Blog entry

Preferential status for hydrogen infrastructure could cement Europe’s dependence on fossil gas

The European Commission is currently finalising a list of transboundary energy projects that Member States want to see fast-tracked. These projects are called Projects of Common Interest (PCI) and Projects of Mutual Interest (PMI), and energy infrastructure projects that win this lucrative title get benefits such expedited permitting and privileged access to EU subsidies.

The PCI/PMI list could have helped stimulate the energy transition had it not been captured by fossil gas interests and myopic government officials.

A leaked draft of the list has over a hundred hydrogen projects – twice as many as in the previous PCI list – including electrolysers, hydrogen storage facilities, hydrogen reception facilities and pipelines. Lots of pipelines. In fact, more than half of the hydrogen projects that were shortlisted are pipelines. And roughly 75 per cent of these pipelines are intended to pump fossil gas-based hydrogen, according to analysis by Food and Water Action Europe.

If these projects materialise, they will entrench Europe’s reliance on fossil gas and, hence, and undermine the EU’s decarbonisation effort.

And it’s not only climate activists sounding the alarm on the PCI process. The EU’s Agency for Cooperation of Energy Regulators (ACER) has an integral role in the PCI process, assessing the consistency and transparency in the screening procedures.

In a recent expert opinion, ACER questioned the credibility and robustness of this process and called for stronger transparency in the selection of energy infrastructure projects.

In the previous round, in 2023, ACER concluded it was unable to assess whether proper regulatory criteria, mainly the application of the TEN-E Regulation criteria, and the cost-benefit analysis across all projects. In its recent opinion, released in early October, the agency underlined that many of the concerns raised two years ago remain, particularly regarding the selection process, the identification of infrastructure needs and the methodologies used to evaluate projects.

ACER’s latest findings echo other expert voices. The European Scientific Advisory Board on Climate Change similarly concluded in 2023 that the Ten-Year Network Development Plan (TYNDP) process, which is the basis for PCI and PMI selection, failed to adequately reflect the transformational changes and rapid emission reductions required to meet the EU’s 2050 climate neutrality and resilience targets. These shortcomings extend across the entire TYNDP process — from scenario development and system needs assessment to the cost-benefit analysis and the subsequent PCI/PMI selection.

In the current cycle, Bankwatch and other civil society groups called out several particularly questionable hydrogen projects that had been submitted by Member States. Though some have since been dropped for various reasons, others still appeared in the latest draft of the list.

Perhaps one explanation for this is that 90 percent of the hydrogen projects on the draft list were proposed by members of ENTSO-G, the lobby group of the European gas transmission industry.

EU governments and the Commission, like the fossil energy industry, have been fueling the hydrogen hype as a decarbonisation panacea. Yet, a closer look reveals that these ambitions are, at best, dangerously out of touch with reality. At worst, hydrogen expansion, surely if enabled with EU public money, would either chain Europe to fossil gas imports for decades or end up birthing countless stranded assets.

A Bankwatch report from December 2024, showed that the hydrogen strategies of Poland, Romania and Hungary are little more than exercises in wishful thinking that overlook serious issues of cost and efficiency.

Whereas the EU – for instance, in the Clean Industrial Deal communication – supposedly focuses on ‘green’ hydrogen, that is, H2 produced with renewable energy sources, the three governments are entertaining all options across the ‘hydrogen rainbow’. And governments’ proposed projects for PCI status reveal that their actual priority is fossil hydrogen.

On Friday, October 24, the final version of the proposed list was approved by the High Level Decision Making Body. Ahead of its decision, Bankwatch and 33 other NGOs sent a joint letter calling for the exclusion of all hydrogen projects from the PCI/PMI list, except for electrolyser projects powered by additional renewables. The groups also called for a review of the TEN-E Regulation, which governs the PCI process, to assess whether the current framework truly aligns with the EU’s efforts to address the climate crisis and energy objectives.

By the end of November the European Commission is supposed to release the PCI/PMI list in the form of a delegated act. Later, the European Parliament and the Council have a two months period during which they can object to the delegated act as a whole.

