossed the mark of 55 UAH / litre. But not only the price is scary: to get the so much desirable 10 litres of fuel in one hand you need to stand in line for miles. The situation affects not only ordinary motorists, but also strategic industries for Ukraine. What should farmers do? The season of field work is just beginning, and all agricultural machinery runs exclusively on diesel fuel. Some farmers are trying to contract the supply of fuel for the harvest season, some have managed to buy before the shortages, and some are ordering diesel from abroad. However, everyone hopes that there will soon be a panacea that will help with the deficit and “cure” fuel prices.
Is it possible to find an alternative to diesel fuel?
One of the options we will consider is biodiesel. It seemed that there were plenty of raw materials for its production in the country. But for some reason, instead of producing value-added products, at least for our own needs, we export ordinary sunflower seeds or rapeseed. We talked to Anton Zorkin, Head of the Energy Sector of BRDO.
Ukraine has all the necessary conditions for the production of liquid biofuels: developed crop production, animal husbandry, processing industry, the availability of significant land resources, as well as technical and professional potential. If we count all technical oilseeds that Ukraine exports, and which are used in other countries for biodiesel production, it can be about 2 million tons of fuel per year. At the same time, there is enough potential to replace all traditional diesels on the market.
According to our estimates, rapeseed, soybeans, and technical oil exported to Ukraine are equivalent to 1.6-1.9 tons of biodiesel. This amount could replace up to 30% of imported diesel, another 10% of imported gasoline, can also be replaced by adding bioethanol of domestic production.
About 1.2-1.9% of the volume of wheat and corn exported in the 2017-2018 marketing year could be used as raw material for bioethanol production. At the same time its share in gasoline can make up to 7-8%, and such mix is absolutely safe for modern engines without need of their modernization.
Currently, almost all biodiesel production is carried out from agricultural products. Raw materials for it can be soybeans, sunflowers, rapeseed, residues of oil production, livestock waste and more. Another component of this eco-fuel is alcohol, which can be made from sugar- and starch-containing plants (cereals, sugar beets, sugar production waste, etc.).
Of course, food alcohol can be used to produce such fuel. However, its difference from bioethanol is chemical purity, human safety and consumer properties. Bioethanol production technology is simpler and cheaper than food alcohol production technology.
14 large biodiesel plants with a total capacity of 300,000 tons / year have been built in Ukraine. However, these plants are actually idle. There are still about 50 smaller enterprises that can produce up to 25,000 tons of biodiesel annually. The total production capacity of bioethanol in Ukraine is currently 200,000 tons per year. However, according to the State Statistics Service in 2019, Ukraine produced only 70 thousand tons of liquid biofuels. That is, we see that the real figure is 3 times less than possible.
A few more numbers. Potentially, Ukraine is able to replace about 5% of traditional diesel. Instead, the share of RES in the transport sector in 2020 was 2.5%. And these are opportunities only at those capacities that we have without state incentives.
The Law “On Amendments to Certain Laws of Ukraine on the Production and Use of Motor Fuels Containing Biocomponents”, adopted in 2013, provided for a “gradual increase in the regulatory share of production and use of biofuels and blended motor fuels”. Thus, the development of the industry was to begin even then.
However, the above-mentioned act was repealed on the basis of the adoption of the Law “On Amendments to Certain Legislative Acts of Ukraine on Simplification of Conditions for Doing Business (Deregulation)” in 2015. “For the development of the biofuel market and its participants, as well as laid the groundwork for increasing Ukraine’s dependence on imported fuel, and as a consequence – rising fuel prices.
Therefore, our organization, in its study “Regulation of production of liquid motor biofuels” stressed the need to implement new legislation to stimulate an increase in market share of biofuels. This study formed the basis of the bill, which was proposed to MPs last year, but still remains irrelevant for MPs.
In particular, the draft law provided for:
In addition to changing the legislation, it would be good to introduce stimulating financial and economic instruments. Such as:
Biodiesel is often produced by individual farms and used for their own needs. That is, yes, there are such producers in Ukraine. It is quite possible for farmers to produce biodiesel on their own, and this is confirmed by practice. As for expediency, I believe that both farm and industrial production are normal and profitable. In this case, for example, the cost of equipment depends on the capacity of production, raw materials and starts from tens of thousands of hryvnia.
