REUTERS

"EU Green Deal ": A challenge and a chance for Ukraine's economy

15:00, 27 February 2021
5 min. 1843

The government has announced its intention to make Ukraine part of a new "European Green Deal" aimed at significantly improving the continent's environmental status. UNIAN understood how this strategic area of development will affect the economy and lives of ordinary Ukrainians.

More than a year has passed since the European Commission announced a new "European Green Deal" aimed at making our continent climate-neutral in the next 30 years. Late last year, the Ukrainian government filed with the EU its position paper on our country's participation in the Deal.

For Ukraine, as a large industrial state, this is a very ambitious goal, because for more than a century, the country has only been increasing its negative impact on the environment, turning part of once green and prosperous lands into landfills and industrial deserts.

Many Ukrainians are not yet aware of how much the new challenges in the state's economy will change, as well as their personal lives. After all, the new deal will require a drastically new attitude to the environment in the part of the population.

"The implementation of the European Green Deal has broad prospects for the efficient operation of many economy sectors, including energy, transport, energy efficiency, resource efficiency, real estate construction and renovation, energy efficiency in central heating supplies, and other economic activities," said Prime Minister Denys Shmyhal.

At the heart of the Green Deal for Ukraine will stand, first of all, energy industry, the engine of national economic development.

Acting Minister of Energy Yuriy Vitrenko noted that the EU Green Deal is not just an energy issue but a new economic paradigm for the country's economic recovery.

In the United States, the New Deal was launched during the Great Depression, when President Roosevelt said that a new economic course was needed for the U.S. economy to tackle Depression. Similarly, Europe, of which Ukraine is a part, now says "The pandemic situation requires a new deal. The new deal must be green," he said.

According to Yuriy Vitrenko, Ukraine also needs its own Green Deal to improve people's lives toward better sustainability.

"We should not take anything away from future generations, we should not develop through significant damage to the environment. That is the meaning of the Green Deal," he added.

Key aspects of new strategy

In December 2019, the European Commission at a meeting of its Council adopted a "Green Deal" - a package of measures aimed at modernizing national economies and the social sphere in order to transform Europe into a climate-neutral continent by 2050.

The key areas are: clean energy, climate action, building and renovating, sustainable industry, eliminating pollution, biodiversity, and sustainable agriculture, "from farm to work", and sustainable mobility.

Under the new course, the national economies of the parties to the agreement shall become circular, the production process shall not generate residues or waste.

Over time, the economies will experience a decline in demand for industrial products due to the extension of the goods' life. Given this and encouraging the use of recycled raw materials, it is possible to predict a decrease in demand for raw materials. It is clear that Ukraine, which is a major supplier of raw materials to the world and European markets, must now brace for radical shifts.

Agricultural initiatives and the transition to a sustainable EU food system will also increase requirements for agricultural and food products. And this can become an additional trade barrier and affect Ukrainian exports. On the other hand, promotion of organic products across the EU will create new opportunities for our producers.

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Climate change and the emphasis on organic products will lead to some reduction in crop yields and higher food prices.

The EU's Carbon Border Adjustment Mechanism will also be a major challenge for international trade and Ukraine in particular.

Currently in Ukraine, environmental legislation is being adapted to EU norms and standards.

It should also be emphasized that the national governments in the EU are now in the process of developing clear objectives for the chosen strategy, and it takes time to reflect on and agree them.

Ukraine's main tasks

Deputy Minister of Economy, Ukraine's Trade Representative Taras Kachka said the government's main economic priority in 2021 would be climate policy.

"The biggest economic priority this year, after all, is climate policy. The success of our cooperation with the EU for decades will depend on how it is formed," Kachka said.

According to DTEK Executive Director Dmytro Sakharuk, carbon neutrality is a global trend and that there's no way it will bypass businesses operating in Ukraine. Enterprises and the state must prepare for significant investments in making production greener.

According to him, studies have shown that by 2030, Ukraine needs to invest EUR 350 billion to ensure a carbon transition. And by 2050 Ukraine needs to have invested EUR 1.5 trillion.

It's not yet clear how a country with such a meager budget could find such huge money.

The European Union is currently developing a methodology on how to set up fund raising to this end. It is expected that these will be investments on the part of governments, international banks, private capital, strategic investors, as well as fundraising through amending tax systems.

Of course, for the wealthier economies – like Germany or France – finding sources for funding the Green Deal will be easier than for our Ukraine, which is still knocking on the EU door. Borrowing significant funds from Western poweres to modernize Ukraine is also not an option. Ukraine needs to find an opportunity to earn these funds.

It seems that now there's not a single Ukrainian politician or official who would understand where to find the money needed for these ambitious purposes.

Reconciliation with nature

The Minister of Environment and Natural Resources, Roman Abramovsky, referring to the UN conclusions on climate change, said that so far none of the global goals to stop degradation of land and marine areas has been fully achieved.

Deforestation and biodiversity loss remain on the list of major issues. More than a million species of plants and animals are deemed endangered on planet Earth at the moment.

In addition, about a quarter of the world's diseases are related to environmental threats. Polluted air is a cause of 7 million premature death annually.

Meanwhile, Ukrainians are witnessing the deterioration of environment and the negative effects of climate change.

Photo from UNIAN

"Improving relations with nature and avoiding the worst-case scenarios is still possible. UN experts call it the last decade, when it's still possible to influence environmental emergencies. But given the interconnection between climate change and biodiversity loss, air and water pollution, these problems can be solved only by joint efforts, coordinating action," said the head of the ministry.

To address climate change and achieve carbon reduction goals, Ukraine, like other European countries, needs to shape up an ambitious national contribution. That is, to make specific commitments on the volume of emission reductions.

Important decisions to start implementing "green" transformation should be reflected in Ukraine's State Budget and community development strategies across regions.

The government must adopt clear programs for waste management, reduction of water and air pollution, and extension of green areas. It is necessary to actually implement the already existing programs to reduce emissions by large polluting enterprises.

It is also important to create and develop the latest technologies in the field of renewable energy, including hydrogen generation. Ukraine has been identified as Europe's strategic partner in hydrogen production, so this area could become a locomotive that will lead Ukraine into a European environmentally friendly life.

There are powerful scientific and educational facilities in Ukraine, while Ukrainian youths have repeatedly surprised the world with their inventions. Obviously, Ukraine needs to implement grant programs that would allow the scientific community to develop and come up with better environmental solutions.

Anna Bredikhina

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