Ukraine Needs a “Green Marshall Plan” That Empowers Cities and Civil Society

The cost of Ukraine’s reconstruction has grown to  $411 billion, according to the World Bank’s latest estimate. Future-oriented loans, grants, and investments in the country’s recovery will turn the unprecedented spending into an opportunity to green an economy that had been one of Europe’s most energy and carbon intensive, putting it on track for European Union integration and global climate goals. 

Ukraine will be able to join and compete in an EU economy “fit for 55” only if cross-sectoral decarbonization goals that mirror the holistic approach of the EU’s Green Deal guide the recovery process. The Lugano Declaration on the Reconstruction of Ukraine recognizes this and commits to rebuilding in alignment with the goals of the Paris Climate Agreement and the 2030 Agenda for Sustainable Development more broadly.  

But the enormous task of building back sustainably from the rubble of war will require a “green” Marshall Plan for Ukraine that provides financial and technical as well as policy assistance. It will also require exceptionally close coordination between Ukraine’s central government and local authorities.  

Because housing, energy, and transport are the sectors that have suffered the most damage in the war, cities will shoulder much of the burden of rebuilding. However, until now, municipal and civil society engagement has been an afterthought rather than a cornerstone of the reconstruction plans of the Ukrainian government and international donors. There is an urgent need for this to change, as the empowerment of cities and CSOs to act will be essential to the success of Ukraine’s green recovery.  

Cities and CSOs Are Willing to Act  

Ukrainian cities have demonstrated the political and civic will to build back green.   

Even before Russia’s full-scale invasion, more than 250 Ukrainian municipalities had become members of energy transition and decarbonization networks such as the Association of Energy-Efficient Cities of Ukraine, the Covenant of Mayors for Energy and Climate East, and the Green Cities Program of the European Bank for Reconstruction and Development (EBRD). Although confronted with pressing humanitarian needs and struggling to deliver basic services since the outbreak of the war, municipalities have continued to engage in these networks, with cities such as Khmelnytskyi and Sumy publishing climate plans during the war.  

Ukrainian civil society organizations are equally, if not more actively, experimenting with rebuilding approaches that balance immediate needs with efforts to create the conditions for a green recovery. Established organizations such as the energy think tank DiXi Group and the environmental NGOs Ecoaction and Ecoclub Rivne are researching, developing, and advocating for a recovery based on principles of sustainable development. Other initiatives include a host of urban planning platforms and collectives–including ReStart Ukraine, ro3kvit, and Re:Ukraine–that have sprung up to work on community-oriented and green solutions to rebuilding Ukraine. 

This activism is both impressive and inspiring. However, the lack of coordination among the initiatives, the shortages of capacity and financial resources, and the lack of dialogue with Ukraine’s newly established State Agency for Restoration and National Council for the Recovery limit their impact. 

Ukraine will not roll out its recovery plans all at once. It will be a step-by-step process that will involve much trial and error and the scaling of successful pilots. Better coordination of local experimentation and more political, financial, and technical support from the central government and international partners could fast-track this process. At the same time, it could ensure citizen and stakeholder engagement and further advance Ukraine’s post-2014 decentralization reforms.  

Support for local experimentation would have the greatest impact in the three sectors that have suffered the greatest damage and that are also major contributors to Ukraine’s carbon emissions: housing, energy, and transport.  

Housing: Prioritizing Energy Efficiency  

With fighting having reached 14% of all Ukrainian municipalities and damaged nearly half of the buildings in the hardest-hit cities, the greatest reconstruction needs—estimated at around $68 billion—are in the housing sector. In Mariupol, one of the cities that has suffered the greatest destruction and has been under Russian control since May 2022, 90% of the damaged buildings are residential. In the font-line city of Bakhmut, 97% of the population has fled and abandoned their homes.  

The restoration and provision of housing is a core element of Ukrainians’ ability to return to their home cities, and is also an opportunity to advance the country's energy transition. Temporary housing such as that developed by the architecture firm Bureau Balbek for internally displaced persons is urgently needed. But in the medium to long run, solutions should link the rebuilding and refurbishment of housing with improved energy efficiency and a shift towards renewable energy sources that are locally available.  

Since the start of the war and the interruption of industrial production, the residential sector has made up the largest share of energy consumption in Ukraine. Most of Ukraine’s ageing housing stock was constructed in the pre-1991 Soviet era and consists of non-thermo-modernized buildings that are far from compliant with the European energy-efficiency standards presented in the Energy Performance of Buildings Directive. The modernization and proper insulation of Ukraine’s housing stock represents the fastest route to improving the country’s energy efficiency.  

However, boosting energy efficiency will require that the government and international financial institutions expand and simplify access to financing for energy-efficient renovations. Prewar initiatives such as the successful Warm Loans program for homeowners and developers should be resumed.  

Housing reconstruction must be both a top-down and bottom-up process. The central government must put in place financial and technical support and building performance standards while at the same time providing an enabling environment in which municipalities, the construction sector, investors, and urban experts can plan and design for local needs and specificities. Centrally controlled and standardized urban development would not sit well with a Ukrainian population that wants to break with its Soviet legacy. 

Local and civic efforts are driving the emergence of a distributed energy architecture in Ukraine. While this new system is in its early days and far from formalized, with the right support it could become a testing ground and model for Europe’s energy transition.

