Natural Resources and Subsoil Use Issues in 2024 – Streamlining Euro-Integration Reforms

Taking into consideration further development of bilateral relations between Ukraine and the European Union, the Ukrainian government put significant efforts in 2024 at implementing EU legislation in Ukraine as part of Ukraine’s path to membership in the European Union, as well as implementation of the Ukraine Facility Plan’s relevant markers, directly linked to the disbursement of financial support to Ukraine as part of its European integration efforts.

Subsoil Use Issues

The Ukraine Facility Plan is an instrument for ensuring the financing of Ukraine’s resilience and recovery of the Ukrainian economy by providing a legislative base and financing for the development of key economic spheres. One of the identified priority spheres under the Ukraine Facility Plan is the development of critical and strategic minerals, which may boost Ukraine’s economic growth. It was for this reason that certain reforms aimed at unblocking the development of the sector were included in the Ukraine Facility Plan. For this reason, adoption of the Law of Ukraine On Amendments to Certain Legislative Acts of Ukraine on Updating the National Program for the Development of the Mineral and Raw Materials Base of Ukraine for the Period Until 2030 and Regulating Certain Issues Regarding Minerals and Components of Strategic and Critical Importance, envisaging a number of reforms aimed at streamlining the development of the sector, was included as one of the key indicators of accomplishing the plan. 

Introduction of Definitions of Strategic and Critical Minerals

In recent years, ensuring proper access to critical raw materials has been one of the key priorities of the EU policies in the natural resources sphere. In 2024, these efforts were translated into the adoption of Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024, establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/1020, also known as Critical Raw Material Act. This document contains, among other issues, definitions of critical and strategic raw materials. Taking into consideration the fact that Ukraine and the European Union have concluded a memorandum of understanding on cooperation in the sphere of critical raw materials, it was important for its practical implementation that a compliant definition of such materials was introduced.

In addition, as the development of the critical minerals sphere is one of the key directions for financing projects under the Ukraine Facility Plan, the introduction of such definitions was necessary in order to unblock the financing under this instrument.

To comply with such requirements, on 18 December 2024, Article 6 of the Subsoil Code of Ukraine was amended by the Law of Ukraine On Amendments to Certain Legislative Acts of Ukraine on Updating the National Program for the Development of the Mineral and Raw Materials Base of Ukraine for the Period Until 2030 and Regulating Certain Issues Regarding Minerals and Components of Strategic and Critical Importance, No. 4154-ІХ. The said Law has introduced definitions of such terms as “minerals and components of strategic importance” and “minerals and components of critical importance”, aligned with the definitions included in Regulation (EU) 2024/1252 and added to national Ukrainian legislation.

The specified lists of such minerals and components are to be approved by the Cabinet of Ministers of Ukraine, as is the case for the corresponding lists of subsoil areas (mineral deposits) of strategic and (or) critical importance, which will be provided for use by holding an auction (electronic bidding) for the sale of a special permit for the use of subsoil and holding a competition for the conclusion of production sharing agreements. It is also envisaged that the Government will approve a number of methodologies on the specified issues. 

Special Procedures for Awarding Special Permits for Strategic and Critical Minerals

Apart from the introduction of definitions of strategic and critical minerals and components, the Law of Ukraine On Amendments to Certain Legislative Acts of Ukraine on Updating the National Program for the Development of the Mineral and Raw Materials Base of Ukraine for the Period Until 2030 and Regulating Certain Issues Regarding Minerals and Components of Strategic and Critical Importance, No. 4154-ІХ introduces special procedures for awarding special permits for strategic and critical minerals extraction. Notably, the Law introduces amendments to Article 13 of the Subsoil Code of Ukraine, which establish additional (to those already provided) requirements for persons (entities) who have the right to acquire such a right.

