EU climate policy is not only about new rules, it is about new opportunities for cooperation

30/ 11/ 2022

The European Business Association is building a new system platform for coordinating the plans of Ukrainian businesses and the European community on green economic transformation. Thus, an expert roundtable on the green recovery of Ukraine was held with the participation of European deputies, top-level experts, and Ukrainian business leaders. The engine for future recovery should be the economy based on the principles of the European Green Deal. Where Ukraine is on this way, how Europe can support the country and what are the benefits of the EGD for both parties – these were the topics discussed by business representatives, MEPs, and international experts on November 25 during the EBA Industrial Ecology and Sustainable Development Committee event Green Recovery of Ukraine for EU decarbonization. Ukraine continues to support the Green Deal The European Green Deal provides for a set of measures to make Europe the first carbon-neutral territory by 2050. This ambitious goal of the EU is shared by Ukraine, but the progress is slow. Thus, according to the data of the government monitoring system Pulse of the Agreement, in 6 years, Ukraine managed to fulfill only 47% of the Association agreement with the EU requirements in the field of environment, that is, less than half of its obligations. Meanwhile, the full-scale war did not divert Ukraine from the green transition. First of all, Ukrainian business is ready to join the implementation of the strategy to reduce emissions, but appropriate conditions must be created for this by both Ukrainian and European authorities. Thus, one of the biggest obstacles to this is the overregulation of the environmental sphere in Ukraine. Therefore, in the third edition of the White Paper on Environmental Policy Reform Deregulation of Environmental Legislation during the War and Reforms for European Integration, the EBA experts, in addition to key European integration reforms, focused on deregulation measures to accelerate green recovery in Ukraine. It includes namely, a revision of the EIA procedure, a moratorium on raising environmental standards, a moratorium on raising environmental tax rates, simplification of reporting, and reform of the subsoil use industry. Decarbonization as a realm for cooperation According to Hildegard Bentele, Member of the European Parliament, the idea of the Green Deal is not to pose new challenges to business, but to offer opportunities. Due to the war, many industries in Ukraine will have to be restored from scratch, so it is worth doing it considering environmental standards. The European Parliament understands that it is impossible to fulfill all the standards at once, so gradual solutions will be introduced because the strategic long-term goal is to decarbonize the economy, not to deindustrialize it. It is important to develop the European Emissions Trading System (EU ETS), which is based on a market approach. Thus, the EU does not plan to raise prices for carbon certificates for another 1-2 years and is ready to give financial incentives to those countries that will be the first to join the EU ETS. Therefore, the European Union still plans to make the carbon trading market global and hopes to cooperate with the United States and China in this context. Ukraine can become a reliable partner of the EU in the field of climate neutrality and energy security as it is ideally suited to achieve the RePower EU goals. According to Rainer Janssen, President of The Association of European Renewable Energy Research Centers (EUREC), the Ukrainian and European stakeholders need to cooperate in the development of both RES and new areas of alternative energy sources, such as bioenergy and green hydrogen. Thanks to its agricultural capacities, Ukraine has the potential to produce biomethane, which can be a replacement for natural gas. The key to solving the EU energy problems According to Rouven Stubbe, Consultant in the Energy & Climate team at Berlin Economics, the EU economy currently faces four challenges related to energy and decarbonization. First of all, this is the gas issue, Europe may not accumulate enough gas for the coming winter of 2023-2024 despite having some new LND terminals. At the same time, Ukraine has the largest underground gas storage facility in Europe, so cooperation between the EU and Ukraine will be key to replenishing the EUs gas reserves and increasing the security of supply for both parties. Besides, mechanisms should be developed to mitigate the price burden for both companies and households. It is very difficult to reduce energy prices while trying to maintain incentives to save gas and electricity. Microfinance long-term support from international partners will play a crucial role for Ukraine in this regard. In addition, the EU is concerned about the need to accelerate the development of renewable energy sources and plans to simplify the licensing and permitting procedure, as well as to classify such projects as of the highest public interest. Rebuilding supply chains is another challenge for the EU, particularly in terms of finding reliable suppliers of minerals. For some industries, such as battery production, a shortage of raw materials is projected for the next 2-3 years. Therefore, EU members and accession countries, such as Ukraine, as well as EU neighbouring countries, should look for ways to develop additional mining projects with the lowest possible environmental impact. There are powerful industrial companies in Ukraine that have taken certain steps to adapt to the green course even before 2022. In the future, Ukrainian businesses will continue to comply with EU environmental requirements, but given a full-scale war, it is extremely difficult. Therefore, the business hopes for an open dialogue with EU institutions to discuss opportunities to support decarbonization strategies for compliant companies. The European Business Association sincerely thanks all participants for the expert discussion! We will continue to cooperate to ensure that Ukraine is fully integrated into the European economic area and becomes a reliable partner of the EU in trade, climate neutrality, and energy security.

