How does one use the Kyoto Protocol?
Verkhovna Rada has finally ratified the Kyoto Protocol, according to environmentalists, a most useful international treaty, which calls for industrialized nations to reduce their emissions of greenhouse gases. The Environmental Protection Ministry is already discussing specific ways to reduce carbon dioxide emissions, the first step being the talks to secure a loan from the World Bank to support the creation of a unified system to monitor air pollution in Ukraine. In a relevant comment, Environment Minister Serhiy Poliakov said that Ukraine can ill afford such a system, which has been long implemented across the EU. Meanwhile, without a monitoring system Ukraine’s participation in the trade in emission quotas envisioned by the Kyoto Protocol is out of the question.
Trade in emission quotas, namely the possibility to sell the margin between the actual volume of emissions in tons and the maximum emission levels established for each country, is a gold mine for Ukraine. The emissions ceiling for Ukraine was established before its industrial production plummeted in the early nineties. As a result, Ukraine ended up on a list of countries with relatively low emission levels. And despite growing industrial output in recent years, experts claim that Ukraine will not reach its 1991 emission levels by 2008. As a result, Ukraine has an annual reserve of at least 464,000 tons and could make a deal with a country that cannot meet the restrictions on greenhouse gas emissions. By buying our quotas the latter would avoid sanctions under the Kyoto Protocol.
Such deals could be quite lucrative for Ukraine. While initially the price per ton of the emission quotas was $5, now it is in the range of $15-20. Experts believe that by selling its quotas Ukraine could make between $1.5 and 2.5 billion annually. Moreover, Ukraine began to attract international interest after it signed the Kyoto Protocol in 1999. Instead of selling its quotas, Ukraine has been offered to exchange them for clean technologies. Thus, the recipients of Ukraine’s quotas could upgrade its industry and make it more environmentally friendly. In this case we could be absolutely certain that after selling our quotas we would not be forced to buy them back later.
Yet there is one major stumbling block. And the problem is not that Ukraine is yet to do a lot of paperwork and estimate industrial emissions. The problem is that the Kyoto Protocol will not take effect unless ratified by countries accounting for 55% of the world’s greenhouse gas emissions. Although 118 countries have signed the protocol to date, they are far from the biggest greenhouse gas producers. For example, the US, which tops the list, has rejected the document, calling it a major burden on its economy, which is struggling even without it. Moreover, President George W. Bush has called the protocol unjust toward America and said that, if ratified, it would cause gasoline, natural gas, and electricity prices to soar.
Russia could make the difference, but it follows the example of the US. Russia is also a major greenhouse gas producer, and by supporting the protocol it could make it work. But this seems unlikely to happen. Recently, Andriy Illarionov, economic advisor to the Russian president, stated that the implementation or even preparation for the implementation of the protocol would impede Russia’s economic growth. Despite the fact that today Russia could in theory still sell quotas just like Ukraine, in his view this is far from the truth. “If the USA is not in the protocol, who else would buy clean air? As a result, considering its GDP growth, Russia could end up buying and not selling economic quotas, which will doom it to poverty and backwardness,” says Illarionov.
Simultaneously, experts believe that sales of quotas could generate $150 billion annually, since in the past two decades alone emissions in some countries have almost doubled. According to the 1998 statistics, Ukraine generates some 500 million tons of carbon dioxide annually against 6.5 billion tons generated by the US. But even despite such a difference, the nation’s environmentalists blame industrial pollution for the cyclones, floods, and unseasonable freezing temperatures that Ukraine has seen in recent years. According to the National Environment Center, alternative energy sources and clean technologies could prevent environmental disasters and save millions spent on relief efforts. Moreover, Olha Tymchenko, manager of the Genetic Monitoring Laboratory at the Institute of Hygiene and Medical Ecology, attributes Ukraine’s soaring cancer rate to poor air quality. In her view, the protocol’s requirements not to exceed but reduce 1990 emission levels could prevent many diseases.
Yet only three countries have managed to reduce emissions over the past fourteen years. They are Russia and Ukraine, whose industrial output plummeted in the years of economic recession, and Germany, the only country to achieve positive results by implementing environmental laws.
Hence, according to Hennady Rudenko, chairman of the Verkhovna Rada Committee on Environmental Policy, Nature Management, and the Elimination of Chornobyl Disaster Consequences, the state should pay for polluting the atmosphere. As he put it, nobody is against environmentally unfriendly industries in Ukraine or elsewhere, but it is important that the state in general or industry in particular pay for the environmental harm they cause.
