Salus populi suprema lex . Marcus Tullius Cicero

Round Table "On the way to implementation of the emission trading system in Ukraine"
Wednesday, 19 October 2011 21:00

State Environmental Investment Agency (SEIA) in cooperation with the World Bank and the Fund of environmental investments organized a round table to discuss the creation and implementation of carbon market in Ukraine (Kyiv on October, 18, 2011). Representatives of government, international financial institutions, EC Delegation in Ukraine, the public and experts were invited for the discussion.

Opening remarks were presented by Mrs T. Suluhiya (World Bank program coordinator) and Mr. S. Orlenko (Chairman of the SEIA) who expressed positive attitude towards the initiative to develop and implement emission trading system (ETS) in Ukraine.

Issues that were discussed during the round table: Social-economic development of Ukraine – priorities of economic modernization; strategy of low carbon growth in Ukraine; the state's role in providing a national carbon market operation; the draft law of Ukraine "On regulation of energy efficiency"; international organizations support of Ukraine’s initiatives on establishing a carbon market; role of the public in creating a carbon market; partnership for market readiness (PMR).

Social-economic development of Ukraine: priorities of economic modernization (speaker J. Zhalilo, 1- deputy director of the National Institute for Strategic Studies)

Positive dynamics of key macroeconomic indicators of Ukraine's economy after the crisis "failure" of 2009 was emphasized. The issues of slow recovery of domestic production, significant power consumption of the national economy, inefficient use of energy; the need to modernize Ukraine's economy was discussed.

During discussion of this question it was reported that $ 5 million of US dollars from the World Bank will be allocated for implementation of the main basic components of the system of emissions trading, to develop a national plan of distribution of quotas, a system of monitoring, reporting and verification in Ukraine.

The issue of Ukraine’s low carbon growth (Speaker A. Gassan-Zade, an international expert)

It was reported that Ukraine’s low carbon growth strategy will be developed. Such a strategy should combine the priorities in the field of climate change and national economic growth priorities, while achieving reductions of greenhouse gases is not a threat to socio-economic development. Low carbon development strategies in Ukraine should take into account national priorities, such as: increasing of energy independence, energy efficiency, economic competitiveness, job vacancy creation, economic growth. During discussing of this issue the expert said that the rapid introduction of ETS in Ukraine is very unlikely.

The state's role in providing a national carbon market (speaker A. Khabatyuk, head of the GHG inventory department of the SAEI)

It was reported that the obligations of the state at the international level do not stimulate the reduction of greenhouse gases (GHGs) in Ukraine. It is already known that GDP growth in Ukraine is not necessarily accompanied by an increase in GHG emissions since carbon intensity of Ukraine's GDP is high enough. The role of the state in reduction of GHG emissions is to maintain renewable energy, support energy conservation, and establish the tax on GHG emissions. The existing tax on CO2 emissions in Ukraine does not stimulate the GHG reductions (in Ukraine – 0,1 UAN for 1 ton of CO2, in the EU - 115 UAH for comparison - 1 ton of CO2). It was noted that sanctions during the functioning of the carbon market must be clearly defined, as well as the registry of GHG should be put into operation. The most important - is the issue of establishing effective emissions trading system, without is the precondition for its linking with any other progressive ETS. The most problematic aspects are: the effective system for collecting, reporting and verification, and distribution of permits for emissions. The most important tasks of the state in creating a carbon market: the creation of effective regulatory field, collecting and processing information, ensuring equitable and efficient allocation of carbon units among market participants, supervision and regulation of the carbon market, the adjustment vector of its evolution with the need to increase energy efficiency and competitiveness of domestic economy.

On the question, asked by the Representative of National Ecological Center of Ukraine (NECU) and Working Group of NGOs on climate change in Ukraine - K. Rudnitska, on the absolute target of GHG emissions reduction in Ukraine until 2020 – there was no specific number named. Also the question of introducing a system of monitoring, reporting and verifying of GHG emissions and concrete steps in this direction was raised, and the public was informed that the reporting system is operating in Ukraine, a system of GHG verification should only be introduce in Ukraine.

Legal analysis of the draft law of Ukraine "On regulation of energy saving" (speaker A. Vasilenko, General Director of "PNBK")

Speaker, who participated in the preparation of the bill, provided the information about the contents of the bill.

Expert Advisory Center "Legal Analytics" (M. Bulgakova) asked a question about establishing a national quota of greenhouse gas emissions in Ukraine and whether other branches except executive power, will be involved in the operation of ETS in Ukraine. Public was informed that the law will not contain the allowable amount of GHG emissions; and on the national level there are enough other bodies and supervisory authorities that can perform the respective controlling functions over the ETS implementation when the system starts working.

International organizations support of Ukraine's initiatives on establishing a carbon market (speaker S. Volkov, UNDP, Ukraine)

It was reported that significant funds to establish ETS in Ukraine will be allocated for this specific purpose. On the issue raised by M.Hvorov – member of the Working group of NGOs on climate chnage in Ukraine, on the possibility of NGOs to participate in the relevant processes, public was informed that it will be possible through public participation in the relevant tender procedures announced by the UN Program in Ukraine, in case of selection, as well as public representatives can be involved as an experts.

Public role in the establishing of carbon market (speaker S. Kurulenko, chairman of the public council to SEIA)

It was reported that the matter of ETS establishing in Ukraine will be discussed at a meeting of public council to SAEI. Currently, the public supports the initiative of adopting a law that would regulate these issues. The public will use the existing leverage and control, under current legislation of Ukraine to execute public control over ETS operation in Ukraine.

Christina Rudnytska (NECU, deputy chairman of the Working group of NGOs on climate change) denied the aspect of the public support of the draft law "On regulation of energy saving", because, first of all, this issue was not discussed at public meeting and public representatives prepared a number of comments and propositions to the law draft, which is far from perfect for an effective ETS implementation in Ukraine.

Partnership for market readiness (PMR) (speaker C. Underwood, Consultant, World Bank)

It was reported that the partnership for market readiness (PMR) to create the preconditions for the introduction of ETS allocated significant funds (from 3 to 10 million U.S. dollars) in different countries. This global partnership provides funding in grants for capacity building and serves as a platform for the pilot implementation of market instruments in reducing GHG emissions. PMR measures include: assessment and training, technical components, institutional components and pilot testing of market instruments.