Unlocking Ukraine’s Green Potential: Carbon Markets as Catalysts for Ukraine’s Green Recovery

June 12, 2025

Scenario Report

Overview

The full-scale war has severely damaged Ukraine’s environment and energy infrastructure, disrupted climate progress and increased the country’s reliance on fossil fuels. Moreover, the loss of energy facilities has been disproportionate – most of the country’s damaged and destroyed fossil fuel plants are in government-controlled areas, while most renewable capacity has been lost in the occupied territories. This creates a worrisome scenario in which bringing traditional power plants rapidly up to full capacity leads to carbon lock-in.

This paper by Ukraine Sustainable Fund, produced with support from Mercy Corps, explores how voluntary carbon markets (VCMs) can help drive Ukraine’s postwar recovery and energy transition by unlocking green finance for renewable energy and sustainable recovery projects.