Support for Energy Sector Startups: International Legal Practices

Abstract

Problem setting. Global challenges related to climate change, energy dependency, growing demand for clean energy, and the necessity to reduce greenhouse gas emissions require the transformation of the energy sector through the implementation of innovative technologies. In this context, energy startups play a special role as flexible and high-tech entities capable of promptly developing and implementing non-standard solutions. However, despite their significant potential, such enterprises face numerous barriers—regulatory, financial, institutional, and informational—which hinder their development. In most countries, including Ukraine, the legal and organizational framework for innovation in the energy sector remains fragmented and insufficiently effective. It is therefore critical to study international experience and seek models that can be adapted to Ukrainian realities to create a favorable environment for the development of energy startups. Тarget of the research is to analyze modern international approaches to the legal and institutional support of energy startups, identify effective mechanisms for promoting their development, and formulate practical recommendations for their adaptation and implementation within Ukraine’s national legal system. Particular attention will be paid to examining European innovation support programs, such as Horizon Europe, as well as legal instruments for stimulating ‘green’ entrepreneurship, which can form the basis for developing a national policy in the field of energy innovation Аnalysis of recent researches and publications. E. Beckstedde, M. K. Ramirez, R. Cossent, Y. Vanschonwinkel, L. Meeus analyze sandbox platforms as a tool for legislative modernization that adapts legal mechanisms to rapid changes in technological development (renewable energy, smart-grids, blockchain services, etc.). In contrast, this article will reveal the characteristic features and types of international support for startups in the energy sector in the context of international law and law enforcement activities. P. O. Okedele, O. R. Aziza, P. Oduro, A. O. Ishola analyze global and regional legal frameworks that regulate the energy transition. The authors explore how these frameworks can promote growth and equity in developing countries. They consider financial mechanisms, the role of national legal systems, and challenges related to balancing energy access, economic growth, and environmental protection. Although the article does not focus exclusively on startups, it creates an important context for understanding the legal field in which they operate In contrast, this article’s emphasis is specifically on the activities of startups as drivers of innovation in the energy sector. Аrticle’s main body. The justification for state support of startups is based on the following principles:1. Overcoming «Valleys of Death»: This refers to the critical stage between successful laboratory research and commercialization, where innovative projects often face a lack of funding and high risks. State support helps overcome these market failures. 2. Creating New Markets: Innovations give rise to new economic sectors, which in turn create jobs, increase tax revenues, and stimulate economic growth. 3. Ensuring Energy Security: Diversifying energy sources and implementing domestic technologies reduce dependence on imports and enhance the resilience of the energy system. 4. Fulfilling International Obligations: Signatory countries to international agreements, such as the Paris Agreementand treaties concerning the UN Sustainable Development Goals, are obligated to promote decarbonization and the development of «green» technologies, which is directly linked to supporting energy startups. The legal frameworks of these agreements often serve as the basis for national support programs. The legal foundations for state support of innovations are typically enshrined in national legislation (laws on innovation, state aid laws, tax codes) and international treaties. International experience demonstrates a variety of approaches to supporting energy startups that can be adapted to national conditions. For instance, the European Union is a leader in forming comprehensive legal and financial instruments to support innovation, particularly in the energy sector. An analysis of foreign and international experience indicates the existence of a number of effective legal and institutional instruments for supporting energy startups. For Ukraine, with its aspiration for energy independence and integration into the European energy space, the implementation of these practices is critically important. Сonclusions and prospects for the development. An extensive analysis of international experience reveals the existence of effective legal and financial mechanisms for supporting energy sector startups. The key elements of a successful policy include: targeted financing for startups at various stages of their development, the introduction of effective tax incentives for investors, flexible and predictable regulation that incorporates «regulatory sandboxes,» strong institutional support through a network of incubators and accelerators, and active international cooperation to attract resources and exchange knowledge. Implementing these approaches into Ukraine’s national legislation will significantly accelerate the innovative development of the energy sector, help ensure energy security and sustainability, reduce dependence on traditional energy sources, and achieve ambitious goals for sustainable development and decarbonization. Ukraine has significant potential for developing energy innovations, and proper legal and institutional support for startups is crucial to unlocking this potential.