Buildings

The building and built environment sector in Ukraine is at a critical point of potential transformation. The large-scale destruction caused by Russia's full-scale invasion has created unprecedented challenges, but at the same time has opened up opportunities for systemic renewal, with a focus on sustainability, resilience and energy efficiency. More than €80 billion is needed to modernise and rebuild the housing stock. Given the scale of the investment required, the only realistic path forward is through the synergistic efforts of the state, local government, donors, communities and the private sector, which would allow for large-scale implementation of comprehensive solutions for thermal modernisation and sustainable restoration.

Recent years have seen important positive developments. In December 2023, the Cabinet of Ministers of Ukraine approved the Long-Term Strategy for Thermal Modernisation of Buildings until 2050, which provides a framework for the systematic renovation of the housing stock and public facilities in the long term. Another important step was the introduction, on 1 April 2025, of requirements for nearly zero-energy buildings (NZEB). The standard remains voluntary, but will eventually bring new and renovated buildings closer to modern EU energy efficiency standards, providing for high levels of thermal insulation, the use of renewable energy sources, modern engineering solutions and minimisation of energy consumption from fossil fuels. 

In addition, public support for improving energy efficiency has intensified through new programmes to finance autonomous energy sources and storage facilities. In particular, thanks to initiatives by the Energy Efficiency Fund (the Green Home programme), 5-7-9 credit instruments, and state bank programmes, hundreds of condominiums and households have been able to partially, or completely, secure their own electricity supply using green energy. Thanks to international technical assistance projects, a number of modernisation and new construction projects have been implemented using new approaches and standards, some of which are better than the current state standards.

Despite the adoption of a number of important documents and the updating of state building codes and standards (DBNs), in practice the construction industry still functions in a fragmented manner, and innovative methods in construction are being implemented slowly. The quality of construction and technical supervision remains inadequate at the project implementation stage. In addition, improper maintenance of buildings often leads to rapid degradation of networks and equipment. Energy efficiency is another critical component: most existing buildings have high energy consumption, public facilities are often underheated, and residential and commercial properties are overheated. At the same time, energy management and consumer monitoring mechanisms are not applied systematically or are completely absent.

Updates to building standards are progressing slowly. Although the European NZEB standard has already been adopted, the current DBNs are not in line with it and remain too strict or outdated. High energy standards are not yet common practice in new construction, which may lead to the need for significant modernisation of such buildings in the near future. The lack of an integrated approach in both standards and urban planning complicates the implementation of sustainable solutions.

Changes to master plans and detailed plans for territories are made mainly without taking into account social, environmental and economic aspects, often in the interests of developers. Issuing building permits based on detailed plans for territories, rather than master plans, creates risks of corruption and hinders long-term integrated community planning. Another important aspect is the involvement of citizens in the recovery process. Currently, public participation is limited to information sharing; real inclusion in decision-making is critical to achieving the principle of ‘building back better. Communities need support in setting sustainable priorities, advocating for quality decisions, and accessing data and decision-making tools.

Finally, the environmental component of reconstruction still remains on the periphery of the discourse. Construction waste recycling is practically non-existent due to a lack of infrastructure, insufficient regulatory documents, technical difficulties in obtaining materials of uniform quality, environmental risks, and a lack of economic incentives to use waste. At the same time, the production of new materials with high carbon emissions, especially in large-scale reconstruction, will create an additional burden on the environment. The potential of innovations such as the use of materials from local plant raw materials for the manufacture of insulation and prefabricated building components with a low carbon footprint is not being realised due to barriers in regulations, financing and awareness.

Institutional and regulatory

• Lack of demand and incentives for the design and construction of buildings with high energy performance.

• Lack of quality technical control during the construction phase.

• Current building codes are not fully aligned with modern sustainable building standards, taking into account the planning of the entire life cycle of a building.

• Fragmentation of the regulatory environment, lack of comprehensive and systematic updating of standards aimed, in particular, at reducing the energy consumption of buildings.

• Imperfect urban planning, often subordinated to the private interests of developers.

• Limited availability of open geodata, access to utility network maps and digital planning tools, especially during wartime.

• Inadequate approaches to budgeting for project and cost estimates, construction projects and other purchases using local and state budget funds, based on outdated methods of estimating work costs.

• Insufficient regulation of the use of secondary materials in construction.

• Lack of a methodology for calculating the embodied carbon of building materials in accordance with EU standards.

• Lack of clear quality standards for recycled materials.

• Uncertain legal status of materials from destruction zones.

