POLLUTED
ECONOMY EFFECT

Why the European Green Deal is important to Ukraine not in the name alone

If the emissions remain at the current level, the global temperature will rise 4C by 2100, according to a study by the Heinrich Boell Foundation. This may cause 34 Ukrainian cities to go under water, turning approximately 75,000 people into climate refugees.

Recent studies have shown that polluted air increased COVID-19 death rate by 15%, Ukraine being among the 20 countries with the highest level of risk.

One in eight deaths in the EU is linked to pollution of the environment, according to the European Environment Agency (EEA).

Polluted air in Ukraine is largely caused by electricity generation and industry.

While the consequences of the climate change are not as evident yet, the death rate from the diseases caused by air pollution in Ukraine is the highest in the world – 120 cases per 100,000 people. Every year, it causes up to 66,000 deaths in Ukraine.

INTRODUCTION

According to the Energy and Environment Ministry, 5 out of 10 companies creating the highest levels of CO2 emissions are thermal power plants operating on coal. Four metallurgical plants and one mine are also among the top 10.

Transition to sustainable types of energy will have not only an environmental, but also economic impact in different areas. In particular, reduction of environment pollution and climate impact through rapid increase of the use of renewable energy sources can help save up to $4.2 trillion across the globe by 2030, according to IRENA.

NEW EU ECONOMIC STRATEGY

At the end of last year, the European Commission adopted a large-scale program – the European Green Deal with the goal of making Europe a climate neutral continent by 2050. The document is a set of economic instruments to promote decarbonization of the economies of the EU member states, as well as economic partners of the EU.

The Green Deal is primarily a project of economic transformation, as Europe is planning to phase out fossil fuels, replace them with renewable energy and also invest in new sources of energy, such as hydrogen. In parallel, technological transformation of the transport sector, industry, agriculture and other sectors will be taking place.

The EU is viewing the Green Deal as the most effective way to overcome the economic crisis caused by the COVID-19. In addition, it is also a long-term planning of the private business and investors’ priorities, which promotes confidence in the future and stability of the economy.

Four of the most energy-intensive industries, such as metallurgy, cement, chemicals (including petrochemicals) and three key transport sectors (road freight, aviation, and shipping) will together account for 38% of emissions and 43% of final energy use by 2050, according to a report by the International Renewable Energy Agency (IRENA).

The European Green Deal is a major plan of legislative changes and investment aimed to reduce the EU’s greenhouse gas emissions by 2030 to at least 50-55% compared to 1990, and achieve full climate neutrality by 2050.

For example, a number of countries plan to ban manufacturing of new cars with diesel and gasoline engines in favor of electric cars. Also the prospects of hydrogen vehicles, particularly in the road freight and public transportation, are being considered. The deal will also target energy efficiency of housing sector and industrial facilities.

The EU plans to allocate one trillion euro for the implementation of the plan over the next 10 years. Another EUR 100 billion will be allocated by the EU for the Just Transition Mechanism. The money will be used for the adjustment of the regions that will suffer from the transition to clean energy sources, for example creation of jobs for the miners and employees of thermal power plants, who will find themselves unemployed by that time.

The change of the economy model is expected to result in an average of 2% annual GDP increase in each EU country. In addition, up to three trillion euro will be saved annually through reduction of energy imports by 70% alone.

Ukraine has declared its support of the green course. In 2020 alone, at least 20 strategic documents have been adopted by the Government to fight climate change, including Ukraine’s 2050 Green Energy Transition Concept, Integrated National Energy and Climate Plan Until 2030, Reform of the Coal Industry and Its Action Plan, and others.

Recent studies have shown that polluted air increased COVID-19 death rate by 15%, Ukraine being among the 20 countries with the highest level of risk.

However, since the beginning of 2020, nothing has been done, except for statements and development of the concepts. The Energy Strategy of Ukraine needs to be reviewed, with the European Green Course within the Green Deal as its priority, as do the national action plans on energy efficiency and development of renewable energy (by the way, the current national plans expire in 2020).

