fbpx

Economy decarbonization should not be solely at the expense of business

29/ 04/ 2021
  This was stated by representatives of the EBA Industrial Ecology and Sustainable Development Committee at a meeting with Mr. Taras Kachka, Deputy Minister of Economic, Trade, and Agriculture of Ukraine - Trade Representative of Ukraine to discuss the draft of the second Nationally-Determined Contributions of Ukraine to the Paris Agreement (NDC-2). Thus, the draft NDC-2, submitted for public discussion, includes many comments of the business community, namely, regarding the energy and cement industries. At the same time, three alarming aspects still remain within the business concern. First, there is the lack of financial support to reduce greenhouse gas emissions by 65% on which the state plans to spend 102 billion euros. According to the contributors to the draft NDC-2, this amount was calculated based on the total amount of capital investments in Ukraine during 2010 - 2019. However, only UAH 24.8 billion (less than EUR 1 billion) was spent on decarbonization and air protection measures during this period according to the State Statistics Service. In our opinion, this is not justified, because in 2020 capital investment in Ukraine decreased by 38.2% and this negative trend will continue. And it will also mean that the climate goal can be met only at the cost of the economys decline. Thus, it is necessary to supplement the draft NDC-2 with a part on unlocking the mechanism of state aid to economic entities for the implementation of environmental measures, which is enshrined in law since 2014. Secondly, the draft NDC-2 does not sufficiently elaborate on sectoral policies. In previous versions of NDC-2, it was planned to allocate 379 billion euros to reduce emissions by 72%, and now we see that ​​more than three times less amount of money, namely 102 billion euros, are required to reduce emissions by 65%. This has been made possible by a reduction in climate and financial commitments for the construction sector, from € 85.7 billion to € 16 billion, and for transport, from € 208 billion to € 3 billion. It turns out that Ukraine plans to fulfill the goal of decarbonization of the economy mainly in the energy, heavy industry, and agriculture sectors, obviously at the expense of private funds. Although, the construction sector is one of the main emitters of CO2 in Ukraine, and transport emissions in our country are basically not controlled. Besides, the draft NDC-2 does not reflect such measures that will directly affect the reduction of greenhouse gas emissions. Thus, we are talking about the use of secondary raw materials (industrial waste) in road construction, the development of alternative fuels from solid waste and industrial waste RDF and SRF in the cement industry; development of projects on waste recycling for agriculture and animal husbandry; introduction of minimum environmental requirements (European standard) in the automotive industry, etc. Third, the draft NDC-2 does not take into account the potential need to adjust baseline CO2 emissions. Until 2021, various methods (direct measurements, calculations) were used to calculate emissions. The Law on Monitoring, Reporting, and Verification came into force on January 1, which is the first step towards launching the greenhouse quota market. It envisages, in particular, the introduction of specific methods for calculating greenhouse gas emissions for companies. In our opinion, the adjusted approach to the collection of emissions data will affect the overall indicators of the National Inventory of Anthropogenic Greenhouse Gas Emissions as it will most likely show an increase in emissions. Nevertheless, we will receive more or less correct information on emissions only in the spring of 2022. Therefore, it is necessary to leave the possibility to take into account this error limit when setting the overall goal of reducing greenhouse gas emissions in the framework of NDC-2. Olga Boiko. EBA Industrial Ecology, and Sustainable Development Committee Coordinator. For about a year now, we have cooperated closely with the working group at the Ministry of Environment on drafting NDC-2. In our understanding, the NDC-2 should be a synthesis of current capacities and plans for the economic development of the state. Therefore, the climate goal must be realistic and balanced. In this regard, Ukraine needs to change its approach to setting such a goal, which would be based on the involvement of all sectors of the economy and relevant authorities, a realistic assessment of financial opportunities, and the current economic situation. We hope that our proposal will form the basis for the preparation of NDC-2, which should start in 2022. Ukraine still has a few months to finalize the draft NDC-2. We hope that business proposals will be reflected in this document.    Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.        

This was stated by representatives of the EBA Industrial Ecology and Sustainable Development Committee at a meeting with Mr. Taras Kachka, Deputy Minister of Economic, Trade, and Agriculture of Ukraine – Trade Representative of Ukraine to discuss the draft of the second Nationally-Determined Contributions of Ukraine to the Paris Agreement (NDC-2).

Thus, the draft NDC-2, submitted for public discussion, includes many comments of the business community, namely, regarding the energy and cement industries. At the same time, three alarming aspects still remain within the business concern.

First, there is the lack of financial support to reduce greenhouse gas emissions by 65% on which the state plans to spend 102 billion euros. According to the contributors to the draft NDC-2, this amount was calculated based on the total amount of capital investments in Ukraine during 2010 – 2019. However, only UAH 24.8 billion (less than EUR 1 billion) was spent on decarbonization and air protection measures during this period according to the State Statistics Service. In our opinion, this is not justified, because in 2020 capital investment in Ukraine decreased by 38.2% and this negative trend will continue. And it will also mean that the climate goal can be met only at the cost of the economy’s decline. Thus, it is necessary to supplement the draft NDC-2 with a part on unlocking the mechanism of state aid to economic entities for the implementation of environmental measures, which is enshrined in law since 2014.

Secondly, the draft NDC-2 does not sufficiently elaborate on sectoral policies. In previous versions of NDC-2, it was planned to allocate 379 billion euros to reduce emissions by 72%, and now we see that ​​more than three times less amount of money, namely 102 billion euros, are required to reduce emissions by 65%. This has been made possible by a reduction in climate and financial commitments for the construction sector, from € 85.7 billion to € 16 billion, and for transport, from € 208 billion to € 3 billion. It turns out that Ukraine plans to fulfill the goal of decarbonization of the economy mainly in the energy, heavy industry, and agriculture sectors, obviously at the expense of private funds. Although, the construction sector is one of the main emitters of CO2 in Ukraine, and transport emissions in our country are basically not controlled.

Besides, the draft NDC-2 does not reflect such measures that will directly affect the reduction of greenhouse gas emissions. Thus, we are talking about the use of secondary raw materials (industrial waste) in road construction, the development of alternative fuels from solid waste and industrial waste RDF and SRF in the cement industry; development of projects on waste recycling for agriculture and animal husbandry; introduction of minimum environmental requirements (European standard) in the automotive industry, etc.

Third, the draft NDC-2 does not take into account the potential need to adjust baseline CO2 emissions. Until 2021, various methods (direct measurements, calculations) were used to calculate emissions. The Law on Monitoring, Reporting, and Verification came into force on January 1, which is the first step towards launching the greenhouse quota market. It envisages, in particular, the introduction of specific methods for calculating greenhouse gas emissions for companies. In our opinion, the adjusted approach to the collection of emissions data will affect the overall indicators of the National Inventory of Anthropogenic Greenhouse Gas Emissions as it will most likely show an increase in emissions. Nevertheless, we will receive more or less correct information on emissions only in the spring of 2022. Therefore, it is necessary to leave the possibility to take into account this error limit when setting the overall goal of reducing greenhouse gas emissions in the framework of NDC-2.

Olga Boiko EBA Industrial Ecology, and Sustainable Development Committee Coordinator
For about a year now, we have cooperated closely with the working group at the Ministry of Environment on drafting NDC-2. In our understanding, the NDC-2 should be a synthesis of current capacities and plans for the economic development of the state. Therefore, the climate goal must be realistic and balanced. In this regard, Ukraine needs to change its approach to setting such a goal, which would be based on the involvement of all sectors of the economy and relevant authorities, a realistic assessment of financial opportunities, and the current economic situation. We hope that our proposal will form the basis for the preparation of NDC-2, which should start in 2022.

Ukraine still has a few months to finalize the draft NDC-2. We hope that business proposals will be reflected in this document.

  

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

 

 

 

 

If you have found a spelling error, please, notify us by selecting that text and pressing Ctrl+Enter.

Start
in the Telegram bot
Read articles. Share in social networks
0 Shares

Spelling error report

The following text will be sent to our editors: