Today Ukraine faces numerous environmental problems that affect its economic performance and human health. The energy-intensive and resource oriented economy operates the outdated industrial infrastructure. Besides that there is a large share of low quality coal in the energy balance. All these factors along with lax environmental regulation cause significant levels of air pollution and hazardous wastes. The research which is conducted under the FP7 Marie Curie International Incoming Fellowship Scheme aims to provide an integrated assessment of trends in economic growth and air pollution in Ukraine, health effects because of discharge of criteria air pollutants (i.e., SO2, NOx, CO, NMVOC, PM2.5, PM10) and economic implications of emission reduction policies both on country and international levels. The research is based on the ICES model developed in FEEM.