Noteworthy, the EU is allocating significant funding for changing the economy model. Among the instruments that would accumulate sufficient funds for this kind of transformation, Ukraine currently has only the Energy Efficiency Fund.

At a meeting of the Council of Europe, then Ex - Prime Minister of Ukraine Oleksiy Honcharuk proposed to Frans Timmermans, Executive Vice President of the European Commission, to create a roadmap for Ukraine’s accession to the European Green Deal.

GREEN DEAL AND UKRAINE

At the time when countries tirelessly work to complete refurbishments of public and residential buildings, prevent inefficient new construction by promoting international green certification systems (BREEAM, LEED, OGNI, DGNB, etc.), trade green bonds to attract financing for green real estate portfolios, develop climate financing products for green technologies, integrate gender aspects into all these processes because gender equality is a proven requirement for successful mitigation and adaptation to climate change, where is Ukraine?

However, even development of strategies for 20-30 years does not mean that they will be implemented. Let’s try to analyze how the real actions differ from the course announced by the government.

For successful involvement of Ukraine in the European Green Deal, we need to develop a roadmap together with the EU, taking into consideration the economic development priorities and condition of the Ukrainian economy. Implementation of these steps also requires additional funding, the scope and sources of which have not been determined yet

Olha Buslavets

Ukraine since two decades works on updating national construction regulations, debates the need to revive the coal industry, works on best practices and single case studies of modernized infrastructure and occasionally changes its decisions on strategy. The time, as a most precious resource to help Ukraine mitigate and adapt to climate change is hopelessly lost with every year

Olena Rybak

Acting Minister of Energy, at the 11th Energy Day, organized by the European-Ukrainian Energy Agency

Managing Director of iC consulenten

“The EU’s ambitious goal is to make Europe the first continent, whose economy is not destroying the environment by 2020. Ukraine is ready to become an integral part of this success story,” Honcharuk stated.

GREEN ENERGY UKRAINIAN STYLE

The green tariff, the rate of which is higher in Ukraine than in the EU countries, is an excellent incentive for development of renewable energy. It allowed to attract not only domestic, but also foreign investment into construction of mainly solar and wind power plants and ensured rapid growth of the renewable energy capacities. The share of renewable generation in 2019 increased to 8.6% in the total electricity output, up 100% compared to the previous year.

Despite the agreement, the debt to the renewable energy producers continues to increase. As of November 3, UAH 23.35 billion in debt remained unpaid, according to SE Guaranteed Buyer. Because of this, several major market players have filed lawsuits in court.

Renewable energy is developing in Ukraine thanks to private investment. Unpredictability of the state as a guarantor of investment creates obstacles on the path towards further development of RES.

For their part, the government used the legislative and regulatory levers to guarantee the producers clear tariffs for green energy. However, in spring 2020, a crisis hit the renewable energy market; the green energy producers stopped receiving payments for generated electricity. As of August 1, 2020, the debt has reached UAH 22.4 billion.

After five months of payment delays and nine months of negotiations, the Government of Ukraine managed to agree with the renewable energy producers on debt repayment in exchange for reduction of the green tariff rate – by 15% for solar power plants with a capacity over 1 MW, by 7.5% for wind and solar power plants with a capacity under 1 MW retrospectively, and by 30% or higher for the future solar energy projects.

In 2014-2019, the solar and wind energy sector alone provided jobs for 25,000 people, not counting the stage of equipment production, according to a research by the European-Ukrainian Energy Agency. The cumulative effect of employment in other sectors of the economy is 10,000-15,000 jobs.

