Ukraine Facility Lacks Dedicated Path for Industrial Decarbonization, GMK Center Finds

Ukraine’s flagship EU-backed funding program has no dedicated mechanism to finance the modernization of large industrial facilities, according to an analysis by GMK Center.

The Ukraine Facility, running from 2024 to 2027, allocates 50 billion euros in total — 33 billion as loans and 17 billion as grants. Pillar II, the Ukraine Investment Framework (UIF), holds 9.6 billion euros: 7.8 billion in guarantees and 1.8 billion in grants. Under Article 28 of the regulation, a 20% climate benchmark is calculated against UIF support and Ukraine Plan investments, meaning roughly 1.9 billion euros could formally be directed toward climate-related purposes.

GMK Center identifies three structural limits on how much of that figure reaches heavy industry. The 20% benchmark covers a wide range of climate and green activities, not industrial decarbonization alone. Support is channeled as loan guarantees rather than outright grants, leaving repayment obligations on businesses. And because the regulation’s wording is broad, funds can be distributed across many priorities with no guarantee that factories receive any share.

Domestic instruments offer little additional headroom. Ukraine’s State Fund has issued 2.4 billion hryvnias — about $52 million — in loans capped at 90 million hryvnias each, at rates up to 9% over ten years. Together with 550 million euros in budget commitments for energy projects, this is far below what the sector requires: a single metallurgy project costs roughly $1 billion, while the industry’s total financing need is estimated at $12 billion.

To close the gap, GMK Center recommends granting Ukrainian enterprises access to European financial infrastructure and developing tailored terms for applying the Carbon Border Adjustment Mechanism.

Source: GMK Center