The engine for future recovery should be the economy based on the principles of the European Green Deal. Where Ukraine is on this way, how Europe can support the country and what are the benefits of the EGD for both parties – these were the topics discussed by business representatives, MEPs, and international experts on November 25 during the EBA Industrial Ecology and Sustainable Development Committee event “Green Recovery of Ukraine for EU decarbonization”.

Ukraine continues to support the Green Deal

The European Green Deal provides for a set of measures to make Europe the first carbon-neutral territory by 2050. This ambitious goal of the EU is shared by Ukraine, but the progress is slow. Thus, according to the data of the government monitoring system “Pulse of the Agreement”, in 6 years, Ukraine managed to fulfill only 47% of the Association agreement with the EU requirements in the field of environment, that is, less than half of its obligations.

Meanwhile, the full-scale war did not divert Ukraine from the green transition. First of all, Ukrainian business is ready to join the implementation of the strategy to reduce emissions, but appropriate conditions must be created for this by both Ukrainian and European authorities. Thus, one of the biggest obstacles to this is the overregulation of the environmental sphere in Ukraine. Therefore, in the third edition of the White Paper on Environmental Policy Reform “Deregulation of Environmental Legislation during the War and Reforms for European Integration”, the EBA experts, in addition to key European integration reforms, focused on deregulation measures to accelerate green recovery in Ukraine. It includes namely, a revision of the EIA procedure, a moratorium on raising environmental standards, a moratorium on raising environmental tax rates, simplification of reporting, and reform of the subsoil use industry.

Decarbonization as a realm for cooperation

According to Hildegard Bentele, Member of the European Parliament, the idea of the Green Deal is not to pose new challenges to business, but to offer opportunities. Due to the war, many industries in Ukraine will have to be restored from scratch, so it is worth doing it considering environmental standards. The European Parliament understands that it is impossible to fulfill all the standards at once, so gradual solutions will be introduced because the strategic long-term goal is to decarbonize the economy, not to deindustrialize it. It is important to develop the European Emissions Trading System (EU ETS), which is based on a market approach. Thus, the EU does not plan to raise prices for carbon certificates for another 1-2 years and is ready to give financial incentives to those countries that will be the first to join the EU ETS. Therefore, the European Union still plans to make the carbon trading market global and hopes to cooperate with the United States and China in this context.

Ukraine can become a reliable partner of the EU in the field of climate neutrality and energy security as it is ideally suited to achieve the RePower EU goals. According to Rainer Janssen, President of The Association of European Renewable Energy Research Centers (EUREC), the Ukrainian and European stakeholders need to cooperate in the development of both RES and new areas of alternative energy sources, such as bioenergy and green hydrogen. Thanks to its agricultural capacities, Ukraine has the potential to produce biomethane, which can be a replacement for natural gas.

The key to solving the EU energy problems

According to Rouven Stubbe, Consultant in the Energy & Climate team at Berlin Economics, the EU economy currently faces four challenges related to energy and decarbonization. First of all, this is the gas issue, Europe may not accumulate enough gas for the coming winter of 2023-2024 despite having some new LND terminals. At the same time, Ukraine has the largest underground gas storage facility in Europe, so cooperation between the EU and Ukraine will be key to replenishing the EU’s gas reserves and increasing the security of supply for both parties.

Besides, mechanisms should be developed to mitigate the price burden for both companies and households. It is very difficult to reduce energy prices while trying to maintain incentives to save gas and electricity. Microfinance long-term support from international partners will play a crucial role for Ukraine in this regard.

In addition, the EU is concerned about the need to accelerate the development of renewable energy sources and plans to simplify the licensing and permitting procedure, as well as to classify such projects as of the highest public interest.

Rebuilding supply chains is another challenge for the EU, particularly in terms of finding reliable suppliers of minerals. For some industries, such as battery production, a shortage of raw materials is projected for the next 2-3 years. Therefore, EU members and accession countries, such as Ukraine, as well as EU neighbouring countries, should look for ways to develop additional mining projects with the lowest possible environmental impact.

There are powerful industrial companies in Ukraine that have taken certain steps to adapt to the green course even before 2022. In the future, Ukrainian businesses will continue to comply with EU environmental requirements, but given a full-scale war, it is extremely difficult. Therefore, the business hopes for an open dialogue with EU institutions to discuss opportunities to support decarbonization strategies for compliant companies.

The European Business Association sincerely thanks all participants for the expert discussion! We will continue to cooperate to ensure that Ukraine is fully integrated into the European economic area and becomes a reliable partner of the EU in trade, climate neutrality, and energy security.