One of the challenges in Ukraine is the urgent need to modernize and adjust electricity transmission infrastructure(substations, power lines etc.) in view of both the rapid evolving of electricity generation from renewable energy sources and the aspired integration with electricity networks of EU countries – as a result, the sector will restore trust and progression and will provide reliable and easy access to electricity networks

Olaf Zymelka

In terms of energy, the EU Green Deal envisages improvement of energy efficiency in all sectors of the economy, especially in building; production of electricity mainly from renewable sources with gradual reduction of the use of coal; full integration of electricity markets to ensure uninterrupted electricity supply.

Strategic documents and action plans to fight climate change must be reviewed and contain more ambitious goals in terms of decarbonization. Consumers, who must be provided with clean and cheap electricity, must remain the focus. This can be implemented through reducing the cost of equipment for the construction of renewable energy power stations and decreasing their capital expenditures, and the costs of energy sources through implementation of energy efficiency support programs and comprehensive thermo-modernization.

However, when the tax authorities threaten to raise taxes and groundlessly accuse taxpayers of tax evasion, when the members of the parliament try to recognize the mechanism of stimulating RES unconstitutional, when large industrial groups fight for low prices for energy sources instead of introducing energy efficient measures, and refuse to pay at all, the producers of electricity from renewable energy sources are being worn out by non-payments, bringing them to a pre-default condition, when the Regulator offers to buy out all RES stations in open letters and the Government changes the rules of the game retroactively, the chances of introduction of a civilized renewable energy market grow substantially weaker.

Ukraine has incredible opportunities, engineers and talented workers, whose qualifications have substantially grown in the past five years to the level of international companies. So, no, this kind of successful growth should not be stopped. It is crucial that we find stabilization levers in the energy sector in harmony with the macroeconomic indicators, comprehensive recovery of the economy. This can be achieved only through political will and cooperation of the sector’s players

Oleksandra Gumeniuk

Director of EUEA

Director of KfW Eastern Europe, Caucasus and Central Asia and Chairman of the Board of the Green For Growth Fund

Ukraine imports over 60% of energy sources, including 100% of nuclear fuel. In 2018, Ukraine spent EUR 11 billion on import of energy sources. Electricity generation heavily relies on nuclear (54%) and coal (34%) power stations.

THE NEED FOR ENERGY MARKET TRANSFORMATION

Nuclear power is sold at the cheapest rate, although its price is much higher, if you take into account operational costs and future decommissioning costs.

The costs for decommissioning nuclear power plants after their lifetime expires will reach billions of dollars. At that, the lifetime will end for the majority of the NPPs within the next decades, several years apart.

In the event a decision is made to decommission the energy units at the NPPs, and in case there are no capacities for replacement, the country may fall into an energy crisis.

The European countries show different attitudes towards nuclear energy, which, on the one hand, is clean because it does not create CO2 emissions, while on the other hand the examples of Chornobyl and Fukushima show that the consequences of using such energy could be even worse.

Ukraine has four nuclear power plants with 15 energy units (construction of two units hasn’t been completed). The design lifetime of the energy units of the Ukrainian NPPs is 30 years. Ten energy units are now operating beyond their design lifetime.

Nuclear power

Germany announced its decision to phase out the use of nuclear energy by 2022. France, on the other hand, is developing the industry, focusing on small reactors, and is building the world’s first thermonuclear reactor. For Ukraine, taking into account the age of the nuclear power plants, there is not so much room for maneuvers.

EnergoAtom, the state operator, has only EUR 150 million at its disposal for decommissioning the NPPs – not sufficient to dismantle even one of them.

The situation is much worse with the coal generation. The majority of thermal power plants in Ukraine were built 60-70 years ago, and some – back in the 1930s.

In January 2020, the Energy Ministry presented a draft Green Energy Transition Concept of Ukraine Until 2050. Under the concept, Ukraine plans to fully phase out coal TPPs in 30 years, increasing the share of RES to 70%.

It is also proposed to reduce the share of nuclear generation in the energy balance to 20-25%, which is twice less than the current level.

Unlike a number of European countries, the plan does not envisage many shutdowns of coal power stations over the next 15 years, only their modernization and even re-equipment of several stations that use gas into coal.

