Open letter on the processes of just transition of coal regions by the Platform for Sustainable Development of Coal Towns of Donetsk region

We, the mayors of Donetsk region’s nine coal towns, three local NGOs and Donetsk Chamber of Commerce and Industry, have united and created the Platform for Sustainable Development of Coal Towns. Our goals are the development of the region, transformation of our economies, attraction of investment, creation of new jobs, strengthening partnerships in the towns’ socio-economic development and reduction of greenhouse gas emissions.

We understand the global trend towards decarbonization, of which Ukraine is also a part of. A number of actions by several of Ukraine’s key international partners testify to the inevitable transformation of the energy sector and the gradual phasing-out of coal: ratification of the Paris Agreement in 2016, establishment of the energy partnership between Ukraine and Germany in 2020, public statements about Ukraine’s contribution to the European Green Deal at last year’s EU-Ukraine summit and the creation of the Initiative for the Transformation of Coal Regions for the Western Balkans and Ukraine.

That is why we see the main goal of our Platform as the preparation, development and implementation of a common strategic vision for the just transition of our coal mining region.

We support the establishment of the Coordination Center for the Transformation of Coal Regions, the development of the Concept of the National Program for the Transformation of Coal Regions of Ukraine until 2030, as well as the government’s decision to develop the Concept for the Reform of the Coal Industry. These steps confirm the systematic approach and strategic nature of the actions of the Ukrainian authorities in matters of socio-economic development of coal mining communities and the early transition to the use of renewable energy sources.

These actions are important and relevant, and they correlate well with the priorities and actions identified by our Platform. Our first common steps were to identify areas for development and preparation of joint project concepts for reforming programs of local educational institutions, installation and use of renewable energy sources on municipal buildings, and the reuse of mine water.

At this stage, with the support of international partners, we are finalizing the Strategy for the Transformation of Coal Communities of Donetsk Region which are part of the Platform. We have identified a vision and strategic fields of action, developed a hierarchy of goals and are actively working to develop an action plan to ensure a just transition of the Platform’s communities.

At the same time, in recent years we have been actively studying global trends in the transformation of coal regions, in particular, in exchange with German and Polish coal communities and in meetings with the Coal Regions in Transition / Just Transition Platform (Brussels), which was attended by over 350 representatives from across Europe, and the EU Initiative for the Transformation of Coal Regions of the Western Balkans and Ukraine.

International experience of the just transition of coal regions shows that success on this path is possible only with the cooperation of state and local authorities, public associations and business.

We want to emphasize the leading role of the state in these processes, which is to create appropriate basic conditions that enable the process of a just transition as such. First of all, it concerns the creation of appropriate conditions for the security of investment, an overall positive investment climate, favorable conditions for foreign economic activity, as well as for energy transition, environmental security, social stability, ensuring the availability of all resources, including the creation of funding for project activities in communities.

It should also be noted that the current socio-economic situation in the coal communities of Donetsk region is characterized by a number of challenges that require a special approach by the state during the transformation of our economy:

1. Low investment attractiveness, in part due to high financial risks because of a close territorial proximity to the contact line.

The experience of Georgia, Moldova, Israel and other countries in attracting investments to regions that border armed conflict or occupied territories shows the need to introduce a wide range of economic incentives in these territories, as well as mechanisms to ensure return on investment.

2. Negative image of the region in a state of armed conflict.

This challenge is due to the fact that potential national and foreign investors do not yet see the interest of the state in rebuilding the economy and infrastructure of our region. Currently, the state is only forming a strategic vision and developing a state policy for the sustainable development of the government-controlled parts of Donetsk and Luhansk regions.

3. Mono-Economy.

Historically, the Platform’s communities have been established as mining settlements for newly established coal companies. Only thanks to the state support of coal enterprises it was possible to keep the production in place until today. The lion’s share of enterprises of other industries was liquidated during the reforms of the transition period. Thus, the structure of the economy of the Platform communities in the vast majority consists of coal enterprises and enterprises that serve them. Small and medium-sized businesses belong to the sphere of trade and provision of household services to the population and depend entirely on the level of miners’ wages and the timeliness of their payments.

4. Deterioration of the demographic situation, high level of labor migration of the most active part of the population.

Due to the lack of jobs, decent and timely pay, people are forced to go to other towns and cities in Ukraine and abroad in search of new employment. Unsatisfactory living standards and poor quality of medical services lead to a natural population decline.

5. Environmental consequences of the coal industry.

As a result of the transformation of coal regions, a significant number of environmental problems arise, which become more and more acute over time.

At present, there are no clear mechanisms for closing mines, which would take into account all the environmental and man-made consequences from the moment of decommissioning of equipment to the development of a strategy for sustainable operation of coal mining regions. In most cases, environmental problems that arise at different stages of liquidation of mines significantly affect the further development and use of the surrounding areas.

