Today's Contents
Reporter's Notepad:
- Are you an expert?
Just The Facts:
- Trump says US is close to minerals pact with Ukraine as revised proposal on the table
- Russia may surrender $300 billion in frozen assets for Ukraine's reconstruction, sources say
- Ukraine plans test launch of GHG emissions trading system in 2028
- Ukraine to buy Westinghouse reactors for Khmelnytskyi NPP expansion
Here's What They Think:
- US Treasury Secretary: Proposed US-Ukraine minerals deal would lay ground for reconstruction of Ukraine's economy
- CFR President: Ukraine's reconstruction represents opportunity for the US
Sober Second Thought:
- Greenhouse gas emissions in Ukraine jumped 31% in past 12 months due to war, assessment finds
Are you an expert in an area relevant to the reconstruction of Ukraine?
If you're reading this, the answer is probably yes.
Dear subscribers,
As you may know, URN Daily is preparing a series of articles of advice from old hands at the Ukrainian investing scene. The series aims to help professionals and businesses just entering Ukraine.
If you have advice you would like to pass on - whether it's specific to your profession or to Ukraine in general, please write to the editor, Adam Brown, at adam.brown@ukrainerebuildnews.com.
It's likely to be a 15-minute interview, with a few highly specific follow-up questions by email.
We have done a number of interviews already in many of the obvious areas - construction, banking, communications and law.
We would welcome further contributions in these areas, but we would also love to interview, for example, somebody with experience in government relations or lobbying, or any area of logistics or agriculture. Venture capital? Maybe you work in HR and could offer advice?
Thanks for your attention,
Adam
Trump says US is close to minerals pact with Ukraine as revised proposal on the table
US President Donald Trump said on Saturday that the US is "pretty close" to reaching a deal with Ukraine on sharing revenue from Ukraine's critical minerals as part of broader efforts to end the war.
"The United States has given $350 billion," as assistance to Ukraine amid the war with Russia, Trump stated. "I want them to give us something for all of the money that we put up and I'm gonna try to get the war settled."
"We're asking for rare earth, oil, anything we can get," the US president said at the Conservative Political Action Conference in National Harbor, Maryland.
On Sunday, the White House Special Envoy to the Middle East Steve Witkoff told CNN he expects the minerals deal with Ukraine to be signed this week.
The deal, first presented to Ukraine's President Volodymyr Zelensky by US Treasury Secretary Scott Bessent on Feb 12, which would reportedly provide the US with 50% of revenue from Ukraine's minerals extraction, was initially rejected by Zelensky due to a lack of security guarantees.
However, Ukrainian officials have been seriously considering a revised version of the deal, dated Feb 21, which contains nearly the same provisions that Kyiv earlier rejected, with some of the terms seeming even stricter than in the original proposal, the New York Times reported on Saturday, citing unnamed officials in Kyiv and the revised deal which it reviewed.
The revised draft, similar to the original proposal from Feb 14, requires Ukraine to give up in favor of the US half of its revenues from natural resources, including minerals, gas, and oil, as well as earnings from ports and other infrastructure.
According to the NYT, the new version also does not provide for any specific security guaranteed for Ukraine, but says the US plans to provide long-term financial support to support Ukraine's economic development.
The document specifies that revenue from Ukraine's resources would be directed to a fund in which the US holds full financial interest, with Ukraine expected to contribute until the fund reaches $500 billion. The US could reinvest part of the revenue into Ukraine's reconstruction, including in the development of the country's subsoil assets and infrastructure.
Speaking to reporters on Sunday, Zelensky said negotiations on what he called a "memorandum" with the US are progressing, as quoted by Interfax Ukraine. Zelensky reiterated that security guarantees must be included in the agreement and said he was ready to discuss a version of the agreement in which contributions to the before-mentioned fund are made 50:50. Ukraine could contribute to the fund using Russian frozen assets, Zelensky noted.
Russia may surrender $300 billion in frozen assets for Ukraine's reconstruction, sources say
Russia may agree to allocate $300 billion in frozen sovereign assets in Europe for Ukraine's reconstruction as part of a possible peace deal, but is likely to demand that a part be spent on the regions under its control, three unnamed sources familiar with the matter told Reuters.