In 2018, Ukraine topped the list of the countries with the most ineffective and expensive thermal power generation, according to a study by Carbon Tracker, a British analytical center.

Coal generation

For example, the government plans to shut down only 4 coal combustion plants with a total capacity of 3.694 GW by 2024. Upgraded coal-fired boilers are expected to be installed at 17 facilities with a total capacity of 15.118 GW. Thirteen gas incineration units with a capacity of 3.401 GW will be converted to coal. At that, the price for natural gas in the EU dropped, and gas is considered a more environmentally-friendly type of fuel than coal in terms of emissions.

At the same time, Ukraine has the National Emission Reduction Plan for Large Combustion Plants, which was approved by the Cabinet of Ministers in 2017.

Meanwhile, the European countries, one by one, are shutting down coal power stations and phasing out coal mining. This year, Austria became the first country to abandon power generation by coal. Over the next decade a number of countries have announced their plans to do the same, including France and Sweden (by 2022), the UK (by 2025), Greece (by 2028), Hungary (by 2030).

Europe’s top three lignite countries are Germany, Poland and the Czech Republic, Europe’s coal triangle. Moving away from lignite and replacing it with renewable energy will not only reduce CO2 emissions, but it is also economically beneficial.

The results of a research conducted by Agora, a German analytical center, which were published in September confirm this. The authors of the research developed a scenario of how the energy market and economic situation will change by 2032 due to withdrawal from the coal industry. They claim that a withdrawal of lignite, provided it is replaced by renewable sources, will decrease wholesale electricity prices, because the operating costs of wind and solar power plants are much lower than conventional power plants.

The level of CO2 emissions will drop 50 by 2032 compared to the current level.

The other issue that is often raised during a conversation about shutting down the mines and coal-fired power generation facilities is employment of the workers of these facilities.

The authors of a study by Instrat, a Polish analytical center, tried to find an answer using the example of one region.

They specify that the Lodzkie voivodeship, the center of lignite mining, can obtain up to PLN 48 billion (EUR 10.5 billion) from structural EU funds in the 2021-2027 period, including PLN 13 billion (EUR 2.1 billion) of public funds from the Just Transition Mechanism (JTM) alone. However, this allocation could be halved if the government rejects the pledge to reach climate neutrality by 2050.

The investments into renewable energy will create more jobs than the coal industry has at the moment, including mining and combustion.

The coal industry in Ukraine is also unprofitable. Ukraine has 37 mines, including 33 state-controlled and 4 private ones. Of the 33 state-controlled mines, 29 are not profitable. Instead, the state annually spends billions of hryvnia in subsidies to support the industry – around UAH 3 billion in 2020. The amount of subsidy per 1 ton of coal increased 3.7 times – from UAH 246 per ton in 2016 to UAH 908 per ton in 2019. The lawmakers have already planned UAH 4.5 billion in the 2021 National Budget for these purposes.

According to the Energy and Environment Ministry, the output of the state-controlled mines dropped from 6.7 million t to 3.5 million t over 2016-2019, while the amount of subsidy per 1 ton of coal increased 3.7 times.

This will immediately result in lawsuits and claims on reimbursement of the losses. That is why the Government needs to encourage reduction of consumption. One of the encouragements could be an increase of environmental taxes, primarily CO2 emission tax increase to the European level

Anton Zorkin

Energy Sector Head at the Better Regulation Delivery Office

Private mines extract 73-75% of coal, which is why it is impossible to prohibit coal mining directly.

Ukraine has a vast potential for renewable energy. Technically feasible and economically viable is a 63% share of renewable electricity generation by 2035, and 93% share by 2050, according to a study by the Heinrich Boell Foundation.

The distinguishing feature of solar and wind power plants is that their electricity generation volume is difficult to predict. That is why Ukraine needs to tackle another issue, the one of accumulation and storage of the generated energy.

