Ukrainian Businesses Paid 1.5 Billion UAH in Eco-Taxes, but Funds Are Not Going to Environmental Causes

The State of Environmental Taxation in Ukraine: Key Issues

According to Главком: Since the start of 2026, Ukrainian enterprises have contributed over 1.5 billion UAH in environmental taxes-a 6.8% increase compared to the previous year. However, a significant portion of these revenues is not allocated to environmental protection. Specifically, 45% of eco-tax proceeds go into the general state budget without any designated purpose, while 55% flow to local budgets. Of those local funds, 30% are directed to regional budgets and 25% to community budgets.

Notably, taxes on CO₂ emissions and radioactive waste management are fully channeled into the state budget's special fund. This has raised concerns among experts, as these resources are often diverted to municipal or infrastructure projects, such as:

• sewer repairs;
• water drainage systems;
• road maintenance equipment;
• dog-walking areas;
• other expenses linked to mobilization efforts.

The Decarbonization Fund and Its Challenges

In 2024, Ukraine established the Decarbonization and Energy-Efficient Transformation Fund, overseen by the State Agency on Energy Efficiency and Energy Saving. The fund's financial management falls under the joint-stock company 'Decarbonization Fund of Ukraine.' Yet, journalists have voiced concerns about the fund's focus, noting that 'when resource efficiency becomes a matter of competitiveness and survival for Ukrainian manufacturers, the state should not treat these funds lightly.'

This creates a paradox: businesses pay for pollution, but the money does not help mitigate the harm caused. This issue demands urgent attention, as Ukraine's environmental challenges require a comprehensive approach and effective use of financial resources for nature conservation. For instance, a case was recorded where equipment worth 192 million UAH was purchased after a formal tender was canceled, raising questions about the transparency and efficiency of eco-tax spending.

The rise in eco-tax collection signals growing attention to environmental matters in Ukraine, but the lack of targeted use of these funds sparks serious concern. At a time when the country faces numerous ecological hurdles, it is crucial that both state and local budgets ensure effective financing for environmental protection initiatives. This could significantly improve Ukraine's environmental situation and support sustainable economic development.

As the government grapples with the allocation of eco-tax revenues, it's essential to consider the broader financial landscape. For instance, state-owned enterprises are projected to contribute a record amount to the national budget this year. Such developments raise questions about the priorities of financial management in Ukraine. To explore how these dividends could impact the country's fiscal health, see our article on record dividends from state-owned enterprises.