Reforming CO2 taxation: Current proposals and outlook
The current Ukrainian CO2 tax is too low to have any effect on reducing emissions. Discussions on increasing the CO2 tax are ongoing among policymakers. However, the focus in these discussions so far is less on reaching effective levels for driving decarbonisation, but more on revenue generation and its fiscal use. On the backdrop of international discussions and commitments, several government institutions are preparing proposals for introducing a national climate fund which could channel CO2 tax revenues into a green modernisation of industry. Another proposal currently discussed concerns financing renewable electricity feed-in tariffs through CO2 tax revenues instead of a consumer levy. Overall, the course and ambition of Ukrainian climate policy remains unclear, creating uncertainty for investors, businesses, and policymakers alike.