It is also necessary to develop quick-start capabilities on gas and gas-turbine units that can quickly balance the changes in power, he says. If in 5-10 years, the technologies allow it – to produce hydrogen in the excess generation modes and combust it in energy units in case of a drop of capacity.

He also adds that a draft law No. 2582 dated 12.12.2019 was registered in the Verkhovna Rada of Ukraine On the Changes to the Law of Ukraine On Electricity Market (regarding energy security, energy system balancing and energy storage systems), which should settle the majority of key issues related to stimulating the market to use energy storage systems.

In the Energy Strategy of Ukraine until 2035, the share of energy from renewable energy sources is declared at a much lower 25%. However, even this share requires structural changes for the flexibility of the energy system.

Balancing RES

The volume of the energy storage market is developing rapidly, having grown 26 times in the period of 2015-2020 with the share of household energy storage systems accounting for around 16% of the total volume, according to him.

According to Kostyantyn Hura, Acting Head of State Energy Saving and Energy Efficiency Agency (ESEEA), 2GW of new highly-maneuverable capacities (with the range of regulation no less than 80% of installed capacity and capable of ensuring start and stop up to 8 times a day, with a power deployment from 0MW to a maximum value over 15 minutes) and 2GW of energy storage systems are planned to be built in 2021.

“As of today, Ukraine does not have the practice of installation of household energy storage systems (HESS) by households due to their high cost and absence of legislative regulation. An average cost of installation of a home solar power plant (HSPP) with a capacity of 30 KW is comparable to the average cost of an energy storage system of the same capacity, which is around $20,000 or UAH 500,000. HESS capacity of 5-10 KW, with the cost of installation ranging from UAH 83,800 to UAH 165,700, is optimal for installation by households. If 500-1,000 owners of HESS with the total capacity of 3-4 MW unite, they can access the market and provide an auxiliary service of loading/unloading 1MW in the system,” says Kostyantyn Hura.

Upon the initiative of the ESEEA, the Government extended the “warm loan” program to 2021, which envisages issuance of “warm loans”, including for the purchase of energy storage systems, intellectual electricity meters, home charger installations. Balancing the energy system is successful, provided it covers three key aspects that improve its flexibility: 1. Modernization of outdated and ageing energy infrastructure; 2. Integration with the European Energy System and performance of ENTSO-E agreement; 3. Managing demand and building balancing capacities. The path is simple, but one that requires cooperation between the key stakeholders of the industry, in addition to large investment.

The draft law requires revision in terms of providing a possibility to households that installed energy storage systems to participate in the organized markets according to the market rules, form prosumer aggregations

Kostyantyn Hura

“Practically all units operating on coal can equally be converted to operate on natural gas. That is why, the first step is rather clear – gradual replacement of the type of fuel, especially taking into account the requirements of the Green Deal. We have rather high capacities of the units that were built as gas-run, but now operate on coal, for example Trypilska, Zmiivska TPPs,” says Anton Zorkin.

The EU is considering a CO2 emission tax increase as the key driver of the decarbonization process in the EU member countries, and other countries that export their products to the EU.

The proceeds from the tax, however, are not directed at the energy efficient projects, but to the general fund of the national budget, which cancels out the very idea of the environmental tax.

To fix the situation, the Ministry of Energy of Ukraine together with the ESEEA have developed a draft law this year, envisaging establishment of the Corporate Energy Efficient Modernization Fund. Under the draft law, the funds will be used on energy efficient projects for the companies, for example replacement of equipment with more energy efficient one.

If steel is smelted at a Ukrainian coal-fired plant, its price in Europe, taking into account the CO2 tax, will be much higher than the steel produced in the local market, with the use of clean energy. Therefore, the products with a “carbon footprint” will become uncompetitive in the European market.