The cost of biofuels depends very much on raw materials and the stability of their income, production volumes, electricity prices, logistics, taxation of petroleum products and more. If the norm is adopted at the legislative level regarding the mandatory share of biofuels in the total volume of liquid motor fuels, there will be a stable demand for such fuels. It will be economically feasible to produce biofuels, not only as a reserve for your farm, but also for sale on the market.
High oil prices, increased fuel requirements and reduced CO2 emissions, in general, make the cost of biofuel production comparable to the cost of traditional fuel production, as evidenced by the growth of world production. In addition, the issue of energy security in terms of fuel supply to the market is currently coming to the fore for Ukraine. But biofuels are always a matter of time.
Published in kurkul.com
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.
The Parliament has registered a bill № 7398, which will create conditions for the construction of new bomb shelters in accordance with the new threats that arose during the full-scale aggression of the Russian Federation. This document was developed with the participation of BRDO experts.
Russia’s full-scale war against Ukraine has shown that most of the shelters available to Ukrainians are the simplest (basements, parking lots, etc.). They do not have evacuation exits, are not equipped with water supply and drainage systems, are not adapted for long-term storage of products and are not able to protect people from weapons of mass destruction, such as chemical, biological, and nuclear.
The new bill envisages for the following:
If the bill is passed, Ukraine will be provided with a sufficient number of modern and comfortable bomb shelters and shelters for civil protection. In the long run, it could save many lives.
So we are waiting for the adoption of this document in the Parliament as soon as possible!
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.
The Parliament adopted two important documents regulating topical wartime issues related to economic recovery and creating conditions for the rapid construction of housing for internally displaced Ukrainians.
Bills № 7282 and № 7289, drafted by BRDO experts, create the preconditions for:
Bill №7282 provides for the creation of a new special type of urban planning program – “Program of comprehensive restoration of the region or territory of the territorial community or part thereof.” The bill also establishes regulatory procedures for the placement of temporary structures and their complexes for temporary residence and care of war victims.
The document regulates certain issues related to the construction of new buildings and reconstruction of temporary accommodation facilities and simplifies the construction of certain engineering and transport infrastructure in martial law. For enterprises that have evacuated their facilities from the scene of hostilities, the document provides for legal regulation of the location of their production facilities in the new location.
Bill №7289, in turn, will provide the most urgent and urgent land needs of entities that are important for the national economy and the agricultural sector. To this end, in particular, issues related to the allocation of land and changes in their purpose in the limited functioning of the State Land Cadastre and the State Register of Real Property Rights.
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.
We call for maintaining the residence of Ukraine for our citizens who are temporarily abroad, and to prevent taxation of Ukrainians in the host country. With this request, as well as proposals for the next steps of the state to solve the problem, the experts of BRDO and the Association “Information Technology of Ukraine” addressed the Prime Minister of Ukraine in an official letter.
Due to the war, a large number of citizens were forced to leave Ukraine, most moved to the EU – to Poland, Germany, the Czech Republic, Romania, Hungary, Slovakia, Bulgaria and more. As a result, both individual entrepreneurs and entire Ukrainian companies are at risk of being granted EU resident status.
Natural persons are generally considered to be their tax residents in other countries if they have a permanent residence, a center of vital interests or stay in their territory for more than 183 days or more than 6 months. However, some countries have considered Ukrainians tax residents since day one, particularly Estonia.
In addition, if a citizen of Ukraine works for an international company that has an office in the EU country where he is located, there may be risks of additional taxation for such an international company (through an economic employer or a permanent establishment). This situation creates legal uncertainty and risks that may be the basis for: the release of Ukrainians, the imposition of fines on them or the transfer of payments abroad.
Regarding legal entities. Currently, there is a mass relocation of Ukrainian companies abroad (in particular, this applies to the IT sector). Legislation in other countries often requires companies to register and pay taxes if their country has an office in the country or is actually doing business in that country. There are also usually requirements for the registration of an individual company or its permanent establishment – as a prerequisite for business.
