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What should be considered when launching the CO2 emissions trading in Ukraine?

20/ 12/ 2021
  Ukraine has pledged to reduce its greenhouse gas emissions by 65% by 2030 compared to 1990 levels. To achieve this target, it is estimated that the country will need 100 billion euros – which is mostly funds from the business. Meanwhile, other financing mechanisms are currently being worked out. Therefore, a scheme for greenhouse gas emission allowance trading (ETS) may be the most optimal tool for decarbonizing the economy. Moreover, this trading scheme is envisaged in the EU-Ukraine Association Agreement. In the EU, the emissions trading market was launched in 2005 but it is not static, and its design continues to be updated. Olga Boiko. EBA Industrial Ecology and Sustainable Development Committee Coordinator. The EBA closely monitoring the development of European legislation on greenhouse gas emission allowance trading. We are aware of the current problems faced by our European counterparts, namely, the sharp reduction in free quotas, which has already disrupted the competitiveness of companies and the loss of market share. In fulfilling our commitments, we must be very prudent and not hastily implement the ETS to prevent any damage to the domestic economy as it is not in the best condition. The implementation of the ETS in Ukraine should include four key points: comply with the ETS system in the EU in the context of providing free emission quotas, their distribution, targets, etc .; test the system by launching the pilot when transactions with greenhouse gas emission allowances are carried out with no financial consequences for system participants. targeted use of funds – ensure the transparent allocation of funds to be received by the state from the sale of quotas for greenhouse gas with priority for environmental modernization/energy efficiency of those companies that will acquire the quotas; coexistence of the ETS and CO2 emissions tax. Usually, the ETS participating companies are exempt from paying such a tax. And this should be provided for Ukrainian companies. This was discussed last week during a webinar on the introduction of a scheme for greenhouse gas emissions trading in Ukraine, organized by the Ministry of Environment which was joined by representatives of the European Business Association. The European Business Association thanks the Ministry of Environment for the initiative in organizing the meeting and hopes for further fruitful cooperation in the development of the market for greenhouse gas emission allowance trading to decarbonize the economy.   For reference: A scheme of greenhouse gas emission allowance trading is an economic tool to stimulate emission reductions. It implies the issuance of permits by the state for emissions of a certain number of tons of substances for companies participating in the scheme. With such permits, the latter can emit the permitted number of substances or sell their quota, reducing their emissions through modernization.

Ukraine has pledged to reduce its greenhouse gas emissions by 65% by 2030 compared to 1990 levels. To achieve this target, it is estimated that the country will need 100 billion euros – which is mostly funds from the business. Meanwhile, other financing mechanisms are currently being worked out. Therefore, a scheme for greenhouse gas emission allowance trading (ETS) may be the most optimal tool for decarbonizing the economy. Moreover, this trading scheme is envisaged in the EU-Ukraine Association Agreement.

In the EU, the emissions trading market was launched in 2005 but it is not static, and its design continues to be updated.

Olga Boiko EBA Industrial Ecology and Sustainable Development Committee Coordinator
The EBA closely monitoring the development of European legislation on greenhouse gas emission allowance trading. We are aware of the current problems faced by our European counterparts, namely, the sharp reduction in free quotas, which has already disrupted the competitiveness of companies and the loss of market share. In fulfilling our commitments, we must be very prudent and not hastily implement the ETS to prevent any damage to the domestic economy as it is not in the best condition.

The implementation of the ETS in Ukraine should include four key points:

  1. comply with the ETS system in the EU in the context of providing free emission quotas, their distribution, targets, etc .;
  2. test the system by launching the pilot when transactions with greenhouse gas emission allowances are carried out with no financial consequences for system participants.
  3. targeted use of funds – ensure the transparent allocation of funds to be received by the state from the sale of quotas for greenhouse gas with priority for environmental modernization/energy efficiency of those companies that will acquire the quotas;
  4. coexistence of the ETS and CO2 emissions tax. Usually, the ETS participating companies are exempt from paying such a tax. And this should be provided for Ukrainian companies.

This was discussed last week during a webinar on the introduction of a scheme for greenhouse gas emissions trading in Ukraine, organized by the Ministry of Environment which was joined by representatives of the European Business Association.

The European Business Association thanks the Ministry of Environment for the initiative in organizing the meeting and hopes for further fruitful cooperation in the development of the market for greenhouse gas emission allowance trading to decarbonize the economy.

 

For reference:

A scheme of greenhouse gas emission allowance trading is an economic tool to stimulate emission reductions. It implies the issuance of permits by the state for emissions of a certain number of tons of substances for companies participating in the scheme. With such permits, the latter can emit the permitted number of substances or sell their quota, reducing their emissions through modernization.

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