• Shortage of qualified specialists in the field of construction.

Energy and environmental 

• High energy consumption of buildings.

• Low level of implementation of energy management and energy monitoring in most communities.

• Lack of financial incentives and models for implementing energy efficiency measures.

• Distortion of energy markets due to PSO and regulated tariffs.

• Lack of monitoring of actual savings achieved through implementation of energy efficiency measures.

• Construction waste is practically not recycled, and there is no recycling infrastructure.

• Construction materials with high carbon content (concrete, steel, glass), lack of priority for environmentally friendly alternatives.

• Limited application of traceability principles in construction material supply chains.

Social and behavioural

• There are no incentives for the construction of energy-efficient housing. The lack of long-term cheap loans stimulates demand and supply for cheap, rather than energy-efficient, housing. 

• Low awareness among the population, local authorities and construction clients regarding green building certification, in particular its energy and resource efficiency, sustainable development, and the possibilities of using materials from demolition and dismantling of buildings.

• Lack of support institutions — specialised agencies providing assistance in improving the energy efficiency of buildings, such as one-stop shops.

• The lack of personal safety and the threat of shelling encourages the construction of concrete, impact-resistant housing rather than environmentally friendly housing. 

• Lack of motivation among energy suppliers to save energy on the consumer side.

• Lack of demonstration projects showing the successful use of recycled waste.

Financial

• Lack of financial instruments for households and municipalities.

• Administratively underpriced energy tariffs discourage the population from investing in energy efficiency.

• Lack of economic incentives for citizens receiving social assistance to implement energy efficiency measures.

• ESCO mechanisms do not work in the district heating sector due to a lack of incentives.

• Lack of financial incentives to increase the competitiveness of secondary (reused) materials compared to primary materials. 

Objective: Facilitate the development of high-quality, energy-efficient and sustainable new construction in line with modern European standards and country needs

1.1. Introduction of standards for nearly zero-energy buildings (NZEB) and zero-emission buildings (ZEB) 

• Testing of standards on public buildings and social housing facilities with a view to further scaling up, amending building codes and ensuring further compliance with EU standards.

• Providing financial incentives for pilot projects based on NZEB and ZEB standards, in particular through preferential loans and grants. 

• Setting a transition period after which NZEB requirements will become mandatory.

• Preparation and definition of a transition period prior to the adoption of the updated EU Directive 2024/1275 (Directive on the energy performance of buildings), including preparation for implementation of the new European standard for zero-emission buildings (ZEB).

• Training specialists to implement NZEB and ZEB standards through the development of special training programmes and capacity building.

• Preparing the legislative framework for implementation of rules aimed at reducing carbon emissions throughout the whole life cycle of buildings.

• Refining the methodology for determining the energy efficiency of buildings with current national standards in the field of energy efficiency, including the application of the 52000 family of standards.

1.2. Control of construction quality and compliance with declared design characteristics

• Raising awareness among designers and developers about the use of, and compliance with, energy efficiency standards in construction, as well as raising general public awareness.

• Raising awareness among local authorities about green building certification, and establishing requirements for developers at the stage of allocating land for construction and commissioning facilities. 

• Strengthening the responsibility of developers for non-compliance with energy efficiency requirements when commissioning a building (if the energy efficiency class of the building in the energy certificate, which is developed when the building is commissioned, differs from that specified in the project documentation).

1.3. Ensuring compliance with legislation regarding informing owners and tenants about the energy efficiency level of buildings 

• Strengthening control over the placement of energy efficiency certificates in a place accessible to consumers by ensuring compliance with paragraph 10 of Article 7 of the Law of Ukraine ‘On Energy Efficiency of Buildings’.

• Encouraging real estate buyers to purchase energy-efficient housing by strengthening control over compliance with paragraph 2 of Article 25-1 of the Law of Ukraine ‘On Advertising’.

• Monitoring lease agreements for the presence of information on the energy efficiency class of the building to ensure compliance with paragraph 4 of Article 8 of the Law of Ukraine ‘On Energy Efficiency of Buildings’.

1.4. Promoting green certification at the housing design stage to launch the green construction market and demonstrate its advantages

• Conducting an information campaign for local government employees on existing green construction certification systems.

• Creating mechanisms to support projects that meet the criteria of international sustainability assessment systems (in particular, LEED, BREEAM, DGNB).

• Implementation of pilot green construction projects in public and residential buildings, as well as social housing facilities.

• Promotion of the Life Cycle Assessment (LCA) tool in construction.