There is no doubt that the EU should prioritise genuinely sustainable energy infrastructure. Electrification based on renewables has to be ramped up and Europe’s grids are in urgent need of upgrade. This is the EU’s actual common interest, not more pipe dreams.

Romania’s Parliament paves the way for environmental destruction and ‘foreign agent’ repression

This law allows for the destruction of 27 protected areas, including two national parks, in order to finalise the construction of outdated hydropower projects. The law applies to projects whose construction began prior to June 2007 – when Romania set up its Natura 2000 network – having thus a retractive application, which the Constitution forbids.

Several of these hydropower projects were started over 40 years ago during the Ceaușescu era, without any environmental impact assessment, and have been halted in recent years either by court decisions – at the initiative of NGOs, such as Bankwatch Romania and Declic – or due the insolvency of their promoter, state owned company Hidroelectrica, between 2012 and 2016.

This new law – in clear contravention of EU environmental safeguards – tries to legalise the shrinking of protected areas to enable the projects to proceed, as well as abolishing the obligation to carry out environmental assessments for the projects. This would result in mass deforestation in some of Romania’s untouched mountain forests. It permits the damming and draining of rivers, which will drive rare fish species to extinction and degrade freshwater resources upon which millions depend.

A now-familiar authoritarian playbook

The recent adoption of the so-called ‘Zamfir Law’ represents far more than an environmental catastrophe in the making – it signals a fundamental assault on democratic principles, the rule of law, and civil society itself. What we are witnessing is a coordinated attack that follows a now-familiar authoritarian playbook: override court decisions, pass legislation that violates constitutional protections and EU law, then silence dissent by delegitimising and threatening those who dare to oppose it.

These are not theoretical concerns. These are hydropower projects whose environmental permits have been suspended or canceled by courts due to serious legal violations. They rely on outdated technology and would make a negligible contribution to electricity generation, despite being claimed by various politicians to be ‘strategic projects of overriding public interest’, which would allegedly solve a no-longer-existing energy crisis. The energy security argument is a smokescreen. There is no impact study demonstrating that completing these projects would reduce electricity bills.

Meanwhile, Hidroelectrica itself is installing a 64 MW (256 MWh) storage unit at the Iron Gates II hydro power plant, using EU funds, and showing that less damaging alternatives exist.

Constitutional violations

This law fundamentally contradicts the Romanian Constitution’s guarantee of environmental protection and violates the established principle that Parliament cannot arbitrarily diminish protections already in place for natural areas. Environmental organisations have called on President Nicușor Dan to refer the law to the Constitutional Court before promulgation.

Romania is not in a state of emergency that would justify such exceptional measures. The energy impact of these targeted projects would be insignificant at the national level, below 1 per cent of the current electricity generation – completely disproportionate to the irreversible destruction they would cause.

Not just environmental destruction, but also the rhetoric of repression

What makes this situation even more alarming, what transforms it from an environmental crisis into a democratic emergency, is the response from the law’s architects when civil society organisations dared to raise these concerns.

Senator Zamfir’s reaction should give the chills to anyone who values democratic freedoms. In a public statement, he declared ‘war’ on Environment Minister Diana Buzoianu, calling her an ‘NGO minister’ and accusing her of coordinating with what he termed ‘eco-terrorists’ engaged in ‘public jihad’. The Ministry of Environment, according to the Zamfir Law, has 60 days to remove the ‘protected area’ status from sites affected by hydropower projects, something the environment minister called ‘a disgrace’.

Zamfir however dismissed legitimate environmental concerns as protecting ‘little fish, little frogs, and little birds’. But he didn’t stop at inflammatory rhetoric. He issued a direct threat, promising to expose the ‘saboteur minister’s interests’ and demanding to know who finances Bankwatch Romania, Agent Green and Declic, and why they ‘attack all the country’s energy projects’.

This is the language of authoritarian regimes. This is how governments prepare the ground for ‘foreign agent’ laws that stifle civil society and crush dissent. We have seen this script in Russia, Hungary, Georgia, Slovakia and elsewhere: first delegitimise critics as foreign-controlled traitors, then legislate them out of existence.

