Support for the establishment of an emission trading scheme (ETS) in Ukraine

Programme description

Title: Support for the Establishment of an Emission Trading Scheme (ETS) in Ukraine
Commissioned by: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Country: Ukraine
Lead executing agency: Ministry of Ecology and Natural Resources of Ukraine (MENR)
Overall term: 2017 - 2020

 

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Context

Climate change has already had a noticeable impact all over the world and poses major challenges for national governments. Emission trading schemes are intended to help combat climate change. Governments set upper limits for greenhouse gas emissions in their countries. Companies then receive ‘emission allowances’, allowing them to emit specified quantities of greenhouse gases. Depending on their emissions, companies can either use these allowances themselves or sell them. The upper limit is reduced over time so that overall emissions fall.

Ukraine’s economy is traditionally dominated by heavy industry. In terms of economic output, the country’s carbon dioxide emissions are three times the EU average. Even by global standards, Ukraine’s emissions are still twice the average. This is one of the main reasons why Ukraine has made a commitment to develop its climate policy. One of the commitments under the Association Agreement between the European Union and Ukraine  is introduction of an emission trading scheme, which Ukraine’s Ministry of Ecology and Natural Resources is responsible for establishing. This task is extremely challenging for the Ministry, as its resources are limited and it lacks relevant experience. The Ministry is receiving support as part of the Support for the Establishment of an Emission Trading Scheme (ETS) in Ukraine project.

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Objective

Ukraine establishes a nationwide emission trading scheme to help mitigate climate change.

Approach

On behalf of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), the ETS project supports Ukraine in setting up an emission trading scheme. The project helps Ukraine’s Ministry of Ecology and Natural Resources in designating an authority that will implement the new system. Experts working on the project advise the Ministry’s employees on calculating the upper limits for greenhouse gas emissions in Ukraine. In future, thesetotal emissions are to be divided up between companies covered by the emission trading scheme in the form of emission allowances. A specially developed data management system will help the authority to monitor and verify the companies’ greenhouse gas emissions. 

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The emission trading scheme is a transparent and efficient tool for reducing emissions at the lowest possible cost to the economy. Allowances can also be traded: companies which do not use all of their allocated emission allowance can sell them to other companies that emit more greenhouse gases. Trading puts a price on the allowances – and therefore on emissions. Ukrainian companies can use the resulting income to purchase or partially refinance environmentally friendly technology. This not only benefits companies in Ukraine, but also – and most importantly – the environment and people all over the world.