According to one of the sources, Russia may agree to surrender up to two-thirds of its frozen reserves for Ukraine's reconstruction, provided there are accountability guarantees, while the remainder could be directed to Russian-controlled territories in eastern Ukraine, which Moscow now claims as its own.
Another source familiar with the discussions said Moscow is open to using the funds for Ukraine's reconstruction but noted that it is too early to determine how they might be divided, Reuters reported.
Two sources emphasized the importance of discussing which companies would be awarded future contracts for reconstruction, as per the report.
A separate source, close to the Kremlin but not directly involved in the talks, stated that Russia would still insist on the lifting of the asset freeze as part of a gradual easing of sanctions.
Reuters said it could not determine whether the idea of using the frozen funds for Ukraine's reconstruction was among the topics of the meeting between the US and Russian officials in Saudi Arabia last week, noting the discussions on the idea are at the early stages.
After Russia invaded Ukraine in February 2022, the US and its allies imposed a ban on transactions with Russia's central bank and finance ministry, freezing $300-$350 billion in sovereign Russian assets. These assets, primarily consisting of European, US, and British government bonds, were held in a European securities depository.
In October last year, the G7 group of countries in October reached an agreement on the $50 billion loan package for Ukraine backed by the frozen Russian assets. However, the allies have set aside the option of more direct actions, citing legal risks.
In February 2024, the World Bank estimated Ukraine's recovery cost at $486 billion over the next 10 years.
Ukraine plans test launch of GHG emissions trading system in 2028
Ukraine plans to launch a pilot phase of a proposed national greenhouse gas (GHG) emissions trading system in 2028, the country's Ministry of Environmental Protection and Natural Resources said.
The GHG trading system is a market-based mechanism that sets an overall limit on greenhouse gas emissions for companies. Each company is allocated or purchases a set number of allowances, which can be used for its own emissions or sold on the quota market established under this system.
"This approach creates economic incentives for businesses to implement energy efficient and environmentally friendly technologies," Ukraine's Minister of Environmental Protection and Natural Resources Svitlana Grynchuk said. "As a result, companies will comply with the mandatory requirements for greenhouse gas emissions in the most efficient way."
Ukraine's government has adopted a roadmap for the implementation of the GHG emissions trading system, establishing the necessary framework for advancing state climate policy, the ministry said in a press release on Friday.
The roadmap outlines three phases: the preparatory phase from 2025 to 2027, which includes drafting relevant legislation and establishing tools for the system to operate; the pilot phase in 2018, which includes the test launch, and the operational phase, which will start no earlier than three years after the martial law in the country is lifted.
Ukraine will have numerous benefits from the introduction of the GHG emissions trading system, including in environmental protection, economic development, EU integration, attracting investments, as well as in achieving energy independence, the ministry said.
Ukraine to buy Westinghouse reactors for Khmelnytskyi NPP expansion
Ukraine plans to buy two nuclear reactors from the US-headquartered nuclear power firm Westinghouse Electric Company to expand its Khmelnytskyi nuclear power plant (NPP), the state-owned operator of Ukraine's nuclear power plants Energoatom sad.
The expansion of the Khmelnytskyi NPP will include the construction of two additional power units, units 5 and 6, which will feature Westinghouse-made AP1000 reactors, Energoatom said in a press release on Friday.
Ukraine's President Volodymyr Zelensky said at the Munich Security Conference earlier this month that the country is preparing a project to expand the Khmelnytskyi NPP "with involvement from American businesses, including Westinghouse," without elaborating.
Expansion of Khmelnytskyi NPP is already underway, with work on the third power unit being 80% complete, while work on the fourth power unit is at 25%.
For power units 3 and 4, Ukraine plans to buy two Russian-made reactors from Bulgaria, with the Ukrainian parliament recently approving the purchase. Ukraine's energy ministry has said that this acquisition will give Ukraine an additional 2.2 GW of guaranteed base generation.
