Published on August 19, 2020

Just transition off to a start in Ukraine, despite tough context

At the time of the collapse of the Soviet Union in the early nineties, almost one million Ukrainians were employed in coal mining. After thirty years, about forty-two thousand miners still work in the industry.

While many mines were lost to the Russian occupation, an effort towards just transition has started in mining towns in the Donetsk region. It deserves support.

All photos by Niels Ackermann / Lundi13 for Ecodiya

At the time of the collapse of the Soviet Union in the early nineties, almost one million Ukrainians were employed in coal mining. After thirty years, about forty-two thousand miners still work in the industry. For decades, the transition from coal mining has been associated with deep social and economic crises in the regions dependent on the industry. Miners frequently went on hunger strikes, and the sound of their helmets knocking on the pavement near the Ukrainian parliament echoed through the capital.

The ongoing armed conflict and Russian invasion of eastern Ukraine has put additional burdens on mining-dependent towns, since most of the remaining mines are concentrated in the immediate proximity of the contact line.

More than half of 150 Ukrainian mines are now occupied by Russia-backed separatists. Many of them got closed, since the self-proclaimed authorities could not keep them running because of lack of funds and human resources. Coal extraction has dropped dramatically. According to media reports, Russia imports the coal extracted in the so-called republics and then resells it elsewhere, including Ukraine and the EU. Illegal coal smuggling to Ukraine is also reported.

The access of human rights observers and international organisations to the mines in the occupied territories of Ukraine (so-called Donetsk and Luhansk People’s Republics) is limited. Thus, the environmental impact and working conditions at the mines situated in the occupied territories is unknown and any kind of transition efforts are hardly imaginable there. The transition efforts described in this text, then, concern towns bordering the occupied territories.

Populism and corrupt schemes around state subsidies for industrial sectors in the past led to poorly managed transition attempts, or at times mere imitation of a transition. State programmes aimed at restructuring the sector were adopted officially, but were never implemented. The Ukrainian mining sector is heavily dependent on public subsidies. Only four out of thirty-three state mines are marginally profitable. In people’s minds, state support of the mines is often considered normal, a necessity that cannot be avoided.

At the same time, taxpayers not only pay for the mines with their taxes, but also with their health, since the mines also affect the environment, including the air and water. Simultaneously, the lives of miners are endangered by difficult work conditions and outdated equipment. There is not much sense in further investments in these doomed enterprises.

Despite the dependence on public subsidies and environmental damage the mines bring, local communities are often resistant to any kind of transformation.

Information vacuum

Unprofitable state coal enterprises, according to Ukraine’s Energy Strategy 2035, are to be closed by 2025. Plans for preventing negative social and ecological consequences following the closures were meant to be developed, but this has not been done yet. Moreover, the list of the mines that are candidates for closure has not been published, and the management and employees of mines, as well as local authorities and communities in mining regions, live in an information vacuum.

Andriy Silych, the mayor of Vuhledar, a mining town in Donetsk region, states that 75% of the local budget comes from taxes paid by the nearby coal mines. Without a sound plan for transition, shutting down the mines would mean the town would slowly disappear. This already happened in neighbouring towns where mines were closed: hospitals and schools shut down, people were left looking for employment elsewhere, and the towns withered away.

The previous liquidations of coal mines were conducted without consulting local communities and other stakeholders. The interests of the people in the region were largely ignored.

There is little belief among the local communities that a transition may be just, and that it’s not an ‘evil state plan to get rid of the mines’, but a necessity that may lead to the positive transformation of the region. The high level of distrust in any authorities in Ukraine is a real barrier on the path to a transition.

‘We must reach every town and settlement with the idea of the necessity of transition’, Maksym Anufriiev, the head of Donetsk Chamber of Commerce and Industry, says. ‘There is a lack of information in the communities’.

Mining identity

Apart from distrust towards the authorities and lack of information, there is another reason for the local population’s resistance to shutting down the mines: their regional identity is centred around the mining industry. Without a thoroughly planned transition and the information campaigns that should accompany a just transition process, there will be a gap in the local identity.

The experience of other countries that have gone through a similar transition demonstrates that identity issues must be tackled immediately, at the preparation stage. Entire towns and regions may be ‘rebranded’ to leave the mining identity in the past.

Iryna Sushchenko, the former acting mayor of Pokrovsk in the Donetsk region of Ukraine, explains that the local population associates its hometown with the mining industry, and that this is the town’s only identity in people’s minds. ‘The transition has to be soft, with long-term projects’, she says. ‘At the moment, people are not ready for this and we are not fully ready either’.

Transition efforts

Since the mid-nineties, Ukraine’s international partners assisted in the development of the restructuring plans for the coal sector and offered support programmes for regions dependent on mining. The World Bank, the European Union, the British government, Germanwatch and many other partners in collaboration with local organisations developed sets of recommendations, but little progress was made.

Experts claim that the lack of political will is the main reason these programmes were either not implemented at all or were carried out only partially. Political teams, afraid to make unpopular, painful decisions, instead avoid responsibility and reschedule the transition over and over again.

Funding the mines with state subsidies, despite the environmental damage they cause, the apparent health risks for workers and the local population and the obvious economic and social short-sightedness of such approach, is ultimately an easier way to avoid any possible unrest that may follow in the immediate aftermath of the transition actions.

In addition to political will, the development and implementation of just transition programmes requires a collective effort with the involvement of different stakeholders. It calls for devising innovative approaches, such as developing special retirement and education programmes for miners that would soften the consequences of the transition, and taking immediate action. Experts stress that the government should establish a commission to develop recommendations for a just transition and set up a restructuring fund. Meanwhile, the mines have to be united in one enterprise and all state subsidies must cease.

These steps should be coordinated with regional reforms that improve the business environment, develop advertising campaigns for the mining regions and support innovative solutions at the local level.

Grassroots initiative

There is also a reason for hope. The rise of civil society in Ukraine since 2014 and decentralisation reform have made transition initiatives possible at the regional level.

Local authorities have their own visions for the transition. Oleksandr Brykalov, the mayor of Myrnohrad, shared the idea of establishing an Industrial museum located at a mine that will be closed in the transition process. ‘We want to highlight the industrial nature of the museum in general to attract not just mining towns’, he said.

Local authorities of Pokrovsk and Vuhledar plan to develop industrial parks and are ready to cover expenses related to communications and provide legal support for prospective investors. These towns are using every opportunity to develop local businesses. For instance, Pokrovsk reimbursed the interest on business loans within a joint programme with Privatbank, the largest state bank in the country.

Andriy Silych, the mayor of Vuhledar, is open to switching some of  the municipal buildings to green energy and also aims to develop IT education. ‘We have to keep youth in our towns’, he explained.

There is a general understanding that the regions have to transform. In May 2019, six coal mining towns in eastern Ukraine and a number of local NGOs established a Platform for Sustainable Development of Coal Towns of Donetsk Region. This partnership is aimed at the transformation of the region’s socio-economic conditions and image.

‘We have to clearly understand our future’, the mayor of Vuhledar explains. ‘I talk to our colleagues from Romania, Germany. They at least understand their perspectives for 10 to 15 years. Our mining towns lack this vision’.

Investing in the old coal economy may harm the medium- and long-term prospects for the development of the Donbas region. The region will thus be ‘unable to compete with more innovative regions of Europe and the world’, Liudmyla Biletska, the mayor of Novohrodivka, said after the presentation of the Platform in May 2019.

The Platform is supposed to help the mining towns lobby for their vision and communicate their needs to the government. It also aims to invite innovative enterprises to the mining towns, develop the green energy sector and support those who suffer from structural changes associated with the transition process. In March 2020, the seventh coal town joined the Platform. The association now includes all key towns in the region where coal is extracted.

In July 2020, the seven mining towns (Dobropillia, Myrnohrad, Novohrodivka, Pokrovsk, Selydove, Toretsk and Vuhledar), announced that they will start developing a joint transformation strategy.

‘It is a foundation for the future transition’, says Kostiantyn Krynytskyi, Head of the Energy Department at Ecoaction, a Ukranian environmental NGO. The regional initiative may become a driving force that will eventually lead to the implementation of the recommendations for a just transition in the region.

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