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Ukraine lacks coordination between economic and environmental policies

15/ 09/ 2020

Without coordination between economic and environmental policies, it will be impossible to implement the provisions of the European Green Deal (EGD). This opinion was introduced to the representatives of the EBA Committee on Industrial Ecology and Sustainable Development on September 11 during an open committee hearing on Ukraine’s participation in the European Green Deal.

The legislative and governmental initiatives, which aimed at greening the national economy, have begun to be actively promoted in Ukraine only during the last six months. Although, the first steps in this direction were taken together with the EU in the 90s of the last century with the signing of the Kyoto Protocol.

According to the Pulse of the Agreement project (2019), the Cabinet of Ministers of Ukraine, the Verkhovna Rada of Ukraine, and other interested state authorities have completed 37% of the planned annual volume of tasks for the implementation of the Association Agreement. When it comes to the environment, the progress in this field just amounts to 28% and thus remains low. The obligations under the current version of the agreement remain unfulfilled, such as the establishment of a system for measurement, reporting, and verification, as well as the introduction of a greenhouse gas emissions quotas trading scheme, waste management reform, and so on.

At the same time, Ukraine’s integration into the EU internal market continues. In 2019, the share of exports of Ukrainian goods to the European Union was a record 40%. Thus, the EU has become the largest trading partner for our country and this tendency is still growing.

The EBA member companies are convinced that to further maintain the position of a reliable partner of the EU, Ukraine needs, in the context of updating the Association Agreement, to take a proactive position and join key European initiatives, including the European Green Deal.

Business welcomes the intensification of the government’s work in this direction and the creation of a position paper on Ukraine’s participation in this deal. At the same time, the community draws the Government’s attention to 3 crucial points to consider when implementing the provisions of the EGD for Ukraine:

1) Create and approve a system of public funding institutions to meet the objectives of the Green Deal. The EU has a system of institutions for the distribution of public funding (funds, special agencies). Some of them, such as the Just Transition Fund, are planned to be created specifically for the implementation of the EGD.

2) Establish clear deadlines for financing decarbonization measures and develop an investment plan. The European Commission will use a range of instruments to finance decarbonization, including grants, budget guarantees for loans, and EIB loans.

3) Develop and approve the amount of investment and sources of funding for the implementation of measures defined by the EGD.

Besides, the representatives of the Association stressed the need to negotiate with the EU on the possible introduction of a Carbon Border Adjustment (CBA) mechanism within the EGD. The EU currently holds consultations with the key trading partners on this issue. On September 17, the Ukraine-EU Roundtable will take place on the EBA platform, where government representatives, experts, and business will discuss their vision of the impact of this mechanism in its possible application. However, the business is cautious about this initiative and believes that one of the main goals of the Ukraine – EU dialogue regarding the CBA should be the exemption of goods/works/services exported from Ukraine to the EU from the mechanism. Also, it is necessary to include these changes in the updated provisions of the Association Agreement.

For the reference:

The European Green Deal is the EU’s green economic development program which aims at achieving climate neutrality on the European continent by 2050.

 

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