The European Commission €50 billion aid proposal to enhance Ukraine’s compliance with EU regulations: supporting agricultural independence and sustainable reconstruction practices
The plan by the European Commission supporting the sustainable reconstruction of Ukraine: The PHOENIX initiative
The EU Commission hosted a conference in Vilnius, Lithuania, from November 28 to December 1, focusing on Ukraine’s sustainable recovery efforts. Represented by Virginijus Sinkevičius, the Commission emphasized its commitment to support Ukraine’s sustainable reconstruction.
The conference, featuring both policy and business segments, aimed to assess challenges and discuss strategies and solutions for the sustainable reconstruction and recovery with Ukrainian policymakers, mayors, and businesses; a goal that is crucial for future prosperity, resource independence, and citizens’ quality of life post-war in Ukraine.
The policy measures to support Ukraine’s reconstruction are under an umbrella of measures called the PHOENIX initiative. Launched by President von der Leyen in February 2023, this initiative aims to rebuild Ukrainian cities sustainably with the New European Bauhaus community.
The concept of sustainable reconstruction after the war in Ukraine: the pattern of circular economies
Even before the onset of the armed conflict in 2022, Ukraine grappled with numerous challenges, such as outdated infrastructure, energy inefficiency, and environmental degradation. Now, the nation has introduced a Recovery Vision aimed at leveraging reconstruction efforts to ensure they align with and propel sustainability goals.
UNIDO, in collaboration with the Ministry of Economy of Ukraine, the National Standards Body (UAS), and international partners like CEN and CENELEC, has collaborated to conceptualize and develop a National Guiding Framework, laying the groundwork for the sustainable reconstruction. As part of this initiative, a series of workshops have been organized to explore how standards and conformity assessment can underpin the reconstruction of vital infrastructure, facilities, services, and their management through an environmentally conscious lens, particularly by embracing principles like circular economy, climate neutrality, and decarbonization.
Environmental damage from the war in Ukraine. The European Commission €50 billion aid proposal
The European Commission is actively monitoring and documenting environmental damage caused by the war, which extends beyond natural areas. The damage inflicted extends to infrastructure, natural resources, ecosystems, and public health, counting over €52 billion in total damage, destruction of 497 water management facilities, €1.4 billion in forestry sector damages, and threats to 20% of protected areas. The destruction of the Kakhovka Hydropower Plant stands out as a severe man-made disaster, comparable to the Chernobyl accident. As if that wasn’t enough, Ukraine is now the most heavily mined country globally.
The European Commission is assisting Ukraine in aligning its environmental laws with EU standards, establishing administrative structures for enforcement, and collaborating with international partners and support groups to address environmental consequences of the war. The proposal for the aid to Ukraine amounts to €50 billion over the period 2024-2027 and will prioritize environmental sustainability in future investments.
The benefits and impact of circular economies in the Ukraine’s sustainable recovery plan
Transitioning to circular economies enables economic actors and consumers to pursue value creation by reducing negative externalities and the extraction of raw materials and harmonizing economic growth with sustainable development. To achieve this, Ukraine’s economic players and the European Union must disconnect natural resource extraction and environmental impact from economic growth to economic prosperity while preserving natural resources and minimizing environmental harm.
Businesses and policymakers alike are intrigued by the benefits: aspects such as waste management, recycling, and resource limitation have been extensively studied. However, many characteristics, including sharing models across sectors, remain underexplored. While there is empirical evidence of the country’s growth potential adopting circular economies, it’s not an automatic outcome, as it initially shifts production activities.
The war in Ukraine has worsened environmental issues, especially regarding building and construction waste and landfill management. A well-structured waste management system could mitigate post-war environmental impact and reduce Ukraine’s environmental footprint, along with concrete recycling and circular housing.
The preparedness of the private sector to incorporate sustainability principles and production of their own building materials: Ukrcement
Ukrcement, the Ukranian cement association for promotion of the best interests of clinker and cement producers in Ukraine, has requested the recognition of its products in compliance with the EU regulation. The executive director of the Ukrcement association, Liudmyla Kripka, explained that in the country there is a lack of organizations to assess compliance with the requirements of EU Regulation 305/2011, which delineates between two stages in the distribution of construction products: the act of making it available and the act of placing on the market, and assigns distinct responsibilities to the economic operators participating in each phase. Consequently, Ukrainian producers who pass a European conformity assessment and issue an indicator declaration cannot use it in their own country without obtaining a certificate from a national conformity assessment body.
To address this inequality, Ukrcement proposes approving the recognition of indicator declarations for construction products issued by foreign commercial entities, confirming compliance with the requirements of EU Regulation 305/2011, even for Ukrainian producers. Despite these premises, Ukrcement recorded only a slight decrease in cement exports volume last year, while cement production in the country decreased. Ukrcement comprises five cement production companies with a total of nine plants spanning the entire territory. The association forecasts that Ukrainian-made cement could emerge as a pivotal raw material for reconstruction, with the market potentially reaching 15 million tons of products, equating to over $1 billion annually, at the peak of reconstruction.
Ukraine’s competitive advantage lies in leveraging logistics to compete with foreign producers, coupled with the fact that the average price of cement in Ukraine is more than 30% lower than in other Central and Eastern European countries. In managing the recovery, the association underscores two primary tasks for the state: ensuring maximum transparency in contractor selection and promoting localization.
Ukraine’s recovery plan ambitions: sustainable and energy-efficient buildings and independence from Russian resources
European objectives for the transition to sustainable buildings focus on reducing the energy demand of buildings. European policy regarding building energy efficiency has been progressively tightening over the years: although a uniform standard has not been established, numerical benchmarks for primary energy consumption indicators of near-zero energy buildings were defined as recently as 2016. Concurrently with the implementation of the European Green Deal, regulatory adjustments are being devised to mandate that all new buildings be zero-emission by 2030.
These buildings would primarily rely on renewable sources for power and emit no carbon emissions from fossil fuels on-site. The initial proposed regulatory changes, unveiled in December 2021, set standards ranging from <60 to <75 kWh/(m².y) for residential buildings and from <70 to <90 kWh/(m2.y) for office buildings, varying based on the location within one of the four climate zones. To expedite this transition, all new public buildings in the EU would need to be zero-emission as early as 2027.
The pressing issue concerning municipal and industrial waste in Ukraine goes hand in hand with the potential for energy generation and material recovery from these waste streams, where the industries could prioritize utilizing each other’s waste products as inputs. By keeping raw materials circulating within the economic system, thereby minimizing the extraction of new ones, it generates a process through which the supply chain is as close to the end user and final product as possible. When the supply chain is localized, it ensures a reliable supply of raw materials.
Circular Economies and reliance on hemp: agricultural and industrial raw materials
Given Ukraine’s vast agricultural land, there exists potential for circular biomethane production, wherein agricultural by-products and household waste are transformed into energy and reused in agricultural activities.
Ukraine boasts a rich history of hemp cultivation and aims to expand this industry nationwide. Accession into the European Union promises access to a sizable market for Ukrainian hemp products, and global legalization for industrial purposes could fuel its market growth. In 2021, the industrial hemp market reached a volume of 4.45 billion US dollars; starting from this data, projections from Grand View Research indicate that by 2030, this figure will soar to 60.68 billion US dollars. By 2050, Ukraine is poised to emerge as a top producer of industrial hemp and related products.
In Ukraine, only hemp grain and fiber varieties can be cultivated and processed under annual licenses issued by the federal government, with a THC limit of 0.08%. This stringent limit means Ukrainian farmers are restricted to a limited number of Ukrainian hemp varieties listed in the country’s official plant variety registry, contrasting with the higher THC limits observed in most parts of the world.
Ukraine’s vast agricultural land map: Ma’rijanni Hemp Industrial Park to create production cluster
The Zhytomyr Oblast region of Ukraine is on the verge of establishing an industrial park dedicated to the cultivation and processing of industrial hemp. The goal is to attract companies, both small and large, to collaborate on various hemp-based products.
Situated in the Khorosh community, the project will be named Ma’rijanni Hemp Industrial Park and will be situated in the village of Rizhanni. A collaborative effort between the Military Administration of the Zhytomyr region and local municipalities, the project is primarily driven by Michel Tereshchenko, a Ukrainian hemp advocate and the majority shareholder of the Volodarsko-Volyn flax factory. The aim is to establish a modern cluster for hemp cultivation and industrial processing.
The production and storage facilities will cover an area of nearly 12,000 square meters to make an impact on Ukraine’s economy and its global market standing. The park aims to stimulate a local market for farmers in the region, create employment opportunities, and supply raw materials to companies, thereby reviving the tradition of hemp textile production in Zhytomyr. The production of hemp-based products could include packaging, biodegradable towels, high-quality paper, insulation materials, building materials, nonwoven mattresses and biomass pellets.
Other than contributing at Ukraine’s sustainable reconstruction and European integration, Ma’rijanni Hemp Industrial Park may offer an alternative to Chinese imports, which the Ukrainian agricultural sector partially depends on.
Ukrcement
It is the Association representing cement and clinker producers in Ukraine. Their interest is to position the industry as a leading force in the sustainable development of Ukraine
