*4.1. Decarbonisation and the "Green Transition" as an Innovative Component of Sustainable Economic Development of Ukraine*

A significant step towards Ukraine's European integration was the full connection of the Ukrainian energy system to the ENTSO-E continental European energy system in March 2022, which will secure the Ukrainian energy system in the face of technological, economic and foreign policy risks. The synchronisation of power systems has been carried out since 2017 and demonstrated to be comprehensive and systematic in nature in testing, static and dynamic stability and other technological measures.

The European course for the transition to a low-carbon economy is a list of actions agreed upon by all stakeholders of the process, which should lead to the separation of the socio-economic development of the country from emissions of harmful greenhouse gases (GG). Moreover, anthropogenic factors of harmful emissions of greenhouse gases from vehicles can be represented as a function:

$$\text{TC} = \text{P} \cdot \text{G} \cdot (\text{E} \cdot \text{C}\_{\text{EN}} + \text{C}\_{\text{NE}}) \tag{1}$$

where TC—anthropogenic greenhouse gas emissions, tons of CO2-eq.; P—population, people; G—consumption of goods per capita, units/person; E—energy intensity of production and consumption of goods, GJ/unit; CEN—specific greenhouse gas emissions per unit of energy used in the production and consumption of goods, including emissions from the production of energy, as well as in the production, processing and transportation of fuel for energy production, tons of CO2-equivalent/GJ; and CNE—specific non-energy GG emissions per unit of good consumed, tons of CO2-eq./unit.

Calculated according to this principle, the anthropogenic factor of harmful carbon emissions of CO2 allows us to state that the problem of greenhouse gas emissions such as carbon dioxide and methane is a priority for the central and southern regions (Figure 1, Table 1).

Thousand tons

**Figure 1.** The impact of anthropogenic factor CO2 emissions in the regions of Ukraine in 2021 [33].

The priority of solving problems to minimise such anthropogenic pressure on the regions is illustrated in Table 1.

**Table 1.** Priority of solving problems of anthropogenic factor of CO2 emissions into the atmosphere by region of Ukraine.


For Ukraine, especially in the conditions of postwar economic recovery, measures of the synergetic effect of solving problems in key areas are extremely important. Against the background of the unconditional priority of military and civil protection measures, it is necessary to note the real progress in foreign policy and economic processes between Ukraine and the EU and between Ukraine and the world, which has developed over several years and considered only potential scenarios.

At the end of February 2022, the Ukrainian power system was disconnected from the power systems of Belarus and Russia in a test format and underwent technical measures to integrate it into the ENTSO-E continental European energy network as soon as possible and harmonise regulations [32].

It should be emphasised that the process of preparation for the integration of Ukraine's energy system into the EU energy system was carried out for six years and received financial confirmation in the form of 700 million euros of investment [34]. Ukraine has been provided opportunities for crisis assistance from Europe, which is extremely important during wartime. The long-awaited event will attract investors, as Ukraine can count on financial assistance from European partners to rebuild its war-torn infrastructure, and foreign partners have already stated their readiness to provide assistance, with at least 100 billion euros from the EU [35] and 32.5 billion from the USA [36]. Such investment funds, in addition to rebuilding destroyed infrastructure and critical social facilities, should be directed to the most profitable and environmentally friendly production, which can be drivers of postwar economic recovery.

It should be noted that in recent years, Ukraine has implemented several programmes and strategies aimed at reducing the harmful effects of human economic activity on the environment. For example, these areas are reflected in relevant legislative and regulatory acts, such as the Ukrainian law "On the Basic Principles (Strategy) of the State Environmental Policy of Ukraine for the period up to 2030" and the Strategy for Environmental Safety and Adaptation to Climate Change for the period up to 2030.

A separate component is the greening of Ukraine's energy sector in the context of the Green Deal in the EU. Ukraine's implementation of the Green Deal principles in its own legal and economic environment, especially given European opportunities and the desire to integrate Ukraine in most areas as a result of Russia's military actions, will be an indisputable catalyst for economic modernisation. Measures will be especially urgent and appropriate in the context of the reconstruction of enterprises and infrastructure after the end of hostilities.

Among the policy documents of environmental orientation in Ukraine, we must highlight the Strategy of State Environmental Policy of Ukraine until 2030, the Strategy for Environmental Security and Adaptation to Climate Change until 2030, and regional environmental programmes.

These documents are intended to outline the transition of the Ukrainian economy to an ecologically oriented decarbonised (low-carbon, "green") path of development, which involves the rational use of natural resources. However, despite a significant number of efforts by the state in this direction, at present, the quality and speed of economic transformation on the way to greening cannot be called satisfactory, as demonstrated by relevant indicators. Thus, according to the International Environmental Performance Index (EPI-2020) [37], on the basis of ranking by 32 criteria, Ukraine took 60th place out of 180 countries in 2020 (Table 1).

The analysis of the leaders of the EPI rating shows a steady trend in its dynamics. The top rankings are traditionally occupied by European countries with a high standard of living (high-income group economies) and significant investments in environmental projects (Figure 2). For example, in 2020, the top five were Denmark, Luxembourg, Switzerland, the United Kingdom and France, where sustainable development programmes are successful and stable.

The Global Innovation Index (GII) 2021, generated for 131 countries, is based on 80 indicators of resource importance in the context of this study. According to the index, Switzerland took 1st place in 2021, Britain was in 4th place, Denmark was in 6th place, France was in 11th place, and Luxembourg was in 18th place. Ukraine was in the 49th position in this rating. That is, the correlation between innovation and the environmental efficiency of the state is indisputable.

**Figure 2.** Top ten countries according to the GII-2021 Global Innovation Index. Reproduced with permission from [38]. Copyright 2021, World Intellectual Property Organization.

According to the GII, Ukraine improved only three indicators in 2021: creativity, scientific knowledge, and human capital and research (Figure 3).

**Figure 3.** Dynamics of GII indices for Ukraine in 2017–2021. Reproduced with permission from [38]. Copyright 2021, World Intellectual Property Organization.

At the same time, Ukraine's ranking has worsened in the category of lower-middleincome countries, declining in comparison with 2020. In addition, Ukraine's place in the annual Bloomberg Innovation Index [39] in 2018–2021 only deteriorated and is determined by the following indicators (Figure 4).

Thus, innovative transformation of the economy is a necessary strategy for Ukraine to rebuild the infrastructure destroyed by hostilities, and clustering in this sense is an auxiliary and powerful mechanism for development at regional and local levels.

According to studies [40–42], the innovative development of the region is determined by a number of interrelated factors that promote each other during innovation, including the following factors:


Simultaneously, according to the data on industrial activity in the regions of Ukraine, it is possible to confirm a significant differentiation among regions by the criterion of the number of such enterprises and the existing features of regional innovation development [43,44].

For the period 2018–2020, the statistics for the regions of Ukraine regarding the number of innovatively active industrial enterprises are shown in Table 2, where regions are highlighted in green if they showed growth over the past three years.

Thus, the stable growth of innovative enterprises over the past three years has been demonstrated by the Ukrainian regions Vinnytsia, Poltava, Cherkasy and Ternopil, which are mostly agricultural, which is another argument for focusing investments in the energy cooperative sector based on biofuels.


**Table 2.** Regions of Ukraine by number of innovation-active enterprises [33].

Simultaneously, the absolute number of industrial innovation-active economic entities in the region does not illustrate the level of regional innovation development, which can be represented by the relative share of innovation-active industrial enterprises in the region at the end of the reporting year.

In general, in Ukraine, as shown in Figure 5, the share of innovative enterprises in the total number of medium and large-business industrial enterprises (codes B, C and D according to the Classifier of Economic Activities) does not exceed 2.5%. This indicates an extremely low technological level of industry in Ukraine.

In addition, the leading regions in the number of innovation-active enterprises do not coincide with the leading regions of the index. The leaders here are the Ternopil, Kharkiv, Sumy, Cherkasy and Kirovohrad regions. The Dnipropetrovsk region is in ninth place, and the Donetsk region is at the bottom of the list. Thus, in Ukrainian regions, there is no stable dependence on the level of industrial development and the level of innovation activity, which, moreover, undergoes significant fluctuations in statistics, even from year to year.

In the sectoral structure of total expenditure by area of innovation, the leaders are the sectors that represent the processing industry of all technological segments, for example, the food industry in the low-tech sector, metallurgical production in the medium-low-tech sector and the production of pharmaceuticals in the high-tech sector (Figure 6).

**Figure 6.** Structure of total costs by area of innovation, % [44].

An effective indicator of the environmental friendliness of regional economic systems is an integrated indicator of the effectiveness of environmental management, which is calculated using a linear function according to the formula:

$$\mathbf{I} = \sum\_{i=0}^{3} \binom{\mathbf{n}}{\mathbf{k}} \mathbf{C}i \text{ li} \tag{2}$$

where Ii—integrated ecological characteristic; Ci—weight coefficient of integrated indicators.

The integrated indicator of the effectiveness of environmental management provides a comprehensive assessment from the standpoint of compliance with objectives based on integrated environmental characteristics calculated by groups of indicators.

Therefore, solutions to problematic environmental issues, particularly climate issues, can be achieved through the intensive implementation of technological innovations and the effective management of the latter. An example of such implementation is "green" technologies, which, together with similar models, should be applied primarily to production processes in the real sector of the economy in order to minimise harmful effects on the environment. Innovation itself can form a breakthrough in consciousness and cause the rethinking of the usual processes and technologies, which, in turn, is a necessary factor for the greening of economic activity, even in the absence of public support.

Undoubtedly, the most significant level of innovation in regional development is reflected in the indicators of the sales of innovative products because they form the gross regional product and reflect the end result of innovation.

Simultaneously, the situation in Kyiv is consistently ahead in these indicators in terms of regions. In addition, the analysis in the current study allows us to state that innovative products by region did not determine the regional sales volume and, as a consequence, were not a crucial component of gross regional product.
