Ukraine is preparing to launch an emissions trading system
Ukraine is approaching the launch of a national emissions trading system (ETS) as part of its commitment to the EU Association Agreement. The system will allow setting limits on CO2 emissions, stimulating decarbonization and contributing to the country's climate goals.
In this regard, the European Business Association appeals to the Ministry of Environmental Protection and Natural Resources of Ukraine with proposals for amendments to the Draft CMU Order, in particular, to adjust the timeframe for preparing an analytical report and developing a regulatory framework.
The EBA experts believe that the deadlines for preparing the analytical report in 2024-2025 are too ambitious due to the complexity of research and consultations. They propose to postpone some activities to 2025 and engage specialists with relevant experience.
The EBA recommends implementing the ETS gradually:
- Relaunch of the MRV - starting in 2025, with at least three years of full operation before the pilot phase.
- Development of the regulatory framework - a process that will take place in parallel with the first phase and, according to the Committee's companies, may take 2-3 years.
- The pilot phase of the ETS will start in 2028.
- Full ETS phase - starting in 2031, provided that at least three years after the termination or lifting of martial law and at least three years after the launch of the pilot phase.
The pilot phase of the ETS will be an important stage for improving the system, providing additional information for its development. During the preparation, it is necessary to identify the legal acts that should be adopted before its launch, as well as those that can be finalized after its completion. Experts emphasize the importance of preparing the economy to join the EU ETS, in particular by strengthening interagency cooperation and adapting management platforms. It is also important to identify the system administrator, which could be one of the ministries or a newly created institution.
An emissions trading system will allow Ukraine to realize its climate ambitions by setting limits on CO2 emissions and providing incentives for businesses to decarbonize. The price of emissions will reflect changes in the economic and environmental situation.
As a reminder, in 2023, the EBA developed a Concept for building an emissions trading system in Ukraine and presented it to the Ministry of Environment. Experts of the EBA Committee are ready to continue to join the discussion and find ways to resolve these issues.
According to the EBA experts, clear planning and transparent implementation of the emissions trading system will contribute to the achievement of Ukraine's climate goals and integration with European carbon markets.
Therefore, the European Business Association appeals to the Ministry of Environment to finalize the Action Plan with the proposals of business.