1.5. Introduction of circular economy principles in construction

• Ensuring the process of bringing legislation and the regulatory framework in line with EU Regulation 2024/3110 to harmonise requirements for construction products, in particular regarding the introduction into circulation and use of secondary materials.

• Introduction of digital passports for construction materials to ensure transparency, traceability of origin and the circularity potential of materials.

• Development of a national platform for the certification of construction materials according to European standards, with initial piloting in several regions.

• Integration of criteria for repairability and reuse into state standards and tender procedures for reconstruction.

• Strengthening market surveillance and creating a database of counterfeit and dangerous construction products with restrictions on their use.

• Introducing support programmes for innovative practices, in particular alternative materials, 3D printing, and solutions for SMEs in the field of sustainable reconstruction.

• Introduction of audits on the reuse of materials before the demolition of buildings, as well as registers of materials from demolished buildings.

• Co-financing of pilot projects for the construction of housing based on the principles of the circular economy, in particular through public-private partnerships, social investment, municipal budgets and state support programmes.

• Inclusion of circular criteria in public procurement in construction, taking into account the life cycle of materials and environmental characteristics.

Decisions are taken by: the Verkhovna Rada of Ukraine, Ministry of Community and Territorial Development of Ukraine, Ministry of Economy of Ukraine, State Service of Ukraine for Food Safety and Consumer Protection, State Agency for Energy Efficiency and Energy Saving of Ukraine, State Architectural and Urban Planning Inspectorate of Ukraine, and local self-government bodies.

Objective: Reduce energy demand through quickly implementable measures.

2.1. Raise public awareness of the energy performance of buildings

• Launch an express energy efficiency rating system for buildings.

• Develop and conduct energy efficiency certification of existing multi-family residential buildings by the end of 2027 to inform owners about the energy performance of their buildings.

• Regulate heat consumption – install individual heating units (IHUs) in all multi-family buildings connected to central heating systems.

• Introduction of standard IHU solutions for each standard type of building, carrying out measures to improve thermal insulation of heating and hot water pipes.

• Promotion of the introduction of radiator metering with consumption control – heat distribution devices.

• Introduction of an energy monitoring system for continuous analysis of building energy efficiency.

• Introduction of integrated information, technical and financial assistance to citizens through the creation of specialised assistance institutions, such as ‘one-stop shops’ for energy efficiency in buildings. Creation of at least one such institution in each region. Ensuring that vulnerable groups of the population are covered by the services of these institutions.

2.2. Introduction of financial incentives for energy efficiency measures and for measures promoting the implementation of RES projects in buildings

• Continuation of the Energy Efficiency Fund through annual allocations from the State Budget of Ukraine in the amount of at least UAH 1 billion.

• Introduction of preferential lending for implementation of energy efficiency measures through the Decarbonisation Fund.

• Support for co-financing programmes at regional and community levels, revolving funds.

• Introduction of a programme to assist citizens in need of social protection (receiving housing subsidies) with energy efficiency measures.

2.3. Encouraging installation of renewable energy sources to replace buildings' own energy needs

• Abolition of VAT on imported RES system components for a specified period if such components are not produced in Ukraine.

• While maintaining subsidies and cross-subsidies for energy for consumers, provide subsidies for energy produced from RES in an amount commensurate with subsidies for traditional energy sources for the population (provided through the PSO mechanism and subsidies).

• Reform of drilling fees for geothermal heat pumps.

2.4. Reconstruction of existing buildings and their adaptation to public needs

• Develop a financial and legal mechanism for transforming existing buildings that are not used for their intended purpose into social housing with high energy efficiency and inclusiveness standards, including the conversion of non-residential premises into residential premises.

• Support the development of innovative approaches to large-scale reconstruction and renovation of buildings, such as industrial prefabricated construction.

2.5. Reform of the construction pricing system

• Bring national rules on construction pricing into line with international standards. 

Decisions are taken by: the Ministry of Community and Territorial Development of Ukraine,  Ministry of Economy of Ukraine, State Agency for Energy Efficiency and Energy Saving of Ukraine, and local self-government bodies.

Association "Energy Efficient Cities of Ukraine", Centre for Environmental Initiatives "Ecoaction", Civic Network "OPORA", NGO Ecoclub, NGO Ecosmart, Green Growth Comms, Helvetas, Razom We Stand, ReThink, Ukrainian Green Building Council (UGBC), Urban Reform, as well as experts of Eindhoven University of Technology, Green Transition Office