Eco-tax funds are not being used as intended: Media outlets have analyzed where over 1 billion hryvnias were allocated
8 May 19:46
Since the beginning of 2026, companies in Ukraine have paid over 1.5 billion hryvnia in environmental taxes, which is 6.8% more than last year. At the same time, a significant portion of these funds is being used not for environmental protection measures, but for projects that have no direct environmental impact.
This is stated in an analytical report by the publication EcoPolitika, as reported by "Komersant Ukrainian".
Where the funds go
The total amount of financial revenue collected through the environmental tax is distributed as follows: 45% goes to the general fund of the state budget. These funds are not earmarked for any specific purpose—they simply fill the state budget, like most taxes. The remaining portion is directed to local budgets.
“55% goes to local budgets. This cash flow is further divided into two parts: 30% goes to regional budgets, and 25% to the budgets of rural, settlement, and urban territorial communities,” the publication states.
Separately, the tax on CO₂ emissions and radioactive waste management goes entirely to a special fund within the state budget.
“Formally, the eco-tax should operate on the principle that the polluter pays, and communities receive resources to improve the environmental situation. However, in practice, funds are often spent on utility or infrastructure needs that can only formally be linked to the environment,” the article states.
The authors emphasize that Ukrainian businesses, which are the main payers of the eco-tax, receive virtually no support for their own decarbonization projects. Meanwhile, European countries are creating special funds to help industry reduce its carbon footprint and adapt to new environmental requirements.
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Funds Are Not Going Toward Environmental Projects
In Ukraine, however, the publication notes, eco-tax funds often do not go toward modernizing production or reducing emissions, but are used to finance unrelated expenses or projects with no direct environmental benefit.
“When the rational use of resources becomes a matter of competitiveness and survival for Ukrainian manufacturers, the state must not take these funds lightly,” the publication emphasizes.
Typical examples of how funds are spent include:
- purchasing road construction equipment,
- setting up dog parks,
- and even expenses related to mobilization efforts.
“The result is a paradox: companies pay for pollution, but this money does not help reduce the negative effects of that pollution,” the study’s authors note.
In their view, this situation stems both from local authorities’ efforts to cover budget deficits and from a low level of understanding of environmental policy at the local level. As a result, the environmental tax effectively becomes an “additional budget” for funding any local needs.
“It is very common for officials to use environmental spending as a cover to fund public works or urban improvement projects. Repairs to sewer systems, drainage networks, and engineering infrastructure are a fairly popular use of eco-tax funds. Formally, this can be “linked” to the environment, but in reality, such expenditures do not reduce emissions, do not clean the air, and do not solve systemic environmental problems.”
Decarbonization and Energy Efficiency Transformation Fund
The article devotes special attention to the use of funds from the Fund for Decarbonization and Energy-Efficient Transformation, established in 2024.
“It is this fund that receives a portion of the payments for CO₂ emissions. The program is coordinated by the State Agency for Energy Efficiency and Energy Conservation, and the funds are administered by JSC ‘Decarbonization Fund of Ukraine,'” the publication states.
However, as journalists note, the fund’s activities are increasingly focused not on industrial decarbonization, but on other areas.
Among the examples is the story of the purchase of equipment worth 192 million hryvnias following the formal cancellation of a tender, which will be resold to consumers. In other words, the state finances the purchase, while other entities receive the proceeds from the sale, the publication writes.
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