Namely, such persons must also meet at least one condition:

1) be a citizen of Ukraine;

2) be a citizen or natural person – a resident of a member state of the Organization for Economic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance;

3) be a legal entity – resident of Ukraine or a member state of the Organization for Economic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance, provided that in such legal entity:

a significant ownership share is held by Ukraine or a member state of the Organization for Economic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance, and (or)

a significant ownership share is held by legal entities registered in Ukraine or a member state of the Organization for Economic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance, and (or)

a significant ownership share is held by the ultimate beneficial owners who are citizens of Ukraine, or who are individuals who are citizens or residents of a member state of the Organization for Economic Cooperation and Development, or another state with which Ukraine has concluded a memorandum (agreement) on partnership (cooperation) in the field of minerals of strategic and (or) critical importance.

Also, the right to use subsoil areas (deposits) of minerals of critical and strategic importance can be granted to associations of legal entities that meet the described criteria.

State Financing for Geological Surveying

The lack of financing for geological surveying is one of the key factors that slow down the development of the extractive industries in Ukraine. In order to improve the situation, the Law of Ukraine No. 4154-ІХ provides for the introduction of a separate source of implementation of the program’s activities – the budget program for the Development of the Mineral and Raw Materials Base of Ukraine (state compensation fund in the geological sphere). Funding from this source can be used to restore and increase mineral resource data, particularly in the search for or further exploration of promising mineral deposits of strategic and critical importance.

Amendments made to the National Program stipulate that sources of funding for the relevant fund should be part of the funds from:

• rent payments for the use of subsoil of national importance, particularly hydrocarbons, in the amount of 0.25% of such payments;
• a fee for issuing special permits for the use of subsoil without holding auctions and selling special permits for the use of subsoil at auctions in the amount of 10% of such fees;
• other revenues determined by the Law On the State Budget of Ukraine.

On 8 May 2025, the Verkhovna Rada of Ukraine (Parliament) ratified the Agreement between the Government of Ukraine and the Government of the United States of America on the Establishment of a United States-Ukraine Reconstruction Investment Fund, thereby initiating the introduction of a new subsoil use architecture in Ukraine.

Waste Management Reform

One of the key areas in which reforms, aimed at implementing EU legislation into the national legal system, are ongoing, is the waste management field. While the framework Law of Ukraine On Waste Management, implementing Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (Framework waste directive) and certain other EU acquis is already adopted and acting, specific legislation, regulating certain waste streams are either being developed or await adoption.

Packaging Waste Regulation

In September 2023 several draft laws aiming at the implementation of the European Parliament and Council Directive 94/62/EC of 20 December 1994 on packaging and packaging waste, were submitted to the Verkhovna Rada of Ukraine (Draft Law No. 10066, developed by the Ministry of Environmental Protection and Natural Resources of Ukraine, and Draft Laws No. 10066-1 and 10066-2, submitted by Members of Parliament). While all three legislative initiatives are generally in line with the requirements of Directive 94/62, none of them envisage achieving recycling targets in the timeframes, set out in the mentioned Directive, understanding the lack of separate collection, sorting, and recycling infrastructure in Ukraine. Furthermore, there seems to be no clear consensus among national stakeholders on the functioning of some of the key aspects of the waste management system for packaging waste, including the creation and functioning of the extended producer responsibility organizations, their relations with the local authorities, responsible for municipal waste management, sorting and collection facilities, and with the introduction of the deposit system.

In addition, on 19 December 2024 Regulation (EU) 2025/40 of the European Parliament and of the Council of 19 December 2024 on packaging and packaging waste was adopted. Among other issues, this Regulation repeals Directive 94/62 and sets out more detailed regulation of some other issues, including the functioning of the extended producer responsibility system, which may also affect the progress in the adoption of new legislation on packaging and packaging waste.

Taking into account these factors, while the Draft Laws had been actively discussed during 2024 on the basis of the Working Group of the Parliamentary Committee on Environmental Policy and Nature Management, the consolidated version of the draft bill must be provided to the Committee and then to Parliament in the second part of 2025.