This creates legal uncertainty, which encourages business to create new legal entities in the host country, to re-sign contracts on their behalf, to transfer payments abroad.
1️⃣ It is critical for us that financial flows remain in Ukraine, as they form the tax base (ie budget revenues), GDP, affect bank liquidity, and add foreign exchange earnings.
2️⃣ The center of vital interests of displaced persons and companies should remain in Ukraine. The vast majority of displaced persons plan to return as soon as it becomes safe in Ukraine, as they feel part of Ukrainian society.
3️⃣ Lack of income received on foreign accounts. Income financial transactions take place in the banking system of Ukraine.
4️⃣ The economic base for income is the economy of Ukraine, not the economy of the country of temporary residence. Displaced persons and companies, as a rule, work remotely for Ukrainian customers or exporting services, so the formation of value added is not due to the economy of the host country.
The Government of Ukraine should call on foreign states to exempt Ukrainians and Ukrainian companies from taxation if such income is received on Ukrainian accounts as part of international assistance to Ukraine due to Russia’s aggressive actions. This requires a more detailed study of the impact of legal institutions on the situation of displaced persons and companies in each country.
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.
In the first days of May the season of planting vegetables on homestead plots began. It depends on ordinary Ukrainians who plant potatoes today whether we will be able to ensure not only Ukrainian but also international food security – because in addition to ourselves, Ukraine feeds about 400 million people in the world. What steps is the state taking to stimulate fruit and vegetable production in Ukraine, and what contribution can every Ukrainian make to this process, – says today Iryna Gruzinska, head of the sector “Agriculture” BRDO.
What is the fruit and vegetable market of Ukraine?
With the beginning of Russia’s war against Ukraine, the issue of the collapse of global food markets became relevant, as our country is a world leader in the production and export of grain, legumes and oilseeds. Ukraine occupies important positions in the structure of imports of such countries as China, Egypt, Indonesia, EU countries, Turkey, Pakistan, Bangladesh, Morocco, Tunisia, Saudi Arabia, Korea, Libya. According to the results of export activity in 2020, domestic vegetables were exported to 95 countries, consumers of more than 100 countries ate Ukrainian fruits. EU countries accounted for 60% of total exports of fruits and vegetables from Ukraine.
Currently, significant efforts of Ukrainians are aimed at finding all possible ways to deny vegetables and fruits not only domestic but also international consumers.
More than 80% of fruit and vegetables and more than 90% of potatoes in Ukraine are grown by households. The issue of forming a “borscht set” falls on the shoulders of all who have homesteads and the ability to cultivate them. The main Ukrainian regions with “vegetable capacity” are traditionally the southern regions of the country, in particular Kherson – it accounts for about 13% of total vegetable production. Whole villages in Zaporizhia grow tomatoes, cucumbers and greens. Today, some of these regions are under occupation by invaders and there are active hostilities, which makes it impossible to harvest.
The cultivation of “Nizhyn cucumbers”, which has already become a world brand and is even served to Queen Elizabeth II, is now under threat as the Chernihiv region is under occupation and is still being shelled by the Russians. It is also important to support the producers of fruits and berries that grow cherry orchards in Vinnytsia, the traditional “Melitopol cherries” and “Kherson watermelons”.
How to harvest vegetables and fruits despite the war?
What we will have on our tables this year depends on the efficient use of all land suitable for agricultural production. In order to simplify the provision of land for the needs of the national economy, agricultural sector and citizens of Ukraine during martial law, the Verkhovna Rada of Ukraine adopted Bill № 7289, which was developed by BRDO experts. Thanks to this document, territorial communities of villages, settlements and cities have the opportunity to lease agricultural land, which is the communal property of territorial communities, without state registration of communal ownership of such land. The adoption of the bill will provide for the urgent needs in the land plots of entities that are important for the national economy, the agricultural sector and the citizens of Ukraine, and thus ensure a reliable Ukrainian rear.
