Kyoto Money: Ukraine Enters the Global “Ecological Market”
Ukraine has sent documents to the Vienna-based Secretariat of the Kyoto Convention confirming greenhouse gas emission quotas for two enterprises, the Zasiadko Coal Mine and the Chernihiv Water Supply Authority, which employ up-to-date hazardous industrial waste treatment systems. “We are confirming that the technology now being applied at the Chernihiv Water Supply Authority will reduce carbon dioxide emissions by 275,000 tons. Methane emissions will also be reduced at the Zasiadko Coal Mine in Donetsk,” said Serhiy Dovhan, First Deputy Minister for Environmental Protection. He explained that the quotas that Ukraine has announced would permit the introduction of technologies for reducing atmospheric emissions of greenhouse gases. These environmental measures would be funded at the expense of countries that do not want to reduce their emissions and are prepared to pay for this. Experts think that Ukraine can offer to sell 1.5 billion dollars’ worth of quotas annually on 300 million tons of greenhouse gases. Are the government and our entrepreneurs prepared for this? And is it right that the installation of expensive nature- conservation equipment should only be prompted by accidents of the kind that occurred a few years ago at the Donetsk mine?
In any case, this kind of business is worth discussing. All the European countries are interested in Ukrainian quotas, and not only because it is Europe, which, according to Mr. Dovhan, “is now most vulnerable to climatic changes.” This interest may also be explained by the fact that the cost of one ton of greenhouse gas emissions is $5 in Ukraine compared to $100 in Japan and $50 to $100 in Europe. “All countries are interested in cooperating with Ukraine because it is cheaper, while the value per unit of emissions is the same,” the first deputy minister emphasized. Ukraine’s cheap “selling” price for emission quotas may be explained by the fact that signatories to the 1997 Kyoto Protocol pledged to cut atmospheric emissions of carbon dioxide and other noxious gases by the year 2012 by an average of 5.2%, as compared to 1990 figures. But the point is that Ukraine is still struggling to come out of the economic recession it has been experiencing since 1990. So Ukraine, as well as some African countries, can trade in our quotas, and receive some sort of compensation from industrially developed countries.
Is this good or bad? Wouldn’t it be better for Ukraine to earn currency by increasing its industrial output rather than by trading in environmental quotas, especially since there is still a long way to go to reach the 1990 level?
I think that our society must really debate this issue. At the same time, the idea to trade in emission quotas is progressive, for Ukraine will not be speculating in quotas by going into an industrial recession to the detriment of its own population, but instead will use state-of-the-art technologies to protect the environment. Why not cash in on this? Besides participating in the implementation of the Kyoto Protocol that Ukraine has ratified, we are getting a chance to better conceptualize and make relevant amendments to the structure of renewable industrial production in order to reduce hazardous emissions even at the current stage. It is common knowledge that high-tech businesses, the true locomotives of modern industry, do not pollute the environment as much as other technological installations. Therefore, Ukraine should opt for state-of-the- art technologies instead of trying to restore the wasteful, power-consuming, and hazardous Soviet-era industrial potential.
The Kyoto Protocol will take effect if the countries that account for 55% of 1990-level industrial emissions approve it. World Bank experts estimate that the overall market volume of quotas is about 2 billion tons. Russia’s President Vladimir Putin said recently that his country would “speed up the process” of ratifying the protocol. (So far the US still remains “the chief polluter” and refuses to do so). If this promise is kept, the Kyoto rules of the game may come into force even before the end of this year. Undoubtedly, Ukraine should seize the opportunities that are being offered, especially in view of the fact that top EU officials made it clear last April that trading in quotas would begin next year, whether or not the Kyoto Protocol takes effect. In this instance, Ukraine is simply obliged to side with Europe.