The former Energy Minister’s comments in Parliament reinforce this pattern. He dismissed evidence-based concerns about environmental assessments as ‘nonsense’ and ‘well-paid propaganda’. The messages are unmistakable: criticism is unpatriotic, civil society organizations are foreign agents, and those who defend the environment are ‘small people’ standing in the way of national greatness.

An urgent call to the European Commission

The European Commission must take immediate notice. This law directly violates the Habitats Directive and Birds Directive, which establish Natura 2000 sites that cannot be arbitrarily degraded, as well as the Water Framework Directive requiring protection of water ecosystems. Romania’s Parliament has passed legislation that is incompatible with EU law and has done so in defiance of court decisions that already suspended environmental and permits for many of these projects.

The Commission has tools at its disposal, which must be deployed now, before this precedent becomes normalised.

Senator Zamfir asks who finances Bankwatch Romania, Declic, Agent Green, and other environmental organisations. The answer is transparent and public: we are funded by Romanian citizens, European institutions, and international foundations committed to environmental protection and democratic governance. Our funding sources are disclosed. Our work is subject to legal oversight. We are accountable to the public and to the law.

The real question is this: who benefits from destroying Romania’s protected rivers and forests? Who gains from inefficient hydropower projects? In recent years, Romanian politicians have repeatedly joined hands to destroy nature and have hidden their obscure interests behind populist facades.

Romania faces a choice. It can uphold its Constitution, respect its European obligations, and maintain space for civil society to function freely. Or it can continue down a path where laws are passed in defiance of constitutional protections, where criticism is met with intimidation, and where civil society is delegitimised as a prelude to repression.

The European Commission must act now. Launch infringement procedures. Invoke Rule of Law mechanisms. Make clear that destroying protected areas and threatening civil society are incompatible with EU membership.

The Romanian Constitutional Court must recognise this law for what it is: an unconstitutional assault on established environmental protections. Romanian citizens must not be fooled by rhetoric about ‘little fish’ and ‘foreign agents’. When governments can arbitrarily destroy protected areas and intimidate those who object, no right is secure.

The coming weeks will determine whether constitutional protections and the rule of law prevail, or whether power, unbound by legal constraints, will triumph over principle.

Bankwatch România, Declic Community, Agent Green, EcoLegal Association, and Eco-Civica Foundation are transparent civil society organisations working to protect Romania’s environment and democratic institutions. Our funding sources are publicly disclosed, our work is legally compliant, and our commitment is to the Romanian people and future generations.

Expanding the Emerald Network: Progress and gaps in the Western Balkans

Strong interest not enough

Yet despite acknowledging some progress, the expert group agreed on the urgent need to put more valuable sites under protection – seen as crucial for preventing the extinction of threatened species and habitats and meeting the objectives of the Convention’s strategic plan until 2030. For instance, the Balkan region in particular is home to many endemic species that occur nowhere else on the planet, including the Dalmatian minnow (Delminichthys adspersus), the Neretva nase (Chondrostoma knerii) and the Vardar streber (Zingel balcanicus).

At the meeting, several Balkan countries expressed strong interest in expanding the Emerald Network, but unfortunately no concrete deadlines were set for submitting new sites. Serbia has prepared a map and list of potential Emerald sites, but has yet to submit them to the Bern Convention. Montenegro has mapped nearly its entire territory, but biological data require analysis. And in Bosnia and Herzegovina, data availability remains low, with more research needed.

Since 2011, no additions to the Emerald Network have been made, primarily due to political and administrative obstacles, even though sufficient scientific data has long been available supporting the inclusion of new sites. In December 2022, a coalition of scientists and environmental organisations proposed a shadow list of 88 sites to be added to the Network.

Environmental harms unresolved

Regrettably, many existing and potential Emerald sites remain under severe threat from large infrastructure and mining projects, which are being prioritised over environmental protection and sustainable development.

This has resulted in cases of extensive degradation that remain largely unaddressed. Sites such as Komarnica Canyon and the Lower Piva River Canyon in Montenegro, Upper Neretva and Upper Drina in Bosnia and Herzegovina, and Golija in Serbia are all at risk from planned hydropower plants that would irreversibly damage landscapes and river ecosystems.

