fbpx
Size of letters 1x
Site color
Image
Additionally
Line height
Letter spacing
Font
Embedded items (videos, maps, etc.)
 

СВАМ will unite Ukraine and the EU on the path to the decarbonisation of Europe

06/ 12/ 2021
  This opinion was expressed on December 1 by the EBA representatives at the 13th Annual Assembly Road to Recovery: Fostering Reform and Resilience for a Stronger Eastern Partnership, which took place on the eve of the 6th Eastern Partnership Summit on 15-16 December. Olga Boiko. EBA Industrial Ecology, and Sustainable Development Committee Coordinator. The EBA business community supports Europe′s climate aspirations to become the first carbon-neutral continent, expressed in the European climate ambitions to become the first carbon-neutral continent according to the European Green Deal. Thus, Ukraine was one of the first countries to join that roadmap of actions. A few months ago, Ukraine adopted the Second Nationally determined contribution under the Paris Agreement, to reduce its greenhouse gas emissions by 65 percent by 2030 from the 1990 levels. Therefore, our targets are more ambitious than the previous ones and even than the current commitment of the EU and other developed countries, despite we don’t have such a financial mechanism to make it real at the moment. I am convinced that the CBAM, as one of the tools offered by the EU to encourage importers to reduce CO2 emissions, should not be used as an instrument to increase inequality between countries, but motivate the partners to explore additional ways to cooperate in decarbonization projects. The EU now has an understanding of the targets and next steps towards climate neutrality. Meanwhile, the urge of combating climate change and the economic realities of European and Eastern Partnership countries, in particular, the Associated Trio (Ukraine, Georgia, and Moldova) differ significantly. In this context, the Carbon Border Adjustment Mechanism (CBAM), which is a part of the Fit for 55 Package to be launched in 2023, is the subject of much debate. With the CBAM, the European Union wants to align the rules of the game for domestic and European producers and encourage other countries to reduce greenhouse gas emissions more decisively. At the same time, the EU identifies Ukraine as one of the countries most affected by the CBAM implementation. Thus, the СВАМ will initially apply to 4 sectors: steel, cement, basic organic fertilizers, and electricity (with the possibility of further expansion to other sectors). The average price of the CBAM Certificate that importers will need to purchase will be calculated weekly, based on average GHG allowance prices in the framework of the European market of emission allowances (EU ETS). The additional burden on imports from Ukraine will amount to hundreds of millions of euros annually according to the EBA estimates based on the average carbon price per ton, as well as the share of imports to the EU. At the initial stage of implementation, the CBAM will impose a burden of € 2.1 million on the cement industry, € 48.5 million on the chemical industry, and € 628.3 million annually on metallurgy. At the same time, the EU plans to cooperate and conclude agreements with non-EU major trading partners, given their pricing mechanism for CO2 emissions. Such agreements may provide for a more lenient environment for the implementation of the CBAM, provided that these countries are highly efficient and demonstrate a desire to decarbonize economic sectors. For example, the CBAM may not be not applicable to exports of electricity from Ukraine if the following requirements are met: integration of the Integrated Power System of Ukraine to the pan-European power system ENTSO-E, coupling of electricity markets; enhancement of the regulatory framework that creates opportunities for increasing the renewable energy share in the energy system; rejection of electricity imports from third countries that have no appropriate decarbonization targets; introduction of an emissions trading scheme for electricity in Ukraine at a price equivalent to that of the EU ETS must be completed by 1 January 2030, etc. The CBAM will soon be considered by the European Parliament, and the European Business Association believes in approving a special approach when applying the CBAM to Ukraine, which in 2019 alone imported 42% of all its goods and services to the EU worth more than 21.1 billion euros. This will help not only to maintain the level of exports but also provide conditions for further eco-modernization of domestic enterprises in terms of reducing CO2 emissions. Such cooperation will further deepen Ukraines integration into the EU and help protect its common European borders.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

This opinion was expressed on December 1 by the EBA representatives at the 13th Annual Assembly “Road to Recovery: Fostering Reform and Resilience for a Stronger Eastern Partnership”, which took place on the eve of the 6th Eastern Partnership Summit on 15-16 December.

Olga Boiko EBA Industrial Ecology, and Sustainable Development Committee Coordinator
The EBA business community supports Europe′s climate aspirations to become the first carbon-neutral continent, expressed in the European climate ambitions to become the first carbon-neutral continent according to the European Green Deal. Thus, Ukraine was one of the first countries to join that roadmap of actions. A few months ago, Ukraine adopted the Second Nationally determined contribution under the Paris Agreement, to reduce its greenhouse gas emissions by 65 percent by 2030 from the 1990 levels. Therefore, our targets are more ambitious than the previous ones and even than the current commitment of the EU and other developed countries, despite we don’t have such a financial mechanism to make it real at the moment. I am convinced that the CBAM, as one of the tools offered by the EU to encourage importers to reduce CO2 emissions, should not be used as an instrument to increase inequality between countries, but motivate the partners to explore additional ways to cooperate in decarbonization projects.

The EU now has an understanding of the targets and next steps towards climate neutrality. Meanwhile, the urge of combating climate change and the economic realities of European and Eastern Partnership countries, in particular, the Associated Trio (Ukraine, Georgia, and Moldova) differ significantly. In this context, the Carbon Border Adjustment Mechanism (CBAM), which is a part of the Fit for 55 Package to be launched in 2023, is the subject of much debate. With the CBAM, the European Union wants to align the “rules of the game” for domestic and European producers and encourage other countries to reduce greenhouse gas emissions more decisively.

At the same time, the EU identifies Ukraine as one of the countries most affected by the CBAM implementation. Thus, the СВАМ will initially apply to 4 sectors: steel, cement, basic organic fertilizers, and electricity (with the possibility of further expansion to other sectors). The average price of the CBAM Certificate that importers will need to purchase will be calculated weekly, based on average GHG allowance prices in the framework of the European market of emission allowances (EU ETS). The additional burden on imports from Ukraine will amount to hundreds of millions of euros annually according to the EBA estimates based on the average carbon price per ton, as well as the share of imports to the EU. At the initial stage of implementation, the CBAM will impose a burden of € 2.1 million on the cement industry, € 48.5 million on the chemical industry, and € 628.3 million annually on metallurgy.

At the same time, the EU plans to cooperate and conclude agreements with non-EU major trading partners, given their pricing mechanism for CO2 emissions. Such agreements may provide for a more lenient environment for the implementation of the CBAM, provided that these countries are highly efficient and demonstrate a desire to decarbonize economic sectors. For example, the CBAM may not be not applicable to exports of electricity from Ukraine if the following requirements are met: integration of the Integrated Power System of Ukraine to the pan-European power system ENTSO-E, coupling of electricity markets; enhancement of the regulatory framework that creates opportunities for increasing the renewable energy share in the energy system; rejection of electricity imports from third countries that have no appropriate decarbonization targets; introduction of an emissions trading scheme for electricity in Ukraine at a price equivalent to that of the EU ETS must be completed by 1 January 2030, etc.

The CBAM will soon be considered by the European Parliament, and the European Business Association believes in approving a special approach when applying the CBAM to Ukraine, which in 2019 alone imported 42% of all its goods and services to the EU worth more than 21.1 billion euros. This will help not only to maintain the level of exports but also provide conditions for further eco-modernization of domestic enterprises in terms of reducing CO2 emissions. Such cooperation will further deepen Ukraine’s integration into the EU and help protect its common European borders.

 

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

Spelling error report

The following text will be sent to our editors: