Fate leads the willing and drags along the reluctant.
— Seneca
The European Green Deal was first mentioned by European Union high officials at the end of 2019 after Ursula von der Leyen became the head of the European Commission. Thereby, the EU responded to societal demands, especially those of young citizens, to counter global climate change.
The goal of the Green Deal is super-ambitious: to ensure the economic growth of the EU member states and to cease oil, coal and gas consumption by 2050. So-called climate neutrality will require both innovative technological solutions and increased forest and natural park areas to absorb CO2 emissions.
The name of European Green Deal is in tune with Franklin D. Roosevelt’s New Deal, for it also aims to change the established stereotypes. By the way, the U.S. has a similar initiative named New Green Deal, which could become a reality with a Joe Biden victory as U.S. president.
So, the European Green Deal is a political concept gradually shaping up into strategies, plans, and legislative initiatives, which will have more and more impact on EU policy – both internal and foreign. Within a few years, the existence of a sound environment and climate program in neighboring countries will be the same mandatory requirement on the part of EU as today’s anti-corruption policy or an effective justice system.
The current focus of the Ukrainian government is to define Ukraine’s place in this new paradigm. Hence, our participation in the European Green Deal also became one of the topics for the 22nd EU-Ukraine Summit in Brussels on Oct. 6, 2020.
Watch: Green Deal — Ukraine needs to catch up on green energy
A few things on misplaced beliefs
We often see environmental protection as something separate from “regular life.”
Some people mention all kinds of things – the country is at war, we have the coronavirus crisis, tariffs are high, salaries and pensions are small, as well as gross domestic product, and the environmental issues are at the end of this list. In many respects, this is the result of a long-time misrepresentation of the “green” agenda in Ukrainian politics.
While in the EU, the environmental component of electoral programs became a list of specific actions which politicians promise (and deliver) to implement, in Ukraine this topic is reflected mostly by general promises from politicians, such as “We care about the environment and it would be great to build a waste recycling plant.”
The public still gives politicians a message that environmental protection can wait, because it’s not a hot issue for Ukrainians. But as the matter of fact – it is. Dust storms, forest fires, drought – all this happened in Ukraine during 2020, and these are clear signs that climate changes affected us too.
So, the European Green Deal is a long-term goal based on which new international unions and alliances will emerge, and leadership and cooperation will be formed in various aspects – political, diplomatic, technological, economic. The new European agenda is not only about cutting greenhouse gas emissions or becoming plastic-free. Above all, it’s about great economic transformation which will follow such transition. This will open the door to a comfortable life in a world free of fossil fuel combustion engines.
Those who stand aside will lose. Those who want to win should play the long game and be in the forefront of changes, shaping up this big politics. “You are either at the table or on the menu ” – as one of my friends says. It’s very important that Ukraine would also be at the table with a “green menu.”
Challenges and opportunities
International financial institutions refuse to fund projects aimed at the development of pollution-intensive industries. Apparent outsiders are coal thermal power industries, losing the competition to “green” energy sources. Countries in the EU are closing all their coal mines, regardless of the powerful national “coal lobby.”
Belgium, France, Great Britain et al. already ceased or almost shut down coal mining, even Poland made a commitment to close the last mine in 2049.
Fossil fuel, which was the driver of the First and Second Industrial Revolutions, isn’t suitable for the world of the Fourth one. Humanity’s energy demand is growing constantly and will grow further, but the planet just doesn’t have enough fossil fuel. Moreover, it won’t withstand the amount of emissions produced by technology development. What will happen to the world industry is obvious as in the case of car engines: increasingly strict government environmental requirements to emissions, accompanied by the ban for the “dirty” cars to enter European cities and towns. For example, Germany uses the Green Deal to at least level off, if not win, the situation on the market for the national car manufacturers, as they are still losing the competition to Asian and American companies producing electric cars and buses.
And it’s needless to say that Ukrainian industry is often outdated, power- and resource-intensive, stuck in the decades-old technological setup. Without the upgrade, it merely won’t survive in the 21st century. We need the “innovative reindustrialization” strategy, which would combine industrial, economic, and environmental policy for power-efficient and high-tech upgrade. Those who already invested in technology upgrade will have competitive advantages not only in the EU markets, despite complicated procedures of international funding and the lack of state support.
Carrot and stick for Ukraine
Ecosphere is not some shelter where one can lock up within the state borders. Thus, European Green Deal will provide for the “carrot and stick” system.
First “sticks” are known by now.
It’s so-called carbon border adjustment mechanism – or CBAM — implemented, for example, as an additional import charge for goods whose production leaves a significant carbon footprint.
According to preliminary estimates of industry experts, additional payments of Ukrainian companies for exports to the EU could increase by almost 600 million euros per year. Such a “stick” could hit the power industry, metallurgy, cement production, chemical industry. This is retribution for those who are unable to see a broader perspective focusing on their current interests. Though countries that can showcase the compatibility of their climate legislation with European standards, or companies that have already been modernized to such standards, may be exempted from this charge.
