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Ukraine prepares to launch emissions trading system: EBA experts propose a clear action plan

24/ 12/ 2024
  Ukraine is moving closer to launching a national emissions trading system (ETS), a key step towards fulfilling the requirements of the EU Association Agreement. The system will set CO2 emission limits, promoting decarbonisation and advancing the country’s climate goals. In this regard, the European Business Association has addressed the Ministry of Environmental Protection and Natural Resources of Ukraine with proposals for amendments to the draft Resolution of the Cabinet of Ministers. These include adjusting the timelines for preparing the analytical report and developing the regulatory framework. EBA experts believe the timelines for preparing the analytical report in 2024–2025 are overly ambitious due to the complexity of studies and consultations required. They propose rescheduling certain activities to 2025 and involving experts with relevant experience. The EBA recommends a phased approach to ETS implementation: Renewing the MRV system – starting in 2025, with at least three years of full operation before the pilot phase begins. Developing the regulatory framework – a process to run parallel to the first phase, estimated by Committee members to take 2–3 years. Pilot ETS phase – beginning in 2028. Full-scale ETS phase – starting in 2031, provided at least three years have passed since the end or cancellation of martial law and following a minimum of three years after the pilot phase launch. The pilot ETS phase will be a critical stage for refining the system, providing additional insights for its development. During preparation, it will be essential to identify the regulatory acts required before the pilot phase and those that can be refined afterward. Experts emphasise the importance of preparing the economy for integration into the EU Emissions Trading System (EU ETS), including enhancing interagency cooperation and adapting management platforms. They also highlight the need to designate a system administrator, potentially one of the ministries or a newly established institution. The ETS will enable Ukraine to realise its climate ambitions by setting CO2 emission limits and offering enterprises incentives for decarbonisation. The cost of emissions will reflect changes in the economic and environmental landscape. In 2023, the EBA developed a Concept for Building an Emissions Trading System in Ukraine and presented it to the Ministry of Environmental Protection. Committee experts remain committed to participating in discussions and seeking solutions to these issues. EBA experts believe clear planning and transparent implementation of the ETS will facilitate Ukraine’s achievement of its climate goals and integration with European carbon markets. The European Business Association calls on the Ministry of Environmental Protection to revise the Action Plan, taking business proposals into account.

Ukraine is moving closer to launching a national emissions trading system (ETS), a key step towards fulfilling the requirements of the EU Association Agreement. The system will set CO2 emission limits, promoting decarbonisation and advancing the country’s climate goals.

In this regard, the European Business Association has addressed the Ministry of Environmental Protection and Natural Resources of Ukraine with proposals for amendments to the draft Resolution of the Cabinet of Ministers. These include adjusting the timelines for preparing the analytical report and developing the regulatory framework.

EBA experts believe the timelines for preparing the analytical report in 2024–2025 are overly ambitious due to the complexity of studies and consultations required. They propose rescheduling certain activities to 2025 and involving experts with relevant experience.

The EBA recommends a phased approach to ETS implementation:

  1. Renewing the MRV system – starting in 2025, with at least three years of full operation before the pilot phase begins.
  2. Developing the regulatory framework – a process to run parallel to the first phase, estimated by Committee members to take 2–3 years.
  3. Pilot ETS phase – beginning in 2028.
  4. Full-scale ETS phase – starting in 2031, provided at least three years have passed since the end or cancellation of martial law and following a minimum of three years after the pilot phase launch.

The pilot ETS phase will be a critical stage for refining the system, providing additional insights for its development. During preparation, it will be essential to identify the regulatory acts required before the pilot phase and those that can be refined afterward. Experts emphasise the importance of preparing the economy for integration into the EU Emissions Trading System (EU ETS), including enhancing interagency cooperation and adapting management platforms. They also highlight the need to designate a system administrator, potentially one of the ministries or a newly established institution.

The ETS will enable Ukraine to realise its climate ambitions by setting CO2 emission limits and offering enterprises incentives for decarbonisation. The cost of emissions will reflect changes in the economic and environmental landscape.

In 2023, the EBA developed a Concept for Building an Emissions Trading System in Ukraine and presented it to the Ministry of Environmental Protection. Committee experts remain committed to participating in discussions and seeking solutions to these issues.

EBA experts believe clear planning and transparent implementation of the ETS will facilitate Ukraine’s achievement of its climate goals and integration with European carbon markets.

The European Business Association calls on the Ministry of Environmental Protection to revise the Action Plan, taking business proposals into account.

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