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Ukraine Confronts Kyoto

By Anastasija Demchenko - February 2, 2004 12:00 AM

KIEV -- Since the collapse of the Soviet Union emissions of greenhouse gases in the former USSR have dropped significantly below 1990 levels. Back then Russia was responsible for 17 percent of greenhouse emissions. For Ukraine, which in 1990 occupied sixth place on the list of general outliers of greenhouse gases (mainly because our country was one of original producers of metals, coals, weapons and agricultural products) there was a significant decrease in emissions conditioned by the process of economic restructuring in the period of transition.

But Ukraine's environment minister, Andrej Kurykin, in his 2002 speech at the COP-8 conference in New Delhi, pointed out that such improvements with greenhouse gases were reached at grave financial and economical cost, business recession, decline in living standards and increased unemployment. Applying the Kyoto protocol now would continue to retard growth in countries like Ukraine with transition economies.

If Ukraine were to ratify, environmentalists claim, it would reap millions of dollars in emissions trading payouts from Western countries -- but economists are not so optimistic. True, Ukraine would be able to attract funds for such projects as the efficiency of its power industry improves, and as it boosts renewable energy sources.

But right now Ukraine doesn't have the ability to attract the foreign investment necessary to pull this off. The budget of Ukraine is about equal to that of Cambridge University, and emissions trading credits won't improve the situation. The economic hole in which the country finds itself is the result of transitions in the political sphere after the collapse of the USSR, and only development of the private sector and implementation of high-end technology will help it to grow.

The Kyoto protocol raises more questions than it provides answers. The level of greenhouse emissions in Ukraine in 1990 does not put the country among the list of nations which have an influence on the Kyoto protocol, such as Russia or the US. Ratification the protocol by the Baltic States and Central European countries was predictable for two reasons: those countries' ambitions to join the EU and the dominance of their service-oriented economic sectors. Ukraine was not invited to join the European family and its type of economy is more akin to that of Russia -- i.e., industrial. Russia is choosing not to ratify the treaty because, in the words of Andrei Illarionov, President Vladimir Putin's economic adviser, it would slow economic growth.

Would Kyoto have a similar effect in Ukraine? The Protocol allows developed countries to earn credits for funding projects in areas such as Eastern Europe and Latin America. Economic rewards given to Western countries are more attractive and give them opportunity to use the credits to help meet 2010 emissions targets, instead of paying for more costly measures at home or buying credits through an emissions-trading system. They also encourage investment in emerging economies.

But Kyoto carrots won't mean much for Ukraine, which has more pressing ecological problems than global warming and other issues to deal with as it undergoes political and economic transition. It doesn't have time for Kyoto right now.

The author is an economist and entrepreneur in Kiev.


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