Frankly, the carbon border adjustment mechanism at the border is a well-thought-out protectionist move to develop own science and innovation and to support European industry by shifting some of the costs to countries that do not encourage national businesses to upgrade. It was developed to reduce dependence on energy sources from Russia, to ensure protection against “carbon leakage”, ie to prevent the transfer of production from the EU to other countries with less stringent environmental standards, and to ensure equal competition with generously subsidized Asian producers. However, it is now being considered for widespread implementation, even for countries that are official candidates for EU membership. Thus, it will be possible to produce megawatts of electricity and smelt thousands of tons of steel, but they will be too expensive in the EU internal market due to this additional duty. We also shouldn’t forget the reputational risk, which might force European consumers to prefer countries and suppliers with a lower carbon footprint.
In order to be able to influence processes, represent the position of national business, develop joint projects and minimize potential threats, Ukraine has chosen a strategy of “early accession” to the European Green Deal.
This was discussed at a meeting between Prime Minister Denis Shmyhal and Frans Timmermans, the vice president of the European Commission.
The issues of energy efficiency and fair transformation of the coal industry were discussed, along with Ukraine’s participation in hydrogen initiatives, about which the EU is sending strong signals, considering “green” hydrogen as a substitute for fossil fuels for energy, road and rail transport, aviation and metallurgy. It is important that Ukraine has the capacity to produce hydrogen and transport it to the EU through our gas transportation system.
A position paper has been drafted on various aspects of the Green Deal’s impact, which we have already submitted to the EU in August, outlining Ukraine’s vision for possible participation and its own red lines.
Other “carrots” of early accession include market access, value chain integration, joint investment projects, affordable loans and grants.
For example, during the 22nd Ukraine-EU Summit, Deputy Prime Minister for European and Euro-Atlantic Integration Olga Stefanishyna signed two eco-friendly agreements that can be seen as an “entry point” into the EU’s new green policy.
The first one is a €10 million agreement for actions under the “Climate Package for a Stable Economy: (CASE) in Ukraine” to fund projects for the development of Ukraine’s resource-efficient economy, stimulate the transition to a circular economy and reduce greenhouse gas emissions circular economy and reduction of greenhouse gas emissions.
The second one is an agreement with the European Investment Bank for 300 million euros for the thermal modernization of public buildings in Ukraine.
This is the first money that Ukraine will receive under the new EU environmental policy. They can be considered as a test investment of the new composition of the European Commission, the effectiveness of which will be considered as a basis for the financing of further, much more global, projects.
For the EU to hear Ukraine
We have agreed with European partners to launch a high-level EU-Ukraine dialogue on the European Green Deal and are beginning to develop a roadmap that takes into account the UN Sustainable Development Goals by 2030 and the provisions of the Paris Climate Agreement, which Ukraine joined in 2016.
And this is not just a “conversation” between officials of Ukraine and the EU.
It is, in essence, a political and legal platform where further practical steps are discussed and formed. We assume that Ukraine shares the EU’s ambitious climate agenda and is ready to move in that direction, at the pace of our objective capabilities. Then, in shaping the Green Deal policy, the EU must take into account the obligations existing under the Association Agreement between Ukraine and the EU and the modernization capacity of the Ukrainian economy. A similar moderately ambitious position is shown by Eastern European EU member states, but they receive enormous support from EU funds to transform their economies, to which we do not yet have access.
Our diplomacy and the Ukrainian lobby in the EU must work hard to minimize the impact of the carbon border adjustment mechanism, and so that other non-tariff instruments of trade regulation do not create additional obstacles to the integration of Ukrainian business into the EU market – as provided by the Association Agreement and WTO commitments. The European Union, which is being built as a continent without borders, must not build “carbon borders” with those countries that are applying for membership in it – it must become our principled negotiating position.
And to achieve this, we need to prove that “greening” the country and reducing harmful emissions are our own priorities. To do this, it is necessary to adopt appropriate legislation, and the budget of Ukraine should adequately finance relevant environmental measures, energy efficiency units, the development of green energy. Businesses also need to take a closer look at their impact on climate change, and the state needs to think about greening support programs.
To be continued…
Environment protection, the fight against climate change and the green recovery from the coronavirus will certainly be one of the main topics in the coming years in the context of future Ukraine-EU summits, contacts between MPs, business and experts.
Weakening or non-application of the carbon border adjustment mechanism to Ukrainian producers is an intermediate tactical goal that will show the correctness of our complex movement towards a climate-neutral Ukraine within the European integration framework. And Ukraine’s strategic goal is to develop an economic strategy for the Ukrainian green course and achieve climate neutrality in the second half of the century, to which we and almost all other countries have committed themselves by signing the Paris Climate Agreement.
And it is better that our movement towards climate neutrality will take place through energy-efficient and technological industry upgrade, rather than deindustrialization and the loss of markets; through the development of organic land use, rather than land degradation and devastation due to climate change; through own production and assembly of electric cars and charging stations, instead of import of used “dirty” cars; through the fair transformation of coal regions and the development of RES, rather than a steady increase in subsidies and problems for green investors.
Ukraine needs to clearly articulate its needs, proposals, and commitments under the European Green Deal. This is one of essential tasks for the government in the near future.