The relevant foreign associations of fruit and vegetable producers have declared their readiness to help Ukraine get this year’s harvest. In particular, the world encourages producers to diversify the range of products grown. The seeds of the main vegetable crops will be provided to Ukrainians by international organizations as humanitarian aid. For example, the Food and Agriculture Organization of the United Nations (FAO) is implementing these initiatives and plans to raise $ 50 million to help more than 300,000 small and medium-sized farms and households in Ukraine. The World Food Program, in turn, helps organize warehouses for food products, including the flour industry, in many regions of Ukraine.
The state encourages agricultural producers to join the Victory Gardens initiative. During the Second World War, such measures were implemented in the United States, Britain, Australia and had a significant social and economic impact. Parks, backyards, sports fields and even the roofs of high-rise buildings have been adapted for growing vegetables, fruits and herbs. “Victory Gardens” were part of the daily life of the rear (“home front”) of these countries, and can play an important role not only in providing the world with food, but also in maintaining the morale of Ukrainians in our war. You can learn more about how to create a garden individually and within the community and provide yourself with food at: https://sadyperemohy.org.
Another experimental step that can allow farmers to reap despite the war is to grow products that are exotic to our land, including chickpeas and bananas. Such initiatives are planned to be implemented by agricultural producers in Cherkasy region.
Simultaneously with the fruit and vegetable season, the honey harvest season also begins. As you know, this product in Ukraine is focused on foreign markets: Ukrainian farmers rank second among world exporters of honey. Before the war, apiaries were registered in every region of our country – there were more than 45,000 bee families – more than 2 million quotas for honey exports to EU countries Ukrainians chose every year during the first weeks of January.
Currently, last year’s remnants of honey products in Ukraine have been transferred to the needs of the Armed Forces. World consumers may experience a shortage of Ukrainian honey due to hostilities, which are also destroying apiaries. The Ministry of Agrarian Policy has prepared detailed recommendations on how to act in a state of war for beekeepers, you can read them at the link. In particular, the state calls on honey producers who are in the zone of active hostilities to transport production. Businesses can get help from the government to relocate their equipment to safe areas, find production facilities and relocate workers.
The abolition of customs duties and export quotas by the EU and the United Kingdom could be an important step in supporting the export of agricultural products from Ukraine, as we used most of the latter within the first half of the year. For domestic vegetables and fruits, the possibility of abolishing (suspending) the entry price system is being considered. Such a positive policy of our partner countries will help to remind the whole world of Ukrainian products and will additionally stimulate Ukrainian economies in this difficult time. A similar proposal has already been made by the European Commission, but the European Parliament and the Council of the European Union have yet to consider and agree on this decision.
The column is published in Delo.ua
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.
In Ukraine, recent weeks have been marked by fuel shortages, long queues at gas stations, and difficult supplies of gasoline and petroleum products. Is it possible to use alternative fuels and reduce dependence on foreign gasoline and diesel supplies?
In 2019, BRDO experts analysed the market for the production of liquid motor biofuels and determined that Ukraine has great potential for its own production of biofuels. But more than 62% of Ukraine’s domestic gasoline and 90% of diesel fuel were by imported.
The production and use of biofuels can provide additional tools for the country’s energy independence, including the transport sector, and address the annual problem of lack of fuel for agriculture. However, instead of its own production, Ukraine annually exports significant amounts of raw materials.
Rapeseed, soybean, and technical oil exported by Ukraine are equivalent to 1.6-1.9 tons of biodiesel. In turn, if Ukraine produced this amount of biodiesel from agricultural raw materials that are exported, it could replace up to 30% of imported diesel.
10% of gasoline imports can also be replaced by adding domestically produced bioethanol. Thus, about 1.2-1.9% of the volume of wheat and corn exported in the 2017-2018 marketing year could have been used as raw material for bioethanol production. The share of bioethanol in gasoline can be up to 7-8%, and this mixture is completely safe for modern engines without the need to upgrade them.
According to BRDO, it is necessary to create clear and transparent legislation for the development of the biofuel industry, which provides, in particular:
1. Introduction of stimulating financial and economic instruments:
2. Implementation in Ukrainian legislation of mandatory sustainability criteria for biofuel production, compliance with which is currently voluntary. These requirements will ensure the environmental friendliness of motor biofuels and reduce emissions.
3. Completion of the process of harmonisation of legislation with the relevant EU norms.
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.
