UKRAINIAN INDUSTRY LINES UP TO CASH IN $780 MILLION ON EU CARBON

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Kyiv Post, 1 March 2007

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by Olga Gnativ, Kyiv Post Staff Writer

Iryna Stavchuk, climate change coordinator at the National Environmental

Center in Ukraine, said governmental red tape is stalling approval of

many potentially lucrative carbon-credit trading deals 

Ukrainian enterprises continue to try to cash in on carbon emissions

trading under the international Kyoto agreement, with an eye also on the

other benefits of improving energy efficiency at their industrial

production facilities.

On Feb. 13, Ukraine's foreign-owned mini steel mill in Donetsk Region,

ISTIL, inked a deal to sell the European Bank for Reconstruction and

Development (EBRD) its surplus greenhouse gas emissions.

However, the agreement will take full effect only after it is signed by

the Environment Ministry, which has almost 50 other joint implementation

projects lined up for its approval.

ISTIL's joint implementation project with the EBRD is one of the ways

that carbon-billowing industrialized nations meet the limits set out by

the Kyoto protocol, which entered into force two years ago as an attempt

by the international community to slow down climate change.

According to the joint implementation project, ISTIL, founded by

Pakistani businessmen who studied metallurgy on Ukrainian turf during

Soviet days, will invest $45 million into energy efficiency as part of

an $85 million loan issued by the EBRD.

If the government approves the project, ISTIL will get about $4 million

from the EBRD in return for 650,000 emission reduction units, which are

equivalent to the tons of cut greenhouse gas emissions expected at the

steel mill over the next five years.

Iryna Stavchuk, climate change coordinator at the National Environmental

Center in Ukraine, said ISTIL's carbon trading deal with the EBRD is one

of almost 50 joint implementation projects in queue for approval by the

government.

"The joint implementation projects are happening despite, rather than

thanks to, government efforts," she said.

Many Ukrainian companies that need to make their facilities more

energy-efficient are not aware of the Kyoto mechanism and don't even

suspect that they can make money on it, according to Stavchuk.

Therefore, many investments are going to other countries more prepared

to host them, she added.

"Governments in developing countries such as India, China or Brazil,

work [actively] with their industries and create special portfolios for

the plants and companies that are eager to participate in so-called

clean development mechanisms."

"Meanwhile, foreign companies often have to come to Ukraine

independently to look for a plant and convince its management to take

part in a joint implementation project," Stavchuk added.

Stavchuk said carbon-trading deals often wait up to a year for

government approval, which is supposed to be given in a month, due to

poor management at the Environment Ministry, which is responsible for

granting approval.

"More joint implementation projects could happen if the government

eliminated legislative barriers throughout different sectors," she

added.

According to global carbon-market consultancy Point Carbon, only five

joint implementation projects in Ukraine have received final approval

from the government.

Point Carbon estimates that Ukrainian industry could raise $780 million

by selling 130 million tons of greenhouse gas reductions per year, which

is equal to 130 million emission reduction units.....

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