Energy: Moving Toward a Decentralized Grid  

Russian missile strikes have crippled almost half of Ukraine’s energy infrastructure—a highly centralized grid consisting of large-scale nuclear, coal, and gas plants, many of which are located in the country’s conflict zones. Reconstruction of these plants would take years.  

The Ukrainian government recently announced that construction of a decentralized and diversified energy system—one that is more resilient in the face of military attacks or natural disasters and that can boost energy security while driving the transition to renewable energy sources (RES)—will become a priority moving forward. This messaging speaks to popular opinion, as more than 80% of the Ukrainian population believes that the use of RES should be maximized and that distributed energy generation can strengthen the country’s energy independence. It also points to Ukraine’s untapped potential for solar and wind energy and other renewable sources such as biomass and hydropower. 

Faced with chronic electricity shortages during the 2022–23 heating season and rising energy costs, Ukrainian municipalities and communities are already exploring ways to develop local electricity generation. Diesel and gasoline generators have been the quickest and easiest fix to powering critical infrastructure such as water supply facilities, heating systems, and telephone masts as well as anchor institutions—especially hospitals and schools.  

But with rising demand, generators have become expensive and they are highly polluting. Many municipalities are turning to solar PV panels, battery systems, and heat pumps at hospitals and other points of critical infrastructure as a longer-term, cost-effective, and environmentally friendly alternative. Hybrid solutions that include generators as a backup are becoming feasible.   

Some cities and regions are also looking into generating renewable energy by processing biomass to produce biogas and biomethane. This method currently makes up less than 2% of Ukraine’s energy mix, but has great potential for growth considering the country’s large-scale agricultural production. In the Kyiv region, the use of biomass could save around 43% of current annual fossil-fuel consumption levels. 

Local and civic efforts are driving the emergence of a distributed energy architecture in Ukraine. While this new system is in its early days and far from formalized, with the right support it could become a testing ground and model for Europe’s energy transition. The EU’s climate goals will require the redesign of the bloc’s energy supply and consumption toward flexible, networked, and local forms of clean energy production that will take time to implement. Under the pressures of war and the need to rebuild, Ukraine is transitioning much faster.  

Moving forward, the systematic decentralization of Ukraine’s energy grid will require detailed data on local energy supply and demand, and proper plans and documentation of local energy infrastructure. The availability of this data is limited, however, especially in small and medium-sized municipalities. To fill this gap, close cooperation with local officials and stakeholders who can provide insights into the needs and consumption patterns of citizens and businesses will be necessary. Further, the central government and energy companies should make publicly available all data that can help municipalities develop local energy plans and increase energy efficiency and savings.   

Alarmed by the Russian forces’ destruction and looting of municipal infrastructure documentation, the Association of Energy Efficient Cities of Ukraine (EECU) has launched an emergency program to scan and digitize the printed documentation and, in cooperation with the Ministry of Communities, Territories, and Infrastructure Development, create a repository. The availability of this documentation will be critical to postwar infrastructure restoration and the redesign of Ukraine’s energy grid toward distributed generation. Local-to-national cooperation, like that between the EECU and the ministry, will be essential to the success of this process. 

Transport: Make Sustainable Urban Transport Part of the Recovery Plan  

Ukraine’s energy transition has been at the center of debates around the country’s sustainable recovery, but the transport sector is receiving far less attention. This neglect is surprising considering that Ukraine will have to reduce its greenhouse gas emissions from transport by around 90% if it wants to meet the EU’s 2050 climate neutrality target.  

A significant proportion of these reductions will have to come from urban transport, an area that is overlooked in Ukraine’s draft recovery plan. The documents covering transport infrastructure only marginally refer to electric public transport, micromobility infrastructure, and electric vehicle charging infrastructure, and instead focus on road construction and automobile traffic. This approach is badly out of line with the EU’s sustainable mobility strategy. Urban transport should therefore be included among the priorities of the national recovery plan even though it is technically a municipal competency.1 

Ukraine has much catching-up to do when it comes to recognizing the importance of sustainable urban transport to the country’s decarbonization goals. Many cities are ready to rethink local mobility systems, but the government must first put in place basic vehicle emissions regulations and public transport provisions. An Urban Mobility Forum held in the city of Lviv in April 2023 has brought more attention to the topic and may spark innovation.  

Green, Livable, and Empowered Cities  

Ukraine’s internationally supported decentralization reforms of the past decade must not be undermined by an overly centralized recovery. Green, livable, and empowered cities that have a say in their future and provide for participatory decision-making will be more appealing to displaced Ukrainians as they consider a return to their home country. Sustainable solutions will also create new jobs and economic opportunities in a sector with great potential for growth. 

A National Democratic Institute survey from January 2023 showed that 84% of all Ukrainians believe that municipalities should lead the reconstruction of local communities. With over 70% of Ukrainians living in cities and a steadily rising urbanization rate, a successful green recovery will depend fundamentally on the active involvement of local leaders and residents in decision-making, planning, and resource allocation.  

The EU’s Mission for Climate-Neutral and Smart Cities is a Green Deal flagship initiative that supports efforts in more than 100 European cities to become climate-neutral by 2030, two decades ahead of the bloc’s 2050 target. As both major emitters and centers of innovation, cities have what it takes to lead on Europe’s decarbonization. Ukraine’s ambition to build back green could greatly benefit from pursuing a similar approach.