Ukraine restores mandatory greenhouse gas emissions reporting
On 8 January 2025, the Ukrainian parliament adopted a Law of Ukraine No.4187-IX «On Amendments to Certain Legislative Acts of Ukraine on the Restoration of MRV of GHG Emissions» (Law No. 4187) that aims to put again in force the mandatary registration and reporting requirements in the field of Greenhouse Gas (GHG) emissions established by the Law of Ukraine No.377-IX «On Principles of MRV of GHG emissions» dated 12 December 2019 (Law No. 377).
Background
Back in January 2021, Ukraine introduced a System of Monitoring, Reporting and Verification (MRV) of GHG emissions, an important transparency requirement and a prerequisite for the establishment of a GHG Emissions Trading System (ETS) in Ukraine. Due to the imposition of martial law in Ukraine, however, mandatory reporting under the MRV of GHG was suspended and replaced by a voluntary one in accordance with the Law of Ukraine No. 2115-IX «On Protection of the Interests of Subjects of Submitting Reports and Other Documents During the Period of Martial Law or the State of War» dated 3 March 2022.
The 8 January reintroduction of the mandatory MRV of GHG during martial law ensures the collection of verified and transparent data and allowing for the next step in establishing the ETS in Ukraine, which is the most effective market-based mechanism for reducing GHG emissions.
Companies that are subject to registration and reporting obligations of GHG emissions
Article 2 of the Law No.377 applies to relations arising in the sphere of MRV of GHG emissions[1] from installations[2] located in Ukraine.
Consequently, the legal entities and individual entrepreneurs who operate or own (i.e. operators) the installations that produce or may produce GHG emissions in Ukraine must be in full compliance with MRV of GHG emissions requirements established by Law No. 377.
To ensure that market participants better understand the applicability of the provisions of Law No.377, the Ukrainian government approved a list of activities and GHG emissions that are subject to MRV of GHG emissions requirements.
According to the Cabinet of Ministers of Ukraine Resolution No. 880 «On approval of the list of activities that are subject to MRV of GHG emissions» dated 23 September 2020, the following activities generating GHG emissions are subject to MRV of GHG:
List of activities that are subject to MRV of GHG emissions
| Name of the type of activity | GHG emissions |
|---|---|
| Burning of fuel in installations with a total rated thermal capacity exceeding 20 MW (except for installations for the burning of hazardous or municipal waste, installations used for research, development and testing of new products and processes, as well as installations that consume exclusively biomass or biofuels); equipment with a rated thermal capacity of up to 3 MW is not taken into account for determining the total rated thermal capacity of the installation | СО2 |
| Oil refining | СО2 |
| Coke production | СО2 |
| Burning or sintering, including agglomeration of metal ore (including sulphide ore) | СО2 |
| Production of iron or steel (primary or secondary smelting), including continuous casting, with a production capacity exceeding 2.5 tons per hour | СО2 |
| Production or processing of iron-containing alloys (including ferroalloys), if the total nominal heat output of the combustion units exceeds 20 MW; equipment for processing iron-containing alloys includes, in particular, rolling mills, heating furnaces, forging equipment, foundries, equipment for coating (cladding) and cleaning (pickling) surfaces | СО2 |
| Production of cement clinker in rotary kilns with a production capacity exceeding 500 tons per day or in other kilns with a production capacity exceeding 50 tons per day | СО2 |
| Production of lime or calcination of dolomite or magnesite in kilns with a production capacity exceeding 50 tons per day | СО2 |
| Nitric acid production | СО2 and N2O |
| Ammonia production | СО2 |
| Glass production, including fiberglass, with a melting capacity of more than 20 tons per day | СО2 |
Obligations under the Law 4187
According to the Law No.4187, the operators who have not: (i) registered their installations in the Unified Register for MRV of GHG Emissions[3] (Unified Register); (ii) made changes or updated the information on the installation in the Unified Register; or (iii) cancelled the state registration of the installation, during the period of martial law, must submit the following documents via Unified Register :
1. one of the following applications[4]:
1.1. application for state registration of the installation;
1.2. application for amendments to the data in the Unified Register; or
1.3. application for cancellation of state registration of the installation in the Unified Register;
2. a monitoring plan[5];
3. an operator's report[6], which is recognised as satisfactory based on the results of verification[7];
4. a verification report[8]; and
5. an improvement report[9].
