One of the most long-suffering international agreements, the Kyoto Protocol on Climate Change, became international law on February 16, 2005. Eight years after its ratification, it has become the object of political and economic games. Suffice it to recall the latest statements by members of the Russian legislative assembly, who voted down the ratification of the protocol. “The Kyoto Protocol would be their country’s crusade against its own interests,” “an economic Auschwitz,” and “energetic GULAG,” the Russian MPs declared. According to them, it would instantly disrupt the Russian president’s plans to double GDP growth by 2010. The US has also issued sharply worded statements. The White House believes that signing the Kyoto Protocol, which has already been ratified by 136 countries, would cost America dearly. If the US were to become the 137th signatory, it would face a sharp increase in oil, natural gas, and electricity prices. These arguments are not without merit, since the protocol is in fact designed to limit energy consumption.
If the protocol had not become law, however, the world would not be celebrating its first victory over global warming. After all, this is the overriding goal of the document. Without the signatures of 55% of the world’s largest greenhouse gas producers, it would not have become law. Ideally, by 2012 the EU member states will have cut their greenhouse gas emissions by 8% and Japan by 6% from 1990 levels. Under the Kyoto Protocol, signatories can do this either independently or with the help of partners. The simplest way is to invest in clean production technologies. Emissions levels may not exceed the limit set for each country. The other possibility involves a most unusual kind of business, i.e., selling air. A country with high levels of greenhouse emissions may buy emission quotas from other signing countries that have unused quotas or offer to upgrade their production facilities in return for quotas. After all, without clean technologies even the most environmentally safe country may one day become a purchaser of air.
Experts estimate that after joining the protocol, the US would be the largest buyer of emission quotas. Russia, which has been delaying the ratification of the Kyoto Protocol, is in a similar situation. Meanwhile, the reverse is true for Ukraine, as both environmentalists and government officials agree that this document will generate handsome profits for Ukraine. The reference year for the Kyoto Protocol is 1990, when Ukraine was experiencing a sharp decline in production. Since carbon dioxide was not believed to pose an environmental hazard, the protocol allowed Ukraine to produce up to 800 million tons of emissions annually. According to Vadym Diukanov, manager of the Ukrainian Society for Sustainable Development project at the Ministry for Environmental Protection, Ukraine uses only 65% to 70% of its quota. We may sell carbon dioxide emission quotas of up to 146 million tons annually, which would make Ukraine one of the largest suppliers of emission quotas in the “international air market.” Quotas cost between 10 and 20 US dollars per ton of emissions. According to estimates provided by the German Consulting Group, Ukraine may thus earn between $770 million and $2.9 billion annually. This makes Ukraine attractive to investors. In keeping with the Kyoto Protocol, any country can earn points by helping its partners reduce emissions. According to World Bank estimates, in Ukraine it costs a mere $7 to reduce emissions by one ton, while this figure is $190 for the US and $270 for the EU.
The mechanism of “air sales” has proved its viability within the US, which strangely enough, is an inveterate opponent of the Kyoto Protocol. The country that produces 25% of global carbon dioxide emissions is the home of the first emission quotas exchange. Companies receive emission quotas from the government and are free to use or sell them. Those who can make their production cleaner at a low cost make a profit at the expense of others, for whom environmental safety comes with a higher price tag.
It’s a different question altogether whether an international trade in quotas will be set in motion, and whether Ukraine will be able to participate in it. Despite the fact that Ukraine has attracted international interest, and Canada, Spain, and Holland have already made specific offers, the Ukrainian side has yet to respond to them. A year has passed since Ukraine’s parliament ratified the Kyoto Protocol. However, Ukraine has still not compiled a registry and inventory of emissions in line with the protocol requirements. There is no agency that would register applications and monitor projects or issue certificates for emission cuts. According to the most conservative estimates, to pay for all this Ukraine will need several million dollars in funding, which is not provided by the budget. According to the head of the Parliamentary Environmental Policy Committee, Hennadiy Rudenko, there are other sources of funding besides the budget, such as the national environmental fund that will be created in the nearest future. According to Rudenko, Ukraine ranks sixth in the world in terms of quotas available for sale, and this standing can guarantee a stable demand from both buyers and investors.
Business talk aside, many environmentalists believe that the Kyoto Protocol has been too long in coming. Forecasts suggest that by 2010 the level of global pollution will have increased by 30% from 1990 levels, while full compliance with the protocol requirements would reduce emissions by a mere 10%. Meanwhile, America’s refusal to participate in the Kyoto Protocol reduces the significance of its real benefits several times over. But the Kyoto Protocol alone will not be sufficient to roll back climate change. As Academician Dmytro Hrozdynsky said in a recent interview with The Day, emissions are not the only cause of the increasing greenhouse effect. “We have to expand the planet’s forested areas, regenerate forests, and purify the oceans — in a nutshell: do everything to speed up the absorption of carbon dioxide.” Hrozdynsky considers the Kyoto Protocol an important first step toward environmental awareness, which will bring results only if responsible decisions are made soon.