Westinghouse's AP1000 reactor is able to supply over 1 GW of electricity to centralized power grids, the company says on its website.
US Treasury Secretary: Proposed US-Ukraine minerals deal would lay ground for reconstruction of Ukraine's economy
A proposed economic partnership deal between the US and Ukraine involving Ukraine's critical minerals would lay the foundation for a "robust" reconstruction of Ukraine's economy while also preserving US interests, US Treasury Secretary Scott Bessent wrote in an op-ed for the Financial Times.
The deal envisages that Ukraine's revenue from natural resources, infrastructure, and other assets is allocated to a fund in which the US would have economic and governance rights, which would then reinvest to support Ukraine's reconstruction and development, according to Bessent. "The terms of this partnership will mobilize American talent, capital, and high standards and governance to accelerate Ukraine's recovery," and would also ensure that countries that did not support Ukraine's defense would not be able to benefit from its reconstruction, Bessent wrote.
CFR President: Ukraine's reconstruction represents opportunity for the US
Ukraine will need an excessive amount of foreign investments to rebuild its economy after the war and there lies the opportunity for the US, Michael Froman, president of the American think tank Council on Foreign Relations (CFR), wrote in an op-ed discussing wider implications of US President Donald Trump's approach in Ukraine peace dealings.
Froman argued that the US must have access to Ukraine's critical minerals and deny the same to Russia and China. "That should give the United States a stake in Ukraine's ongoing security, viability, and prosperity," Froman wrote.
Greenhouse gas emissions in Ukraine jumped 31% in past 12 months due to war, assessment finds
Warfare, reconstruction, combat-driven landscape fires, damage to the energy infrastructure, and the displacement of refugees and civil aviation have driven a 31% increase in greenhouse gas (GHG) emissions over the past 12 months, a preliminary assessment has found.
The total since the Russian full-scale invasion of February 2022 now stands at 230 million tonnes of CO2 equivalent (MtCO2e), according to the assessment by the Initiative on GHG Accounting of War.
"The emissions are the equivalent of the annual emissions of Austria, Hungary, Czech Republic, and Slovakia combined or the annual emissions of 120 million fossil fuel automobiles," the authors wrote.
The authors stated that Russia should be held accountable for these emissions and the resulting climate-related damage. Using a social cost of carbon of $185 per tonne of CO2 equivalent, they estimated Russia's liability after three years of war to exceed $42 billion.
During the third year of the war, all sectors contributed to the rise in emissions, but conflict-driven landscape fires saw a significant surge due to unusually dry conditions likely linked to global warming, according to the study.
Emissions from warfare steadily increased, becoming the largest single source, primarily due to the ongoing consumption of vast amounts of fossil fuel and ammunition. Meanwhile, emissions from rebuilding damaged buildings and infrastructure grew at a slower rate, as most destruction had occurred in the initial weeks and months of the full-scale invasion.
Forest fires
In 2024, war-driven forest fires in Ukraine surged dramatically, with burned areas more than doubling from an annual average of 38.3 thousand hectares in the previous two years to 92.1 thousand hectares.
Emissions from all landscape fires, including forests, rose by 25.8 MtCO2e in 2024—a 113% increase compared to the combined 22.9 MtCO2e from 2022 and 2023—bringing the total to 48.7 MtCO2e.
Most fires occurred near the front lines or border areas. Climate analysis indicated that Ukraine experienced an unusually dry summer in 2024, likely due to climate change. These dry conditions created a perfect environment for fires ignited by ongoing hostilities to start small and rapidly spread into larger blazes, according to the study.
Warfare
After three years of war, warfare has become the largest source of carbon emissions. Emissions from warfare began at 21.9 MtCO2e in the first year, rose by 29.7 MtCO2e in the second, and increased by another 30.5 MtCO2e in the third, totaling 82.1 MtCO2e, as per the study.
The primary driver of these emissions is the fossil fuel consumption of tanks and fighter jets, which are heavy users of diesel and kerosene. However, artillery ammunition also became a major contributor in the third year. While drone usage grew significantly during this period, it did not replace the reliance on carbon-intensive artillery shells.