According to Law No. 4187, the operator has the right not to submit the operator's report for the reporting years 2021, 2022 and 2023 at all. For the reporting year 2024, the operator has the right to submit the operator's report by the end of the year in which the Law No. 4187 comes into force (i.e. up to the end of 2025).
Liability of the operators for non-compliance with MRV of GNG requirements
Non-compliance by the operator with the MRV obligations is a ground for administrative liability.
Pursuant to Article 91-6 of the Code of Ukraine on Administrative Offences No.8073-X dated 7 December 1984 (with further amendments), the following violations of the MRV requirements by the operator of the installation will be considered as a breach of law:
- failure to fulfil the obligation to register the installation or to make changes to the records of the Unified Register;
- failure to submit the monitoring plan, monitoring plan with amendments, improvement report, operator's report (found to be satisfactory based on the results of the verification), and the verification report;
- providing the verifier or the central executive authority with knowingly inaccurate or incomplete information related to the operator's monitoring of GHG emissions;
- failure to implement the approved monitoring plan, monitoring plan with changes.
For violation of the above MRV obligations, a fine in the amount up to UAH 1360 (approx. EUR 31) may be imposed.
If a person within one year commits an administrative offence for which he has already been brought to administrative liability, he may be imposed a fine in the amount up to UAH 6800 (approx. EUR 155) with deprivation of the right to hold certain positions or engage in certain activities for a period of one year. The fines for violation of MRV of GNG requirements are currently low, but may be revised in the future.
To be prepared, the legal entities who operate or own the installations that produce or may produce GHG emissions in Ukraine shall consider preparing and submitting all reports and other required documents for 2024 and 2025. These preliminary steps will help avoid liability for violation of MRV of GHG requirements and pave the way for full compliance with the current legislation of Ukraine.
To sum up, the adoption of the Law No.4187 returns mandatory registration and reporting requirements in the field of GHG emissions and establishes the ETS in Ukraine, which is common practice for EU member states.
For more information, contact your CMS client partner or these CMS experts: Vitaliy Radchenko, Maryna Ilchuk, Oleksandr Protsiuk.
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[1] According to Article 1 (5) of the Law No.377, GHG emissions from an installation are the emissions of GHG identified for a particular type of activity from greenhouse gas emission sources at the installation into the atmosphere;
[2] According to Article 1 (18) of the Law No.377, an installation is a stationary technical facility where an operator carries out one or more activities, including other activities that have a direct technological connection with the activities carried out at such a facility and may affect GHG emissions;
[3] Due to martial time in Ukraine, the Unified Register is not publicly available. The Unified Register for MRV of GHG Emissions is a public electronic register that ensures the creation, collection, accumulation, storage, accounting, protection, display, processing of information about installations and documents in the field of MRV of GHG emissions from installations, as well as electronic cooperation in this area.
[4] Within 30 days from the date of entry into force of the Law No.4187.
[5] According to Article 1 (15) of the Law No.377, a monitoring plan - is a document that defines a complex of monitoring measures, developed by the operator on the basis of typical forms of a standard or simplified monitoring plan and submitted by the operator to the authorised body for approval;
[6] According to Article 1 (9) of the Law No.377, an operator's report - is a report on GHG emissions from the installation prepared by the operator based on the monitoring results for the reporting period;
[7] According to Article 1 (3) of the Law No.377, a verification - the activity of the verifier, which consists of verifying the operator's report, preparing and issuing a verification report based on the results of such verification;
[8] According to Article 1 (2) of the Law No.377, a verification report means a report issued by the verifier to the operator based on the results of the verification and containing one of the following verifier's conclusions: (i) based on the results of the verification, the operator's report is found to be satisfactory; or (ii) based on the results of the verification, the operator's report is found to be unsatisfactory;
[9] According to Article 1 (10) of the Law No.377, an improvement report – is a report prepared by the operator containing information on the improvement of the monitoring process and information on the elimination of inconsistencies in monitoring and reporting data on GHG emissions from the installation and the implementation of improvement recommendations provided by the verifier;
