Ukraine has the potential to generate up to $5 billion in carbon revenues over the next 3 to 5 years. These opportunities can be realized through: Trading of Surplus Emission Allowances under the Kyoto Protocol – OECD countries will have to purchase around 2 billion tonnes of surplus emission allowances to meet their commitments under the Kyoto Protocol. There is likely to be significant competition in this market since transition economies together have about 6 billion tonnes of surplus allowances; and about 29% are available in Ukraine alone. Also, OECD buyers have indicated their interest in purchasing surplus allowances only if they are “greened”, i.e. sales are linked to investments that reduce emissions of greenhouse gases and/ or increase carbon sequestration, so called “Green Investment Schemes”. One benefit of “greening” is that Ukraine, by selling existing surplus allowances, can invest in emission reduction projects up to and beyond 2012. Several transition economies are already working with the World Bank to develop a Green Investment Scheme to enhance the marketability of their surplus allowances. Implementing Projects that Reduce Greenhouse Gas Emissions or Enhance Sequestration – OECD countries are expected to purchase between 0.5 and 0.8 billion tonnes of emission reductions through investments in projects that reduce emissions of greenhouse gas or enhance sequestration; the so called Joint Implementation mechanism. Ukraine alone has the potential to achieve emission reductions of the order of 2.7 billion tonnes through energy saving investments in the power, industry, water and district heating sectors (20%); methane capture from gas transmission and distribution systems, coal mines and landfills (21%); energy efficiency improvements across all sectors including the residential sector (40%); as well as investments in renewable energy, agriculture and forestry. Timing is Critical - The window of opportunity is rapidly closing due to uncertainty in the carbon market at the end of 2012; the first commitment period under the Kyoto Protocol. Large scale trading opportunities and the majority of project based transactions are targeted at meeting OECD compliance needs up to 2012. This emphasizes the need for quick action given the long lead time between project preparation and the ‘first yield’ of emission reductions, and the likely competition for the sale of surplus allowances. The World Bank Can Help to Realize these Opportunities - The World Bank is Trustee of a number of carbon funds comprising public and private buyers. Over US$1 billion of funds are currently under management, targeted at project based transactions and the purchase of surplus allowances that have been “greened”. Through its experience in the market, the Bank brings to the table its ability to mobilize in-house and external expertise, links to sources of funding and technical support for carbon project development and supervision. The Bank supports host country capacity building through its CF-Assist (grant) program and training provided by the World Bank Institute. Further Information is available online [www.carbonfinance.org] and through:
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