Due to the devastation caused by Russia’s war against Ukraine, Ukrainians face many difficulties.
In order to improve the mechanism of collecting and processing information on damaged and destroyed property of Ukrainian owners, the Cabinet of Ministers of Ukraine approved Resolution #505 of April 29, 2022. This decision of the Government will have a positive impact on legal entities and citizens affected by the occupants and simplify the work of government agencies.
The document provides:
BRDO experts took part in drafting the Government resolution.
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.
In three months of 2022, the Ukrainian Railways transported 56 million tons of cargo. This is 18.5% less than in the corresponding period of 2021. On the eve of the war, Ukraine’s railway market grew, but now its volume is declining. In order for the successful development of our country’s transport system, as well as for its future to be “green”, it is important to correct this dynamic. Andrii Bukovskyi, an expert of the Infrastructure Sector of the BRDO, talks in more detail about the national freight market and its synchronisation with the requirements of the European Green Deal.
BRDO experts have been researching the domestic market for freight services for several years in a row. Today, given the wartime and further reconstruction of the country, we have prepared a new analytical review. It presents statistical indicators of the industry and contains proposals for the resumption of work in this area, taking into account the “green” requirements of modern times. Their need is dictated by the further European integration of Ukraine and the implementation of state environmental policy, which will synchronise the national sphere of freight with the European Green Deal (EGD).
The most dependent on the transport industry are agriculture, metallurgical production, coal industry, mining and metallurgical and defence complexes. Due to the geographical features of Ukraine and the structure of the real sector of the economy, especially export-oriented segments, railway transport is a key part of the entire freight transport and logistics complex of our country.
How did the war affect rail freight?
In January 2022, the volume of traffic provided by Ukrzaliznytsia increased significantly (transit, in particular, increased by 38.8% compared to January 2021), but with the beginning of Russia’s war against Ukraine it decreased. Domestic transportation (mostly of grain and iron ore), as well as imports and transit, fell by almost a quarter. Russia’s aggression has done the least damage to export rail transport via Western rail freight crossings, reducing it by only 10%.
The sphere of export transportation is currently characterised by several factors. First, since the beginning of the war, all railway crossings to Russia and Belarus have been closed. Secondly, there are 10 checkpoints with EU countries: 4 with Poland, 2 with Slovakia, 2 with Romania, and 2 with Hungary. Third, as in pre-war times, in the western direction, this type of transportation inhibits the need to move from the Ukrainian to the European track. Due to the related technical difficulties at the busiest railway crossings – in Izov, Chop, and Uzhgorod – carriers have to stand in line for 20 days.
In terms of cargo most affected by the war is transportation of building materials, the least is coal transportation.
Was the freight market in Ukraine “green” before the war?
Over the last ten years, the volume of cargo transported by all modes of transport ranged from 600 to almost 812 million tons, reaching a maximum in 2011, a minimum in 2020, and ending 2021 at 619.9 million tons.
The undisputed leaders were rail and road transport. At the same time, motor transport showed a steady increase from 140 million in 2009 to a record 244 in 2019, and rail in this period was steadily moving towards the anti-record, carrying 312.9 million tons in 2019 and only 305.5 million in 2020. As of the end of 2019, the market shares of freight traffic were distributed as follows: 36% were carried out by car, 46% by rail (historical minimum).
Analyses of the freight market in terms of determining the volume of transport services indicated a significant change in market shares. This is especially true in the case of market segmentation in terms of specifications of each mode of transport cargo.
The corresponding trend has developed in the dynamics of changes in market shares of modes of transport, in particular without much change: aviation – less than 0.02% annually, water – about 1% annually, pipeline – from 22% in 2009 to 16.7% in 2019 .
According to the State Statistics Service of Ukraine, transport companies in 2021 compared to 2020 increased freight traffic by 3.3% to 619.9 million tons. At the same time, rail traffic increased by 2.9% to 314.3 million tons, automobile by 16.2% to 222.6 million tons, pipeline decreased by 20.4% to 77.6 million tons.
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%.
Since each mode of transport usually served the relevant sectors of the economy, such sharp changes in market shares may indicate the formation of negative factors for the development of the national economy, which in turn may adversely affect the transport industry due to overloading roads.
