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Business pointed out some problems with the implementation of the EU Greenhouse Gas Monitoring Mechanism

18/ 02/ 2022
  On January 1, 2021, the Law on Principles of Monitoring, Reporting, and Verification of Greenhouse Gas Emissions came into force, which was the first step for the launch of emissions trading in Ukraine. By March 31, 2022, companies must submit the first verified reports together with the approved monitoring plans for the previous year. At the same time, the EBA member companies currently face a range of risks that can negatively affect both the implementation of this regulation and the activities of companies. First, there are refusals to approve monitoring plans. The Ministry of Environment is reluctant to approve standard monitoring plans, thus causing non-compliance with deadlines. Second, there is an insufficient number of verifiers. As of today, only three verifier companies are accredited under DSTU ISO 14065: 2015, and two of them have emerged in the last two weeks. In fact, companies subject to the law have been deprived of the opportunity to pre-tender and select a contractor, and the market for these services does not look competitive enough. Another question is whether 400 companies will be able to get quality emissions verification services from the three verifiers within 1.5 months? It is probably necessary to either extend the reporting deadlines or provide conditions for the temporary submission of unverified reports. Third, there may be differences in approaches to calculating and paying the CO2 tax. Under tax law, companies are required to file quarterly tax returns on CO2 emissions. However, there has been no clear single methodology for calculating emissions for a long time. Now after the introduction of unified approaches, the data of some companies may change significantly. Given recent events, there are fears that this will not be another reason for claims from the tax inspection. Therefore, businesses need clarification on the calculation and payment of the environmental tax for CO2 emissions. Fourth, there is the possibility of sanctions from the State Environmental Inspectorate of Ukraine. All the above contradictions will obviously negatively affect the willingness of business to comply with the law. This, in turn, may lead to the application of sanctions against companies, particularly, by the State Environmental Inspectorate. Therefore, it would be appropriate to exclude relevant issues from the subject of inspections of environmental inspectors. Olga Boiko. EBA Industrial Ecology and Sustainable Development Committee Coordinator. The creation of a quota market is not only our European integration commitment, but it is also perhaps the only chance for Ukrainian exporters to ease the application of the EU Carbon Border Adjustment Mechanism (CBAM) to their products. After all, only verified data on CO2 emissions will allow companies to prove the effectiveness of measures taken to decarbonize production and maintain a competitive position in the European market. We cannot delay the reform, especially in the current economic conditions. That is why the European Business Association appealed to the Prime Minister to intervene and foster the dialogue with all the stakeholders, including business, the Ministry of Environment, the State Environmental Inspectorate. We hope that the situation will be resolved shortly and in 2022 we will be able to obtain the first verified data on greenhouse gas emissions to further launch the quota market.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

On January 1, 2021, the Law on Principles of Monitoring, Reporting, and Verification of Greenhouse Gas Emissions came into force, which was the first step for the launch of emissions trading in Ukraine.

By March 31, 2022, companies must submit the first verified reports together with the approved monitoring plans for the previous year.

At the same time, the EBA member companies currently face a range of risks that can negatively affect both the implementation of this regulation and the activities of companies.

First, there are refusals to approve monitoring plans. The Ministry of Environment is reluctant to approve standard monitoring plans, thus causing non-compliance with deadlines.

Second, there is an insufficient number of verifiers. As of today, only three verifier companies are accredited under DSTU ISO 14065: 2015, and two of them have emerged in the last two weeks. In fact, companies subject to the law have been deprived of the opportunity to pre-tender and select a contractor, and the market for these services does not look competitive enough. Another question is whether 400 companies will be able to get quality emissions verification services from the three verifiers within 1.5 months? It is probably necessary to either extend the reporting deadlines or provide conditions for the temporary submission of unverified reports.

Third, there may be differences in approaches to calculating and paying the CO2 tax. Under tax law, companies are required to file quarterly tax returns on CO2 emissions. However, there has been no clear single methodology for calculating emissions for a long time. Now after the introduction of unified approaches, the data of some companies may change significantly. Given recent events, there are fears that this will not be another reason for claims from the tax inspection. Therefore, businesses need clarification on the calculation and payment of the environmental tax for CO2 emissions.

Fourth, there is the possibility of sanctions from the State Environmental Inspectorate of Ukraine. All the above contradictions will obviously negatively affect the willingness of business to comply with the law. This, in turn, may lead to the application of sanctions against companies, particularly, by the State Environmental Inspectorate. Therefore, it would be appropriate to exclude relevant issues from the subject of inspections of environmental inspectors.

Olga Boiko EBA Industrial Ecology and Sustainable Development Committee Coordinator
The creation of a quota market is not only our European integration commitment, but it is also perhaps the only chance for Ukrainian exporters to ease the application of the EU Carbon Border Adjustment Mechanism (CBAM) to their products. After all, only verified data on CO2 emissions will allow companies to prove the effectiveness of measures taken to decarbonize production and maintain a competitive position in the European market. We cannot delay the reform, especially in the current economic conditions. That is why the European Business Association appealed to the Prime Minister to intervene and foster the dialogue with all the stakeholders, including business, the Ministry of Environment, the State Environmental Inspectorate.

We hope that the situation will be resolved shortly and in 2022 we will be able to obtain the first verified data on greenhouse gas emissions to further launch the quota market.

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

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