Kyiv
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Paris Agreement is a “window of opportunity” for modernization and investment but it is unclear whether Ukraine can use it – discussion

Kyiv, November 03, 2016.

Paris climate agreement opens up excellent opportunities for modernization, economic development and improving the environment in Ukraine. However, it is hard to predict whether the country will take advantage of this window of opportunity. Key challenges along the way – lack of institutional capacity, corruption, energy lobby and lack of public demand. These were the results of a discussion held at Ukraine Crisis Media Center.

The experts reminded that the main goal of the Paris Agreement is to prevent the increase of average temperature on Earth for more than 2 percent. It is necessary to minimize emissions of greenhouse gases. Energy production is the main polluter: almost 60% in Ukraine and in the world, so the key challenge is to transfer this sector to renewable sources and implement low-carbon development strategies.

The goal of fighting climate change should be incorporated in energy strategy

The experts noted that the goal of fighting climate change must form the basis of Ukraine’s energy strategy like in developed countries. Oleksandr Dyachuk, Senior Fellow, Institute of Economics and Forecasting, National Academy of Sciences of Ukraine, said that the Institute and the Ministry of Energy and Coal Industry of Ukraine had developed a draft energy strategy of Ukraine till 2050. “We attracted the UN Department of Fight against Climate Change to prepare this project. They gave us valuable suggestions, which we have fully taken into account,” said Volodymyr Omelchenko, director of energy programs, Razumkov Center.

The main objectives of the strategy are increasing energy efficiency, a greater proportion of renewable energy sources and greenhouse gases emissions mitigation. By 2020, Ukraine is supposed to increase energy efficiency to 9% and enlarge the share of renewable energy sources to 11%, by 2035 – to 19.5% and 21.5% accordingly, and greenhouse gases emissions must remain no higher than the level of 2012. By 2050, they must be reduced by 30% compared to 1990.

Incentive to modernization and economic development

“Greenhouse gases emissions mitigation is not just reducing the consumption of carbon containing resources – oil, gas, coal and so on. This is, first of all, modernization of our economy, including energy production, by raising efficiency and the use of “green” technologies,” emphasized Oleksandr Dyachuk.

Achievement of these objectives requires investing EUR 75-100 billion in the economy by 2030, of which 83% – in the energy sector. “At first glance, this is a large amount, but if we divide them in 10 years and note the level of depreciation of equipment, we will see that we can spend the same money on maintaining the existing infrastructure that will continue to pollute the environment,”  he said. Mr. Dyachuk added that those investments might be smaller, if the money was invested in the development of domestic production based on the latest technologies.

Andriy Zheleznyi, junior expert on climate change, National Ecological Center of Ukraine, noted that these are innovative investments that will be taxed and give more revenues. “This will create 100,000 new jobs in energy efficiency,” he stressed. It will also reduce the statistics of deaths attributable to air pollution (in 2012 – over 54,000), and, in addition, decrease our energy dependence on Russia.

The Agreement will facilitate the arrival of investors – if Ukraine creates favorable conditions

Ivan Gaidutskyi, coordinator for low carbon development, Parliamentary Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, said that the ratification of the Paris Agreement had become a guide for investors from around the world: energy efficiency and green technologies are considered to be the main direction for investments. According to Andriy Zheleznyi, a lot of private investors will be interested in the prospect of investing in renewable energy and energy efficiency in Ukraine, “provided that the state policy will be transparent and will give signals that Ukrainian officials and civil society are ready to transform their habits”.

Oleksandr Dyachuk noted that Ukraine can also receive certain investments as part of the Paris Agreement: the developed countries will be funding sources. These countries are to attract at least USD 100 billion a year by 2025, taking into account the needs and priorities of the developing countries. However, added Mykhailo Chyzhenko, the mechanisms of receiving these funds have not been specified yet. The Paris Agreement established only general frameworks. It is also unclear whether Ukraine will be included in the list of countries eligible for such assistance, especially in view of the fate of “Kyoto money.”

Implementation of Paris Agreement requires synergy between all the stakeholders

“It should be both the “bottom- up” and “top-down” process. Just as the government should explain to society why climatic issues are important (…), so civil society should demand these things from the government,” Oleksiy Ryabchyn, MP, head of the Subcommittee on Energy Saving and Energy Efficiency, Parliamentary Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety. In his view, environmental protection should become a more important subject of political debates.

Changes should be driven by business. “Every entrepreneur’s goal to make capital should be accompanied by the goal to reduce emissions and do something for the environment,” noted Ivan Gaidutskyi. For this purpose, added Oleksiy Ryabchyn, the government should set the long-term targets before business. “If business is engaged in the energy industry that does not meet international standards, we need to tell them that in 5 years they will not be able to work, and they have time to change their methods. The government should identify climatic priorities not only in policy documents, there should be a steady policy and clear rules of the game,” he noted.

Challenges: lack of public demand, lack of institutional capacity and transparency

The first challenge to the implementation of the Agreement is a lack of institutional capacity. These issues are within the responsibility of the State Agency of Energy Saving and Energy Efficiency of Ukraine, and to some extent – the line ministries; there is an interdepartmental committee on climate change at the Ministry of Ecology, but all these departments are lacking coordination. “We lack communication when we develop the strategies – environmental, energy and so on, apart from each other,” noted Hanna Vronska, former Acting Minister of Ecology. She added that the Ministry of Ecology has participated in developing the energy strategy, and this is a positive development.

The second challenge is the resistance of the current “energy lobby.” That is why the primary task for the state is to guarantee the protection of investors’ property. “Only when the rights of small and medium businesses who want to invest in “green” energy are ensured, and when they are sure that they will not be deprived of everything, only then there will be investments in the Paris Agreement both from the French, Canadian, and the domestic investors,” stressed Oleksandr Dyachuk.

The energy strategy should focus on long-term economic strategy

Volodymyr Omelchenko and Mykhailo Chyzhenko, head of the Department for Climate Policy & Reporting, Ministry of Ecology and Natural Resources of Ukraine, added that the strategy should also focus on that economic model, which Ukraine is going to build in the next decades. “Now it does not make sense to talk about the specific goals, if we do not understand what the economic model we are going to implement,” noted Mykhailo Chyzhenko. “The state must understand what we will build, whether we will be an “assembly shop” or “design bureau”, and thus to focus the energy policy,” added Mr. Omelchenko.

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