The cessation of mines’ economic activity does not guarantee the improvement of the ecological and socio-economic conditions of these territories. The environmental situation of coal mining regions requires the urgent implementation of a set of measures that will ensure the ecologically balanced functioning of these territories and allow citizens to effectively exercise their rights to environmental safety. When closing mines, it is necessary to provide funding for measures aimed at preventing environmental violations, which will improve the living conditions of the population in these areas. Solving environmental and socio-economic problems of areas where mass liquidation of mines is taking place should become a key component of sustainable development of these regions.

6. Low awareness of the local population about the socio-economic risks for coal communities associated with the global low-carbon economic development and the transformation of coal regions.

Decarbonization and transformation of coal regions are global trends, of which Ukraine is also a part of. This year, for the first time, our state has declared its goal of becoming climate-neutral by 2060.

An important component of this process is the local level, climatic ambitions and the transformation of individual cities/towns. We believe that there is currently a lack of information in the region on all processes taking place at the national level.

We are convinced that increasing the number of public consultations and establishing a national dialogue on the transition to a low-carbon economy is the basis for successful reforms. For our part, we are ready to join and help accompany these processes on the ground.

7. The threat of rising unemployment due to technological and structural changes in the coal industry.

 

It is worth noting that the population of the Platform’s communities is highly dependent on the coal industry. Most of the residents are employed in coal mining enterprises, or in enterprises that depend on their operation. Opportunities for employment outside of coal companies are very limited in the region.

The process of transformation of coal regions will inevitably lead to a sharp rise in unemployment, to the release of miners, population migration, the decline of infrastructure, which in turn can create a great aggravation of social and economic tensions.

As of today, there are no programs for re-profiling of local educational institutions, there is a lack of opportunities for the development of dual and non-formal education, which can lead to an even further deterioration of the employment situation.

 

Based on the above, we offer:

1. The Cabinet of Ministers of Ukraine to take a legislative initiative to recognize the Platform communities as priority development territories and introduce a special regime of investment activities, paying special attention to defining a specific goal for small and medium business development as a basis for sustainable local development.

2. The Cabinet of Ministers of Ukraine to initiate a national dialogue on decarbonisation and transformation of coal regions of Ukraine, including the creation of open platforms for discussion with stakeholders, the population and the media on social, economic and environmental issues of transformation, the roadmap for decarbonisation.

3. The Ministry of Development of Communities and Territories of Ukraine together with the Ministry of Economy, as well as the Ministry of Foreign Affairs to create a platform for finding national and international investors in order to create new industries in the communities of the Platform.

4. The Ministry of Development of Communities and Territories of Ukraine to make changes in strategic documents for the development of Donetsk and Luhansk regions, to determine one of the priority areas for active promotion of these regions at the national and international levels.

5. The Ministry of Education and Science of Ukraine to create favorable conditions for the introduction of dual education, an effective system of training qualified personnel, focused on providing new types of economic activity.

6. The State Property Fund of Ukraine together with the Ministry of Development of Communities and Territories of Ukraine to develop a regulatory framework that will ease the use of objects and territories of state-owned mines by local governments, as well as industrial waste for projects aimed at developing relevant territorial communities.

7. To create a Just Transition Fund for joint, effective and transparent use of the state and international financial resources concerning social and economic development of our region.

8. The Ministry of Finance together with the National Bank of Ukraine and the Ministry of Foreign Affairs should develop mechanisms to guarantee the return of foreign investments by, inter alia:

– concluding bilateral investment guarantee agreements with other countries;

– involvement of leading international insurance organizations on the terms of public-private partnership;

– active cooperation with international financial institutions on lending and guaranteeing return on investment.

We are aware that the success of these state measures will also depend on the active position and support of local governments.

Our role and capacities, first of all, we see in the following:

– Creating a favorable economic environment for businesses (through local regulations, etc.), promoting the region as a place attractive for doing business;

– Development of a unique advertising campaign for the region with an emphasis on the potential for innovation, economic development and cultural heritage / tourism;

– Creation of local and regional programs of economic and social development;

– Organization of regional events (workshops, conferences etc.) for municipal entities, strategic planning sessions with the involvement of all stakeholders (local authorities, public, trade unions, businesses, NGOs, scientific community, etc.)

– Involvement and consultations with the local population, representatives of civil society on all processes of just transition.

We call for unity in addressing the just transition of coal regions, as this process will cover many aspects, from energy transition and economic diversification to the restructuring of educational institutions and social and environmental security.

Mayor of Bilozerske – Serhiy Makieiev

Acting Mayor of Dobropillia – Vitaliy Shevchenko

Mayor of Myrnohrad – Oleksandr Brykalov

Mayor of Novodonetske – Dmytro Brazhnikov

Mayor of Novohrodivka – Oleksandr Shevchenko

Mayor of Pokrovsk – Ruslan Trebushkin

Acting Mayor of Selydove – Ruslan Sukov

Head of the Toretsk civil-military administration – Vasyl Chynchyk

Head of the Vuhledar City Council – Andrii Silych

President of the Donetsk Chamber of Commerce and Industry – Maksym Anufriiev

NGO “Vuhledar Development Agency” – Fedir Sorokin

NGO “Dobropillia Youth Center “DOBRO” – Volodymyr Oros

NGO “Platform of initiatives “MOVE” – Shylenko Denys