In 2019, the rate of the environmental tax for CO2 emissions from immovable sources grew 24 times in Ukraine, compared to 2018 to UAH 10 per ton. The tax is paid by the companies with over 500,000 t CO2 emissions per year. Although this tax in Europe averages EUR 30 per t, even this rate of the tax is a huge progress for Ukraine.

CO2 emission tax

Introduction of the environmental tax will mostly impact metallurgy, which is the biggest pollutant in Ukraine, agrarian sector, chemical industry and other industries.

Also, a draft law, envisaging a fourfold increase of the CO2 tax has been in the Verkhovna Rada for over a year. The MPs, however, have not yet found the time to consider it.

Taking into account the plans under the EU Green Deal, particularly regarding the introduction of a mechanism of taxation of imported carbon-intensive commodities, it is crucial for us to speed up the rate of decarbonization. Improving energy efficiency is one of the instruments.

Energy intensity of GDP in Ukraine was 2.5 times higher than in Poland, 3.3 times higher than in Germany and twice higher than the average in the world in 2018, according to the Global Energy Statistical Yearbook.

Ukraine is the most energy intensive economy in the world, consuming the highest amount of energy sources for production of 1 to of its GDP than all other countries, according to the International Energy Agency (IEA).

Ukrainian industry consumes around 30% of energy with the metallurgy being the largest consumer. In 2018, the energy losses due to low energy efficiency of the companies were estimated at $1.5 billion a year, which is the same amount as an IMF tranche, according to the Economy Ministry of Ukraine.

Residential sector is the largest consumer in Ukraine, accounting for 32% of the total final consumption (16,203 thousand toe in 2018). There are over 6.5 million households and over 80,000 high-rise apartment buildings in the sector. To encourage Ukrainians to save energy in the residential sector, the Agency is implementing a nationwide “warm loans” program. The Energy Efficiency Fund has been launched together with the EU for multi-apartment buildings with housing cooperatives.

In 2018, Ukraine topped the list of the countries with the most ineffective and expensive thermal power generation, according to a study by Carbon Tracker, a British analytical center.

Energy efficiency as a solution

In 2019, thanks to the reduction of gas consumption by 7 billion cubic meters by households, budget-funded institutions, enterprises in municipal heating companies compared to 2014, EUR 1.3 billion was saved.

Porovskyy points out that introduction of energy efficiency measures must be multisectoral, and is, probably, what is needed the most to strengthen the economy of Ukraine, improve energy system stability, prevent energy poverty and reduce CO2 emissions. “If Ukraine fully implements multisectoral energy efficiency measures, the freed energy sources would have been enough to provide for annual energy consumption of such country as Spain.

The total energy consumption in Ukraine dropped 20% compared with 2013.

The initiatives aimed at reduction of CO2 in the residential sector, which are being implemented at the local level, as also important. The Covenant of Mayors is one of such initiatives. As of today, there are 245 signatories in Ukraine covering over 20 million residents.

The communities that signed the Covenant of Mayors before 2016 committed to reduce emissions of CO2 by at least 20% by 2020. Those that signed the Covenant of Mayors after 2016 – by at least 30% by 2030.

Oksana Kysil, Covenant of Mayors Project Coordinator, notes that the signatories with commitments by 2030 are implementing projects not only to alleviate the climate change, envisaging reduction of CO2 emissions (energy saving, energy efficiency and RES), but also measures of adjustment, and factually cover all areas of the Green Deal, except for agriculture.

Big cities attract funding from international organizations (World Bank, EIB, KfW, EBRD, IFC, NEFCO) to finance energy efficient projects, and private ESCO for rehabilitation of public buildings, grants from the EU and other donors.

Smaller cities and towns mainly use the funding of the EU, NEFCO and private ESCO. The EU allocated over EUR 14 million in grants to fund 17 projects.

The main areas of introduction of energy efficient measures include public buildings, street lighting, heat and electricity generation, replacement of fixed assets at the water services companies that consume electricity.