Damage to energy infrastructure
The destruction of energy infrastructure added another 2.8 MtCO2e (+16%) over the past year, bringing total emissions from this sector to 19.0 MtCO2e since 2022. Intensified attacks on oil depots and refineries drove a sharp rise in emissions, with 2.1 MtCO2e released in the past 12 months compared to 1.1 MtCO2e over the first two years.
In addition, Russia continued targeting power stations and the electricity grid. These ongoing attacks not only released CO2 but also emitted sulfur hexafluoride (SF6), an extremely potent greenhouse gas that is 24,000 times stronger than CO2.
Reconstruction
The destruction of civilian infrastructure added another 6.2 MtCO2e (+11%) over the past year, bringing total emissions to 62.2 MtCO2e since 2022. While the most extensive damage occurred in the early weeks of the conflict, frontline urban centers continue to suffer heavy destruction.
Rebuilding these areas will require vast amounts of construction materials, with carbon-intensive concrete and steel accounting for over 80% of future reconstruction emissions, according to the study.
Refugee, civil aviation displacement
No additional emissions from the movement of refugees have been added to the preliminary assessment as these were minimal in 2024, the authors said. However, longer routes that flights are forced to take due to airspace closures due to the war resulted in additional emissions of 4.8 million tCO2e bringing the total to 14.4 million tCO2e after three years of war, as per the assessment.
3 Years of Full-Scale War
DTEK, the largest private investor in Ukraine's energy sector, published a photo-heavy 23-page "action report" recapping the three years of the full-scale invasion from the perspective of energy.
The report covers the history of the invasion and DTEK's actions to keep the lights on, the push toward renewable energy sources as the grid is being repaired and replaced at the same time, as well as basic information about DTEK and more.
Japan's Metal Products Inc Meets CBU
The Confederation of Builders of Ukraine (CBU) recapped a Feb 18 meeting its president, Oleksandr Chervak, held with Susumu Watanabe, president of Japan's Metal Products Inc, and Ryosuke Nishihara, a representative of the Japan International Cooperation Agency (JICA).
The CBU and Metal Products, which makes products including purlins, lattices, shutter frames, frames for mounting solar panel and steel components for tower structures, agreed to work on "specific cooperation opportunities" and identify join initiatives for the reconstruction of Ukraine.
South Korean Industrial Businesses Meet CBU
The CBU also recapped a Feb 17 meeting between its president and Bokhwan Kim, president of Korea Overseas Infrastructure & Urban Development Corporation (KIND), an association of major Korean industrial businesses.
"The participants discussed in detail the prospects of Korean companies entering the Ukrainian market, as well as the specifics of doing business in Ukraine: workforce recruitment, supply and production of construction materials, cooperation with local companies, legislative frameworks, and construction sector regulations, among others."
Increasing German Interest
Vira Savchenko, CEO of BDO in Ukraine, announced that her company is creating a German-language version of its website to cate to "growing interest from the DACH region."
The German-language website can be found at https://www.bdo.ua/de-de/home. "Not everything is translated yet – but we’re working on it!."
Turkish Interest in Reconstruction
Adam Mycyk, M&A partner at global law firm Dentons in Ukraine, recapped an event Dentons hosted in Istanbul two weeks ago addressing investment opportunities in Ukraine.
"The turnout and engagement were proof of what we already know: Ukraine remains a market of strategic importance for Turkish investors," he wrote, adding that "early movers will have the greatest opportunities to capitalize on Ukraine’s reconstruction and reintegration into the global economy."
Ukraine's Energy Priorities
The Ukrainian think tank DiXi Group promoted an eight-page document from the group's supervisory board outlining immediate priorities in Ukrainian energy secdurity, including winterization, air defense, flow-based capacity allocation and energy efficiency.
The document also covered international support to Ukraine's energy sector, the need for speedy assistance, and strategies for sustainability and energy independence on the medium term.
URN Daily: Sense Bank and Ukrgasbank for sale? And US seeks to cancel $4.7 billion of Ukraine's debt