Dozens of mines are planned for pristine natural areas all over the region. The Serbian mountain range of Fruška Gora is exposed to uncontrolled logging, while other Serbian mountain ranges like Zlatibor and Kopaonik, along with coastal Emerald sites such as Velika Plaža and Buljarica in Montenegro, continue to face strong pressure from construction.

Designation must mean protection

These cases illustrate a broader concern that Emerald site designation currently provides little real protection, as short-term economic interests often prevail over human well-being, public benefits, long-term economic growth, innovation, conservation and sustainability.

Across the Western Balkans weak enforcement, competing development priorities, and insufficient institutional commitment continue to undermine biodiversity protection. The issues observed reflect systemic regional patterns that threaten to erase some of Europe’s last intact natural areas and habitats of global ecological importance.

The Bern Convention has therefore renewed its call for national governments, international institutions, and civil society organisations to intensify joint efforts to safeguard these irreplaceable ecosystems. Urgent action is needed to ensure that Emerald Network sites are not merely symbolic designations, but living, protected spaces where nature and local communities can thrive, embodying the commitment of all European states to promote conservation and the fight against biodiversity loss.

The project benefits from the support of the Donors Initiative For Mediterranean Freshwater Ecosystems.

This document was produced with the financial assistance of the Donors Initiative For Mediterranean Freshwater Ecosystems. The contents of this document are solely the liability of CEE Bankwatch Network and under no circumstances may be considered as a reflection of the Prince Albert II of Monaco Foundation or Donors Initiative For Mediterranean Freshwater Ecosystems’ position.

EBRD’s toxic bond with Indorama: Funding polluter in Georgia’s shrinking democracy

On 11 June, the European Bank for Reconstruction and Development (EBRD) approved a USD 65 million loan to Rustavi Azot, a Georgia-based chemical manufacturer and subsidiary of the Indorama Corporation. The financing is earmarked for a new low-density ammonium nitrate plant, energy-efficiency upgrades, and working capital expenditure.

On paper, the deal has been categorised as a low-risk category B project, promising gains in air quality, energy efficiency, wastewater treatment and greenhouse gas emissions. In reality, however, Indorama and Georgia make for a deeply troubling pairing, casting serious doubts on any assurance of positive outcomes.

An uneasy alliance

Indorama Corporation, the Singapore-based multinational, has a long record of alleged human and environmental rights violations across multiple jurisdictions, from Africa to South-East Asia.

In Uzbekistan, Bankwatch has documented how loans issued by the EBRD and the International Finance Corporation (IFC) for Indorama’s operations in the cotton sector have led to the loss of local farmers’ livelihoods, mass lay-offs, exploitative labour practices, reprisals against workers, union-busting tactics, and inadequate environmental and social impact assessments. The EBRD’s Independent Project Accountability Mechanism (IPAM) is currently investigating whether the controversial Indorama Agro cotton project in Uzbekistan complies with the Bank’s environmental and social standards.

Georgia, meanwhile, is hurtling down a path towards outright authoritarianism. Its parliament, widely seen as illegitimate, continues to impose regressive legislation, which has led to the rapid erosion of human rights, the unravelling of institutions, and civic space shrinking at an alarming rate. These significant developments have repercussions for the development sector and the investment decisions made by multilateral development banks.

In Rustavi, one of the most polluted industrial cities in Georgia and home to the Rustavi Azot plant, ECO Centre – a Georgian environmental civil society organisation whose pivotal role in advocating for improved air quality led to several industrial facilities in the Rustavi zone adopting self-monitoring systems – was forced to shut down after the adoption of the draconian foreign agents law last year. Its closure has effectively extinguished community oversight – just when it was most needed.

A history of exploitation

Rustavi Azot itself has a turbulent history. Before Indorama acquired it in 2023, the plant was embroiled in several scandals and rights violations, including mass layoffs, crackdowns on organised labour, violations of freedom of association, and forcing permanent employees to switch to short-term contracts. While some workers have since been reinstated, with Rustavi Azot under Indorama committing to negotiate a new collective bargaining agreement, a number of grievances remain unresolved. These include unequal pay, unsafe working conditions, and allegations of unfair dismissal of older workers seeking lawful retirement benefits. This February, employees went on strike again over wages.

The company also appears to have a deeply unbalanced and exclusionary working environment. Recently, Indorama celebrated its ‘beloved chairman’ with a week-long series of festivities. In Rustavi, there were tree plantings, visits to care homes, a table tennis tournament, a cricket match, and a multicultural dinner party with Indian and Georgian dances. But amidst these oddly incongruous festivities, heavily promoted on the company’s social media channels, workers voiced their discontent.

In comments on the posts, employees expressed frustration over wages and having been left out of the celebrations. ‘The salaries of Azot employees are, to put it mildly, miserly and need to be seriously reviewed – that would be a good place to start,’ wrote one. ‘How can you hold this event in such a narrow circle that ordinary workers never even knew about it?’ another asked, suggesting the celebrations were reserved for a hand-picked few.

Cutting corners

Rustavi Azot has an equally grim environmental record. Even after installing the self-monitoring system under public pressure, the company repeatedly logged pollution levels above legal limits. An inspection in February 2024 found Rustavi Azot still in breach of environmental laws, failing to comply with previous orders and improperly handling hazardous waste.

The company’s approach to the environmental permitting process offers a glimpse into its murky business practices. Indorama plans to refurbish, modernise and expand production at its Georgian facility, but has opted to break the project into three separate components.

These consist of a screening decision for the EBRD-financed low-density ammonium nitrate plant, a standalone environmental impact assessment (EIA) for its EBRD-backed effluent treatment units and steam turbine, and another EIA for a set of more complex, environmentally sensitive initiatives, including new production facilities, expanded capacity and a 20-megawatt solar plant.

During the initial scoping process, the national authorities treated the latter two as part of a single, comprehensive EIA. Yet the company’s own consultant claims Indorama met privately with ministry officials to secure approval for splitting the project into separate assessments – one for the treatment units and turbine, and another for the more complex upgrades. On 15 August, the authorities found the latest EIA submission for the treatment units and turbine defective, giving the company two months to address the outstanding issues. On 23 September, they revised the decision and issued an environmental permit to the company, despite many critical issues remaining unaddressed in the final submission.

This is where EBRD’s due diligence also falters the most. The upgrades are hardly operationally and environmentally separable; by treating them in isolation, the EBRD risks ignoring the full cumulative impacts. In fact, this has already allowed the Bank to classify it as a lower-risk category B project that avoids the stricter scrutiny of a category A listing.

The higher-risk rating is more than warranted given the potentially significant environmental impacts associated with the production of hazardous substances, the direct impacts associated with establishing a new facility, the cumulative impacts due to its location within an existing industrial complex, and the presence of new and additional risks.

Though the loan agreement between the EBRD and the client was only signed on 24 July, the construction of the plant and effluent facilities had already been in full swing for several months, indicating the company never actually needed the loan in the first place.

Will the EBRD keep turning a blind eye?

Why the EBRD is so determined to back one of its most controversial clients remains unclear. But if the Bank insists on financing the operations of its Georgian facility, it should at the very least ensure its client adopts the following measures:

Communicate actively with local unions to guarantee fair, good-faith collective bargaining.

Adopt a zero-tolerance policy on discrimination, wage theft, and unequal pay.

Complete a full facility audit in line with best available techniques.

Implement a quantitative risk assessment, a major accident prevention policy, and on-/off-site emergency plans.

Perform continuous emissions monitoring, regularly disclose water, air, and community health and safety data, and establish clear procedures for addressing exceedance.

Provide public access to monitoring results and transparent publications protocols.

Update and implement the existing stakeholder engagement plan on a regular basis.

Comply fully with EBRD safeguards as well as national laws and regulations.

Public finance should not be used to whitewash the reputations of repeat offenders or to prop up investments in countries where civil society and institutions are under sustained attack. If the EBRD is serious about its safeguards, it cannot afford for this project to fail to meet its standards.

Can Ukraine reconcile environmental priorities with economic interests?

In August 2025, the Ukrainian government approved changes to indicators in the Ukraine Plan, the reform and investment roadmap that determines how funding is accessed under the 2024–2027 Ukraine Facility, the European Union (EU)’s financial support instrument for Ukraine. The updates are largely technical, involving adjustments to the content and timeline for implementing reforms and investments. The revised indicators now require approval by the EU’s main institutions before they can take effect.

The strategic vision outlined in the Ukraine Plan, approved by the Council of the European Union on 14 May 2024, remains unchanged, including components relating to the green transition and environmental protection – reforms that are essential to Ukraine’s European future. Yet a crucial question persists: How seriously is the government pursuing these reforms?

Why environmental issues must remain a priority

The Ukraine Plan provides the core framework for reforms and investments under the EU’s Ukraine Facility Regulation. The total support package amounts to EUR 50 billion, of which EUR 38.27 billion is provided by the state through grants and loans.

The Facility’s priorities include growing the Ukrainian economy, reducing social and economic inequalities, and progressively aligning Ukraine with the EU’s social, economic and environmental standards on its path towards European integration.

From the very beginning, the Plan has been defined by a strong environmental component, emphasising decarbonisation through the transition to carbon-free technologies in metallurgy, the replacement of fossil gas with renewable energy sources to transform heat supply, and the implementation of climate solutions across key sectors of the economy.

The guiding principle is clear: Ukraine’s reconstruction should not revert to an approach that maintains the status quo, but should instead adopt modern green standards aimed at reducing fossil fuel dependence, cutting greenhouse gas emissions, and strengthening economic resilience.

Key provisions of the Ukraine Plan

In the energy sector, the Ukraine Plan outlines changes in the regulatory framework to promote the development of renewable energy sources, increase the efficiency of district heating, improve the energy performance of public buildings, and localise the production of renewable energy equipment. These measures are important given assessments that reconstruction could cause significant additional carbon emissions.

The Plan is notable for introducing a green approach to the agricultural sector and prioritising support for small and medium-sized farms over large agricultural holdings for the first time compared with previous strategies. It also includes measures to develop advisory services and transition to products with higher added value, creating the potential for sustainable policy change.

With regard to climate policy, key measures include the creation of a scientific and expert council on climate change, the introduction of market-based carbon pricing mechanisms, and preparations for emissions trading. Crucially, climate change adaptation is recognised as a cross-cutting priority as opposed to an individual category.

At the same time, the Plan contains a number of contradictions. For instance, the document outlines a biodiversity strategy and action plan without specifying any goals for increasing protected areas. In the forestry sector, the Plan commits to forest preservation but also outlines an increase in the volume of timber harvesting from 15 to 25 million cubic metres within 10 years. And despite the Plan’s broader commitment to decarbonisation, the emphasis on reviving nuclear energy contradicts principles of decentralisation and economic feasibility.

Other issues are also left unaddressed. Climate adaptation at the community level, the over-ploughing of land, and problematic land-use patterns receive little attention. While irrigation is referred to as a key agricultural solution, the Plan lacks a systematic approach to adapting farming practices to climate change, even as water access becomes an increasingly urgent concern.

Overall, then, the Plan sets out the right strategic direction but in an inconsistent way, with measures promoting green approaches paired with policies that risked undermining them.

Progress under the Ukraine Facility

During the first year of the Ukraine Facility, Ukraine fulfilled several conditions that opened the way to funding. In 2024, the European Commission officially confirmed that the Ukrainian government had fulfilled these criteria, paving the way for the release of the first funding tranches. But while formally the government has been following the recommended reforms, civil society has questioned the quality of their implementation and the extent to which they meet EU standards.

In September 2024, the then Ministry of Environmental Protection and Natural Resources adopted a concept note defining the scope of deviations from the EU’s Environmental Impact Assessment (EIA) and Strategic Environmental Assessment (SEA) Directives. The note had been expected to detail the drafts and justifications for deviations, explain the scope and rationale for exceptions, and set clear timelines.

Instead, the draft limited the application of EIA and SEA requirements to projects classified as rehabilitation work. This loophole effectively limits the public’s participation in decision-making and access to information, violating the principles of the Aarhus Convention, the Espoo Convention and the EIA Directive.

Subsequently, the government launched a new action plan outlining further steps to simplify the EIA procedure, which it viewed as an obstacle to business development. Yet the EIA Directive is an essential framework that prevents significant risks and should be regarded as a vital component of Ukraine’s EU integration pathway. Instead of simplifying the EIA procedure, it should be improved to ensure businesses proceed in a manner compliant with environmental standards.

Among the steps taken under the Ukraine Plan is the adoption of a national energy and climate plan until 2030. However, it lacks sufficiently ambitious measures for the development of decentralised renewable energy. Similarly, the 2030 national transport strategy fails to provide the comprehensive focus or concrete policy measures needed to meet EU and international decarbonisation goals for the transport sector, despite explicitly stating the importance of decarbonisation as a necessary implementation step.

Civil society’s concerns were reflected in the Commission’s 2024 report on Ukraine, which noted only partial progress on aligning legislation with EU standards. Some advances have been made in horizontal environmental legislation, monitoring and control systems, access to information, waste management, and the reduction of industrial pollution. However, there has been no progress on biodiversity, highlighting the need for the government to take environmental issues more seriously and allocate funding for reforms, including from the Ukraine Plan.

Following approval of the national climate law in 2024, which creates a legal basis for low-carbon development, the key priority in 2025 is to establish a comprehensive emissions trading system. This is a market-based instrument, without which it is impossible to enter the European climate space. Although the system has yet to be implemented, Ukraine’s commitment to developing an emissions trading system sends an important signal to business and investors.

But the application of legislation to reforms thus far is far more concerning. Only some of the Facility’s requirements have been incorporated into Ukraine’s recovery financing. While the Facility mandates that a minimum 20 per cent of funds are directed towards climate, the environment, and the green transition, there is currently no mechanism in place to ensure this principle is applied to investment projects.

Additionally, the government has accelerated the implementation of several energy measures. Most notably, a draft law on the implementation of EU renewable energy standards, released in August 2025, contains several inaccuracies and risks. These pertain to territories designated under the Nature Reserve Fund, the need to conduct impact assessments for Emerald Network areas before determining zones for accelerated renewable energy development, and the identification of individual sites for new energy grid and storage infrastructure. Public consultation and feedback under the law’s SEA framework are also limited.

The draft law’s definition of energy communities is also problematic. By restricting energy associations to non-profit entities, it contradicts the EU’s Renewable Energy Directive (RED II), which the law is meant to align with.

In the heat supply sector, a comprehensive state modernisation programme is expected to be unveiled by the end of 2025, which should lead to the wider involvement of stakeholders. However, a decision on hot water tariffs has been postponed yet again, this time until the end of 2026.

The management of critical materials also requires attention. Reforms should provide for public discussion and strategic assessments, given their national economic significance. Instead, the focus has been on inventory administration and attracting investors without assessing environmental and social impacts.

Collectively, reforms rolled out during the first year of the Facility show that Ukraine does have the capacity to fulfil the EU’s formal conditions, but the quality of the documents adopted has often fallen short. Without substantive content or effective implementation, the government’s current approach is likely to impede its ability to meet the EU’s environmental standards.

What are the current risks?

The recent consolidation of Ukraine’s environmental policy under the new Ministry of Economy, Environment and Agriculture presents a significant challenge. The new arrangement, which merges the former Ministries of Environment, Agrarian Policy, and Economy into one administrative unit, begs the question: Can a ministry with such a broad mandate pay enough attention to environmental protection and climate action? The risk is that an ‘economy-and-resources-first’ approach could sideline pressing environmental issues for the sake of mineral exploitation, agricultural production, and rapid growth in GDP.

The quality of the environment is a matter of national security given that public health, food security and access to drinking water depend on the state of the country’s water reserves, soil, ecosystems and air. In the context of a major war, the lack of a strong institutional centre for environmental policy makes the state even more vulnerable.

There is also a crucial external dimension. While technical meetings involving screenings under EU law and preparations for negotiation positions have already taken place, the success or failure of Ukraine’s EU accession bid ultimately depends on the country’s ability to meet the environmental and climate standards laid out in chapter 27 of the EU acquis. However, if environmental policy is absorbed by the agriculture and economic sectors, meeting these criteria is far from certain.

Following a meeting with Ukraine’s leading non-governmental organisations on 11 August 2025, the Minister of Economy, Environment and Agriculture Oleksiy Soboliev highlighted the importance of ensuring the principle of do no significant harm becomes a guideline for investment. However, without strong institutional oversight and clear control mechanisms, it remains to be seen whether the principle becomes a tangible element in decisions made on development and recovery projects.

It is similarly unclear whether the Ukrainian government has the capacity to align environmental priorities with its economic interests. One thing remains certain, however: Ukraine’s recovery cannot afford to rely on outdated practices and models, which would only delay the country’s successful integration into the EU.

Why the EU budget needs a democratic reset – a Czech civil society perspective

At the Centre for Transport and Energy (CDE), we are drawing attention to the fact that civil society is being sidelined from one of the EU’s most powerful levers for change – its budget. And unless this changes, Europe risks making the same mistakes again – spending public money inefficiently, unsustainably, and without public legitimacy.

The 2028 budget – a moment of reckoning

Starting 1 January 2028, the EU will operate under a new budget. With priorities ranging from energy security and climate action to economic resilience and global competitiveness, environment-wise, this budget will have to do more with less.

For us at the Centre for Transport and Energy and for civil society across the Czech Republic and the EU, this means every euro must be used strategically and equitably. We are already seeing the consequences of poor prioritisation. Take the Czech Republic’s use of cohesion funds to finance fossil fuel infrastructure – a short-sighted move that undermines the EU’s own climate commitments. Ending such practices is one of the Centre for Transport and Energy’s central demands.

Despite the direct impact of EU funds on Czech citizens’ lives, civil society remains virtually locked out of the decision-making process. In the Cohesion 28+ preparatory platform led by the Czech Ministry of Regional Development, the Centre for Transport and Energy is one of just two civil society organisations present. The remaining 93 per cent of invited stakeholders represent the state, business, and financial sectors. This is not just a Czech problem – but it stands out with particular intensity in the Czech Republic. Therefore, at the Centre for Transport and Energy, we are asking: how can budget decisions be fair or democratic when those representing ordinary citizens are barely in the room? The current imbalance leaves out not only civil society organisations like ours but also the voices of the most vulnerable communities we work to represent.

CDE’s vision: how should the new EU budget look like?

We at the Centre for Transport and Energy believe the EU must step up – not shrink – its ambitions. That’s why we are advocating for a EUR 2 trillion budget, with clear and binding commitments to sustainability, fairness, and transparency.

The Centre for Transport and Energy’s key proposals include allocating 50 per cent of the EU budget to climate and biodiversity, 40 per cent for climate action and 10 per cent for biodiversity protection strictly applying the ‘do no significant harm’ principle to prevent harmful investments, aligning climate measures with social justice goals, supporting renewable energy and energy communities, particularly in coal-dependent regions, and fully reinvesting revenues from the Emissions Trading System into sustainable projects. Our position is clear – a just transition must remain at the core of EU policy and that means supporting people and communities, not polluters.

Democratisation of decision-making

At the Centre for Transport and Energy, we are not only advocating for smarter spending, but we are also calling for systemic changes to how decisions are made. Currently, the state holds the overwhelming majority of power in deciding where EU funds go. This dominance undermines both accountability and innovation. We believe no single actor – not even the state – should control more than half the votes at the decision-making table. This principle reflects the European Code of Conduct on Partnership, which calls for meaningful cooperation between public authorities, social partners, and civil society. But in practice, this principle often only exists on paper.

One concrete step toward change would be reforming the Technical Assistance Operational Programme. Although it is designed to help all partners manage EU funds, in reality, it is used almost exclusively by public authorities. Redirecting even a portion of this funding to under-resourced civil society organisations would empower them to participate meaningfully and on an equal footing.

Our money and our future are on the line

EU funds are public money and citizens, especially in countries like the Czech Republic that rely heavily on EU investment, deserve a say in how that money is used. The Centre for Transport and Energy believes the solution is simple: civil society must be recognised as an equal partner in shaping Europe’s future. We are actively engaging in consultations and policy frameworks, including the Strategic Framework for Cohesion Policy, to ensure that the process includes a diversity of civil society voices.

But to succeed in a landscape dominated by more powerful interests, structural change is needed – goodwill alone is not enough. The long-term EU budget represents a critical opportunity to address this imbalance, and we must not let it slip away.

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