“We have achieved quite a progress compared to 2005. We have a good legislative base – The Law On Energy Efficiency of Buildings, a draft law on energy efficiency, which is based on the European directives. Speaking about the municipal level, Ukraine has many programs, for example the Energy Saving Program 70/30. The program has been implemented for five years, and every year, more funds are allocated from the local budgets and more housing cooperatives submit their applications. The cities have many assistance programs, under which the residents are compensated for the interest on their loans or part of loan principal,” said Ima Khrenova-Shymkina, Deputy Project Director, Energy Efficiency Reform in Ukraine, GIZ, at the 11th Energy Day.

Many cities have established energy management departments tasked with attracting financing from the local budgets and international organizations, according to her.

According to Olena Rybak, Managing Director of iC consulenten, there are a number of good examples of projects and financial products on the market. “What is now needed is to scale this up, significantly. The reduction of the project cycle in this aspect is the most important thing. Currently it takes between 3 to 6 years to implement a project on i.e. simple building refurbishment or partial district heating system modernization with IFI financing. Here is where the turbo regime and systematic changes are really needed, we have to shorten this”.

The signatories with a commitment until 2020 – all of them, all 100%, stay true to their commitment, reducing the emissions by at least 20%,

Oksana Kysil

The ESEEA together with the Energy Ministry have developed a draft concept of the new 5-Year National Energy Efficiency and Green Energy Development Policy (2022-2026). The new policy will aim at supporting energy efficiency in different sectors of the economy, for example, encouraging companies to implement energy efficient measures, thermal modernization of public buildings (implementation of the Energy Efficiency Directive, driving energy service market growth for implementation of thermal modernization of public buildings owned by the state or municipalities, development of the charging stations for electric cars, renewable energy facilities, development of biogas production from agricultural wastes.

“Fulfillment of the tasks the ESEEA is faced with requires huge funds. This is possible with private investments, as the RES sector was developed thanks to private investments. Nearly all public buildings and a majority of the residential sector are old Soviet buildings. We need up to $100 billion for the modernization of the private sector and $10 billion for thermal rehabilitation of the public buildings,” says Kostyantyn Hura.

Of course, this is not a truthful picture, but it does expose a number of issues, such as accounting of energy sources and produced energy consumption, and, clearly, the level of energy sources consumption for ensuring economic processes. Also, reducing the sufficiency (including at affordable prices) of energy sources is and will be a real challenge. Excessive energy consumption is an indicator of energy poverty, when the country is already lacking energy sources for economic development

Serhiy Porovskyy

Energy Efficiency Financing and Policy Expert, UNIDO

CONCLUSIONS

The Green Deal is about the principles of sustainable economic growth and effective use of the resources. It is a harmony of the economy, harmony of the production/consumption and our Planet with respect to the environment we are all living in.

Transformation of coal regions will create new opportunities for development of renewable energy, new jobs that are safer for health.

For a country, it is a possibility to become energy independent, with a competitive economy and creation of new jobs. The Green Deal is not only about reduction of greenhouse emissions. The Green Deal aims to promote innovation, improve food quality, transition to sustainable transport, create new business niches and increase business activity. The Green Deal is about giving more than taking.

CO2 tax will force metallurgy, the most polluted industry, oriented at the EU market, to adjust its production to meet the new environmental standards. It will also be more beneficial for other companies to upgrade their production than to pay for emissions. This will make the air cleaner.

Energy efficient measures in the residential sector and public sector will ensure a new level of comfort at lower consumption of energy sources.

Ukraine has two paths of further development – to create conditions and attract investment in development of renewable energy sources, sustainable transport, energy efficiency of the residential sector and companies, or simply declare it in different strategies and plans, but not make any real changes.

Imposition of CO2 taxes creates a mechanism, under which a country that is not willing to invest into its own sustainable production will be forced to invest into sustainable production of others. And if some believe that the price of implementation of the Green Deal is too high, let’s imagine how much it will cost us to keep the things the way they are and do nothing at all.