The Extractive Industry’s Waste Regulation

Another important reform that progressed in 2024 was the reform of waste management of extractive industries, as it was on 5 November 2024 that the Draft Law on Extractive Industries Waste Management was submitted by the Cabinet of Ministers of Ukraine in the Verkhovna Rada of Ukraine (reg. no. 12180). This draft bill is aimed at the implementation of provisions of Directive 2006/21/EC of the European Parliament and of the Council of 15 March 2006 on the management of waste from extractive industries and amending Directive 2004/35/EC in Ukraine’s national legislation. In addition to the creation of the permitting system for extractive waste facilities and setting out main requirements to them, the draft bill in question also envisages the implementation of circular economy principles by developing the bases for surveying technogenic mineral deposits and possible extraction of minerals from such deposits.

On 4 December 2024, the Verkhovna Rada of Ukraine Committee on Environmental Policy recommended adoption of Draft Law No. 12180 in the first reading with the extended timeframe for submission of the proposals to the second reading on behalf of Members of Parliament. One of the key discussion issues of the draft law during its consideration in Parliament was the issue of the terms and conditions of financial support, particularly in the context of a double burden on business in the event of the introduction of financial support in Ukraine simultaneously with the preservation of the environmental tax. As a result, on 4 June 2025, Parliament did not support draft law No. 12180 in its first reading. The issue of finalizing the draft law on the implementation of Directive 2006/21/EC, as well as the regulation of other provisions that were the subject of its regulation, is at the stage of consultations between the relevant state stakeholders.

Other Waste Streams

In terms of the regulation of other specific waste streams, progress remains rather slow. At the end of 2023, the Draft Law of Ukraine On Electric and Electronic Equipment and its Waste was published on the official website of the Ministry of Environmental Protection and Natural Resources of Ukraine for public consideration, but no active progress has been made since that time as well as in terms of other waste streams.

It is worth noticing that, according to the National Waste Management Plan, deadlines are set out for the development of specific regulations of:

• single-use plastic (2026);
• batteries and their waste (2026);
• electric and electronic equipment and its waste (2026);
• end-of-life vehicles and waste tyres and oils (2026);
• textile (2027).

Climate Change Prevention Reforms

Another important part of the environmental reforms, aimed at aligning Ukrainian legislation with EU legislation, is climate change prevention reforms. In this part, significant progress was made during 2024, particularly through the adoption of the framework law on the foundation of climate policy.

Framework Law Based on Climate Policy

On 8 October 8 2024, the Law of Ukraine On the Main Basics of State Climate Policy, which is aimed at aligning Ukrainian legislation with the EU acquis, related to preventing climate change, in particular, Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’).

Among other issues, the mentioned Law of Ukraine is aimed at setting the long-term goals of Ukrainian climate policy (aligned with the goals set out in the Paris Agreement), as well as principles for the definition of mid-term and short-term goals. The Law also provides a set of instruments that are aimed at promoting the low-carbon development of Ukraine through the stimulation of the use of greener technologies, including fiscal mechanisms, market mechanisms, organizational and economic mechanisms, state support schemes, and instruments for stimulating the population to participate in preventing climate change and adaptation to it. It also sets up a monitoring mechanism to ensure proper tracking of progress in achieving climate goals.

Steps towards the Creation of a National Emission Trading System

As discussed above, Ukrainian climate legislation envisages the use of market mechanisms to prevent climate change. Central to these mechanisms shall become a national emission trading system, the development of which was broadly discussed in 2024. On 21 February 2025, the Cabinet of Ministers of Ukraine approved Decree No. 146-p On Approval of Action Plan regarding Creation of National System for Greenhouse Gas Emission Quota Trade, which envisages the launch of the first operational stage of the functioning of the national emission trade system in 2028, while its full launch is envisaged not earlier than in three years after termination of application of martial law.

Further Streams

Natural Resources and Subsoil Use Issues will be the focus of state policy in 2025, based on the further implementation of the Ukraine Facility Plan markers and further European integration steps (which will become even more specific based on the results of the Bilateral Screening Meetings within the framework of the negotiation process on Ukraine’s accession to the European Union.). A separate focus in the field of subsoil use is that of practical steps by Ukraine and the United States in terms of creating the American-Ukrainian Reconstruction Investment Fund and the practical implementation of provisions contained in the concluded Agreement.