Business associations call on the Government to take into account the interests of business and tough economic situation adopting NDC2


On December 3, the Ukrainian Business and Trade Association (UBTA) held a round table on possible risks associated with Ukraine's international commitments. The event was focused on the Second Nationally Determined Contribution (NDC2) under the Paris Climate Agreement and the expected position of the Ukrainian Government in the dialogue with the EU on the European Green Deal.

Last month, the Ministry of Ecology and Natural Resources of Ukraine presented an updated version of four NDC2 scenarios. The Government should finalize Ukraine's position on this issue before the meeting of the United Nations Climate Change Conference (Glasgow, Great Britain, November 1-12, 2021).

Iryna Stavchuk, Deputy Minister of Ministry of Ecology and Natural Resources of Ukraine, explained that the task of the Government is to find the optimal scenario that would ensure both the competitiveness of the Ukrainian economy and the modernization and decarbonization of key industrial sectors. The official also noted that protecting the interests of Ukrainian business in negotiations with the EU on the European Green Deal is a significant part of the agenda.

‘The Ministry decided to hold a series of sectoral discussions with business authorities and NGOs to analyze in detail the possible outcomes of different NDC2 scenarios,’ Iryna Stavchuk said.

Lesya Vasylenko, the Member of Parliament of Ukraine, highlighted the fact that there are no funds for the implementation of NDC2 or any other activities in the context of the European Green Deal in the current draft of the Ukraine’s budget for 2021.

‘So far there is no consensus in the Government and the Parliament on how much money should be allocated for certain programs for greening the economy. Amendments to the budget are possible only after such decisions will be made, ‘ Ms. Vasylenko commented.

Nazar Bobitski, director of the Brussels office of the Ukrainian Business and Trade Association (UBTA), outlined the position of the Ukrainian business, particularly exporters. According to him, the Government should take the most responsible approach on NDC2.

‘NDC2 must be, on the one hand, sufficiently ambitious, in the spirit of the Paris Climate Agreement, on the other hand, economically justified, taking into account national circumstances and the difficult economic situation in Ukraine. If we adopt ambitious goals, will the EU be able to compensate Ukraine for the additional cost that businesses have to incur? Will the EU be able to help us with investments, given into consideration that European business will receive more than 1 trillion euros financial assistance under the European Green Deal? If such assistance is not available to us, the EU must embrace the moderate, cost-effective NDC2 and keep its markets open to our exporters,’ Nazar Bobitski clarified.

Zoia Pavlenko, UBTA expert, continued the discussion on potential problems with attracting the much-needed investment.

‘In the relatively stable 2019 year, Ukraine brought in about 20 billion euros capital investments in total. According to all NDC2 scenarios presented by the Ministry of Ecology and Natural Resources, in the next 10 years (from 2020 to 2030) circa 25-30 billion euros should be attracted for decarbonization programs annually. How realistic is this, taking into account the severe consequences of COVID-19 pandemic for business and poor Ukraine’s level of investment attractiveness?’ Zoia Pavlenko asked.

The business associations emphasize the inadmissibility of shifting most of the financial consequences of Ukraine’s international climate commitments on the business shoulders.

‘From the experience of the last 15 years, if the Government says that as a result of the reform the business bears only part of the costs, the business usually remains face to face with problems. We do not want the situation to happen again. The metallurgical industry is interested in sustainable development and already invest a lot in environmental and decarbonization programs. But we insist that NDC2 scenarios should be realistic’, Oleksandr Kalenkov, President of the Ukrmetalurgprom Association, said.

As Ukraine’s agricultural export to the EU is growing from year to year, European Green Deal issues are becoming ever more relevant to the sector. ‘Agricultural companies invest a lot in increasing productivity and innovative technologies. After all, without productivity growth, we won’t be able to increase gross production and therefore improve prospects of economic growth. However, certain emission reduction scenarios may put this process in doubt. Therefore it is the Government’s job to ensure that economic and environmental strategic development programs are well balanced and harmonized. These scenarios must also reflect the position of the business communities,’ Volodymyr Lapa, Strategic Development Advisor to the President of the Ukrainian Agribusiness Club (UCAB).

UCAB, Ukrmetalurgprom, UBTA and six other business associations addressed the Prime Minister with an official letter to establish a cross-sectoral working group to mitigate the risks associated with Ukraine's international climate commitments.

To download the letter please follow the link