Green investment scheme and climate change mitigation policy in Ukraine Stavchuk Iryna Climate change program coordinator National ecological centre of Ukraine Kiev, 6 April 2007 Seminar “Green Investment Scheme in Ukraine”

Identify potential projects for greening in different sectors of economy through analysis of existing programs and policies in Ukraine, results of WB research “Options for designing a GIS in Ukraine”, examples of climate change mitigation policies in EU, USA, China and other countries Main objective:

Energy sector(1) Ukraine according to energy strategy concepts would like to finance: –Modernization of the coal industry – more GHG gases –Nuclear industry – out of Kyoto Protocol –Modernization of the gas transmission system – already economically feasible and the problem lies in corruption –Utilization of the coal methane – already feasible under JI –Development of own gas resources – more GHG gases Conclusion: these projects are bad examples or will support fossil fuels and therefore are not interesting for buyers

Energy sector(2) Renewable energy sources need: –Grants for development –RES fund for feed-in-tariff system –Law on the obligatory purchase of RES electricity and obligatory share of biofuels. EU: 20% electricity production from RES by 2020 р. China: 10% by 2010 excluding large hydro Energy efficiency: –Public energy companies? –Private energy companies – which companies? Competition issue? Conclusion: good examples of projects in energy sector for GIS need policy developments

Transport sector Strategy of the transport sector by 2020 doesn’t mention the problem of climate change. Main aspects should include: Support of rail transport development and infrastructure Support of clean public transport in cities =>Impossible as JI projects, but very important for GIS Production and use of biofuels needs law and regulation EU: 5% biofuels by 2005 and 10% by Sweden: high taxes of fossil fuels (up to 100%) no tax for biofuels

Industry Ukraine operates in market economy, therefore GIS should not support few energy efficiency projects in industry, but rather stimulate energy efficiency in equal conditions to all industries e.g. through low interest lawns; Big industrial companies already participate in joint implementation mechanism and GIS should not compete with JI mechanism; Small industrial companies and small scale projects which are not feasible under JI are potential projects for GIS; Positive experience of energy service companies could be utilized as combination of consultancy and financing of energy efficiency measures; => GIS funds directed to specific companies will create distortion of competition on the market and stimulate corruption

Housing sector Energy efficiency in public buildings, hospitals, schools etc. could be financed from GIS. Introduction of the heat and water meters for houses, therefore each consumer would pay for the energy and water consumed Support of the household waste separation systems in cities Modernization of the municipal industry Financial support of the municipal small scale projects in housing sector =>There is a big potential, but difficult to implement due to lack of proper regulation

Agricultural sector Need for regulation on the use of mineral fertilizers; Need for regulation to ban burning of biomass on the fields and stimulate to use it as energy source; Biogas production could be supported from GIS

General conclusions 1.GIS cannot support any of the existing state sectoral programs because there are no planned measures to reduce GHG emissions and no National plan of climate change mitigation activities. 2.For most of the desirable projects the barrier for implementation is regulatory and not financial. Although there are good examples of projects to be implemented under GIS the main focus of the government should be in introduction of policies and regulation to mitigate climate change. Such policies will help to reduce energy dependence and bring much bigger potential for investments rather than only project based GIS fund.

Moreover, 1.Supply for AAUs is much bigger than demand, so Ukraine might not sell as much AAUs as it wants; 2.Buying AAUs is the last measure for Annex B countries, and they want to avoid it; 3. What will be reduction target for Ukraine after 2012? Obviously, Ukraine will not get any hot air and should implement GHG emission reduction policies already now. EU: -30% by 2020 р. and plans 60-80% by Regardless the future of Kyoto Protocol: fossil fuels are depleting and prices will be only increasing, therefore focus should be on RES development and energy efficiency. 5.Regardless opinion that climate change is not human caused: implementation of all mentioned policies is necessary for Ukrainian economy.

Thank you for attention! Stavchuk Iryna + 38 (044)