In summary, in recent years motor transport has increased its market share by half (+57%), water, on the contrary, lost almost half (-44%), a significant decrease occurred in the railway (-8%).
Based on the above, we can draw an intermediate conclusion: in the last ten years, motor transport has been quite successful in its expansion to the freight market of Ukraine, while its competitors are weakening their positions. This trend is extremely threatening, as in terms of Ukraine’s tasks and commitments in the EGD vector, rail and water transport need to increase their market shares. Unfortunately, this is not the case.
The average distance of transportation by rail is more than 500 km, and by road more than 200 km. It is worth noting that for rail transport this figure is growing every year, and for road transport is declining: in 2009 501 km and 242 km, in 2019 581 km and 200 km, in 2021 574 km and 209 km respectively. Indicators of water transport (2009 – 809 km, 2019 – 555 km, 2021 – 556 km) can be used as a benchmark, but its very small share has little effect on the activities of current transport “heavyweights”.
The change in this indicator confirms the implementation of a scenario that is negative for the national economy and its environmental aspects:
Grain transportation: how have the market shares of different modes of transport changed recently?
In January this year, BRDO experts have already published an analysis of the national grain transportation market. In 2021-2022, Ukraine harvested the largest harvest of cereals and legumes during the years of independence. The entire harvest of cereals and legumes forms a freight base for transport companies – road, rail, river and sea. And the greater the grain harvest, the greater the volume of its domestic traffic. At the same time, transport companies also transport foreign grain and legumes in transit through Ukraine and import grain to domestic consumers.
Road, rail, sea, and river transport interact closely during the transportation of cereals and legumes. The vast majority of crops grown in Ukraine are exported to various countries around the world through seaports. Grain is usually delivered to seaports by rail, road, and river.
According to Ukrzaliznytsia, 21.2 million tons of grain were transported by rail in July-December 2019, 19.3 million tons in the same period in 2020, 20.8 million tons in 2021. Given the record grain harvest and of legumes in 2021-2022, Ukrzaliznytsia should also significantly increase the volume of grain transportation, but the actual figures do not show a sharp increase.
At the same time, there is a significant increase in grain transportation for export by road and river transport. It is logical to assume that the leader in the transportation of grain and legumes in Ukraine is road transport, which transports grain from fields to elevators, railway stations and access tracks of stations, seaports, processing plants, and other points. Most of the grain is delivered to the places of loading on the railway (railway stations, access tracks of stations) by road and then the railway carries out their transportation for export to seaports.
Unfortunately, there is no complete and reliable information on the volume of transportation of grain and legumes by road, as most of such transportation is not made out by consignment notes, or made out with underestimation of the weight of the cargo. However, objectively, road transport transports the most grain, as it participates in all logistics chains.
This trend requires more in-depth research to determine the competitive position and prospects for the development of each type of freight. This is especially important given the need to adapt the Ukrainian freight market to the requirements of the EGD to increase multimodal and intermodal freight.
Multimodal and intermodal transport have some differences, despite the similarity of characteristics. The common features of these methods of transportation include the use of several subtypes of vehicles.
In this case, intermodal transport is the gradual transportation of goods by two (or more) modes of transport (usually with the use of special containers or packaging). The goods are not reloaded during the change of transport. Such delivery can take place by different means of transport, the client can, if necessary, involve two or three companies at once. It is possible to use different types of transport with the issuance of several invoices, and the responsibility for the safety of the goods and the timeliness of delivery is distributed among the transporters.
The peculiarity of multimodal transportation is the presence of one carrier responsible for the cargo during the entire transportation, and a single invoice. Multimodal delivery is carried out with the use of one tariff rate on the entire route of transportation. Conditions and procedure for organising multimodal transportation with the participation of railway transport are determined by the Law of Ukraine “On multimodal transportation”.
The railway is the future of “green” freight
In recent years, international environmental experts have placed great hopes on rail transport. The International Energy Agency (IEA) recently released its 2019 report, “The Future of Railways. Opportunities for energy and the environment”. A thorough study describes the modern landscape, the parameters of which determine the future of the railways, and also presents two scenarios for the development of this transport industry until 2050.
To make the IEA report available to the public, Andrii Bukovskyi and Victoria Yanovska, Head of the Center for Railway Transport Research, prepared a Ukrainian-language review of the document.
The report notes the rapid growth in global demand for transport due to social and economic progress and the corresponding increase in demand for energy, CO2 emissions and air pollutants, but rail transport is recognised as one of the most energy efficient modes of transport.
The study notes that in the world as a whole, the transport sector accounts for almost 1/3 of final energy demand, about 2/3 of oil demand and more than 1/4 of global carbon dioxide (CO2) emissions from fuel combustion. At the same time, if the current trends continue, it is projected that by 2050 the volume of passenger and freight traffic will more than double, and thus, energy needs will increase and the environmental impact of the industry on the environment will increase. That is why changes in the transport sector are essential to achieve energy transitions on a global scale.
Rail transport is one of the most energy efficient modes of transport for freight and passenger transport. 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). The railway has the ability to ensure mobility with minimal emissions of harmful air pollutants and due to the effect of agglomeration promotes sustainable economic growth.
According to the legislation of Ukraine, railway transport is designed to meet the needs of social production and the population of the country in domestic and international traffic and provide other transport services to all consumers without restrictions.
This appointment has not been fully implemented for the last 3 years. Railway transport, which accounts for 75% of freight turnover (excluding pipeline) and 30% of passenger turnover, systematically loses its transport capacity and rapidly degrades, posing a real threat to the national economy, social stability and defense capabilities.
Already today there is an incomplete satisfaction of the needs of the economy in rail freight, as evidenced, in particular, by the analysis of changes in GDP and freight turnover. The previously stable correlation of these indicators over the last 3 years has been sharply broken and turned into a steady divergence (such a kind of “scissors”: GDP – up, turnover – down).
In 2021, Ukraine’s GDP grew by 3.2%. Also, our country has the highest dollar GDP in history – almost $ 200 billion. This was announced by the First Deputy Prime Minister – Minister of Economy Yulia Svyrydenko during a meeting with companies of the European Business Association.
At the same time, the freight turnover of railway transport lags behind the dynamics of GDP every year, currently the gap reaches about 18 percentage points and indicates the formation of a threatening trend for the national economy.
State policy: how to promote the development of rail freight?
State policy is already promoting the development of rail freight, taking into account the EPC. In addition to two aspects: it is necessary to ensure strict control over the implementation of market plans and strategies by market participants, and for irresponsible leaders – to draw appropriate conclusions in favor of the state.
BRDO experts are convinced that the fragmentation of Ukrzaliznytsia JSC will contribute to the solution of this problem, as well as many others, which were set during the formation of a legal entity that is too multicomponent in terms of activities. Unbundling and formation of the holding structure of the carrier should take place through the formation of separate business entities, formed taking into account the peculiarities of certain activities and the degree of competitiveness (monopoly) of the relevant market segment.
Currently, all necessary measures to restructure Ukrzaliznytsia JSC in accordance with EU legislation have already been reflected in the plans of the Ukrainian Government adopted on the basis of decrees of the President of Ukraine and the National Transport Strategy of Ukraine (NTSU-2030). According to these documents, the separation of the functions of infrastructure management and transportation, preparation of the company for the launch of a competitive market for rail transport in Ukraine should take place soon.
What practical recommendations do we offer?
What steps of UZ JSC and the Government (as the sole shareholder) can provide a quick, adequate and sufficiently effective response to the challenges that arise at the intersection of urgent and strategic tasks of the country’s functioning? At what point can the vectors of the EPC, plans for the implementation of NTSU-2030 and the Association Agreement between Ukraine and the EU, and on the other hand the vectors arising from changes in global logistics chains, the need for rapid recovery of Ukraine’s economy and intentions many countries to help in this? International business is interested in investing in Ukraine, but consistently refuses to invest in the amorphous, unstructured and almost unmanaged business structure of the domestic railway.
The answers to these questions are already being voiced by the state – it is “the creation of the holding structure of Ukrzaliznytsia (JSC UZ) on a functional basis.” The structure of the organization will include a business association for the provision of multimodal and intermodal services (including the widespread use of container and piggyback transport), formed on the basis of property and staff of the branch “Transport Service Center Liski” JSC “UZ” and to which potential interest many logistics operators, other investors and potential recovery donors.
The directions of railway transport development are discussed in more detail in previous studies of BRDO experts, in which we have already paid attention to the issue of unbundling Ukrzaliznytsia, analyzed the freight car market, identified its key problems and outlined possible solutions. The results of the study are available in the Green Paper “Unbundling of JSC” Ukrzaliznytsia: Liberalization of the freight car operation market “.
Published in Ukraine Rail Monitoring
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.
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.
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.
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.
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.
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.
Creating conditions for temporary residence of internally displaced persons, reconstruction of housing and settlements affected by the Russian armed aggression, as well as relocation (evacuation) of production facilities of enterprises from the war zone – these are the goals of the draft law №7282, developed jointly with BRDO experts, that was adopted in the Parliament.
Thus, the bill provides for the creation of a new special type of urban planning program – “Program of integrated rehabilitation of settlements (territories)”, which will determine the main spatial and socio-economic priorities and a set of priority measures to restore settlements and territories affected by hostilities, terrorist acts, sabotage, emergencies, etc.
In addition, the bill establishes regulatory procedures for the placement of temporary structures and their complexes for temporary residence and care of victims of circumstances caused by emergencies, including hostilities, terrorist acts or work to eliminate their consequences.
Draft law also regulates the construction of new buildings and the reconstruction of temporary accommodation facilities and simplifies the construction of individual engineering and transport infrastructure facilities under martial law.
For enterprises that have evacuated their facilities from the battlefields, legal regulation is being created for the location of their production facilities at the new location. This will provide the preconditions for increasing the number of jobs in the construction and related industries.
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.
The Parliament adopted a bill №7289, aimed at simplifying the provision of land for the needs of the national economy, agricultural sector and citizens of Ukraine during martial law. BRDO experts participated in the development of the document.
The rules for regulating land relations in peacetime are long, so the decision-making process can take months. In addition, under martial law, the functioning of the State Land Cadastre and the State Register of Real Property Rights is suspended.
That is why the bill proposes to give territorial communities of villages, settlements, cities the opportunity to lease agricultural land, which is communal property of territorial communities, without state registration of communal ownership of such land.
What is the bill about?
In addition, the bill defines the mechanism for registering the establishment and change of purpose of land in the period when the functioning of the State Land Cadastre is suspended, and in martial law. The Ministry of Agrarian Policy and Food of Ukraine has the right to suspend and resume the State Land Cadastre for security reasons, impose restrictions on the powers of state cadastral registrars and other features of maintaining the State Land Cadastre in wartime.
The adoption of the bill provides the most urgent needs in the land plots of entities that are important for the national economy, the agricultural sector and the citizens of Ukraine, and thus support the Ukrainian economy.
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.
At present, there are still annoying gaps in this area, as the requirements of the Martial Law and the Law “On Electronic Communications” on the development and approval of certain legal acts provided by these laws have not yet been met.
As a result, currently:
As a result, problematic situations are already arising, from which ordinary Ukrainian citizens suffer. A recent example is the recent decision of the National Commission for State Regulation in the Fields of Electronic Communications, Radio Frequency Spectrum and Provision of Postal Services (NCEC) to exclude Netasist LLC and Netassist LLC from the Register of Telecommunications Operators and Providers.
The reasons for this decision, as stated on the NCEC website, are the provider’s refusal to comply with the requirements of the NCU during martial law, in particular, the company’s decision not to block the domains of the aggressor country.
At the same time, the legislation does not provide for such grounds for decision-making and the powers of the NCEC.
In this case, about two thousand subscribers of these operators simply lost contact. Among them are both individuals and legal entities, and for all of them these circumstances in wartime are factors that complicate life and work.
BRDO emphasizes the need to develop and approve the necessary NPAs. We addressed the responsible state bodies with an official letter, which contains a list of necessary acts and outlines the issues that should be taken into account in them. You can read the text of the appeal here