Cablegate: Ukraine: Environmental Investment Agency On Copenhagen

VZCZCXRO1067
PP RUEHIK
DE RUEHKV #0229 0420855
ZNR UUUUU ZZH
P 110855Z FEB 10
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 9312
RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

UNCLAS KYIV 000229

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KGHG ENRG SENV UP

SUBJECT: UKRAINE: ENVIRONMENTAL INVESTMENT AGENCY ON COPENHAGEN
ACCORD

REF: A. STATE 11182
B. KYIV 129

SENSITIVE BUT UNCLASSIFIED

1. (SBU) Acting Economic Counselor and Economic Analyst met on
February 3 with Igor Lupaltsov, the head of the National
Environmental Investment Agency of Ukraine (NEIA), to discuss
Ukraine's association with the Copenhagen Accord and deliver talking
points per reftel A. Lupaltsov, who headed the Ukrainian delegation
at the Copenhagen summit, echoed NEIA's earlier statement that the
agency supported the association but the final decision would be
made by the Cabinet of Ministers (reftel B). He did not provide a
timeline of when Ukraine would formerly associate; although, he
mentioned that NEIA would send its formal recommendation on February
4 or 5 to the CabMin to associate.

2. (SBU) While Lupaltsov professed Ukraine's disappointment with the
outcome of the Copenhagen negotiations and criticized the
organization of the summit, he said the Copenhagen Accord was an
important step to reach a binding agreement. At the same time,
Lupaltsov stressed Ukraine would only join any future agreement if
the Kyoto-based cap-and-trade mechanism remains in place. Ukraine
plans to offer an emission reduction target of 20% by 2020, using
1990 as a baseline year. However, to reduce emissions by just 10%
from a business-as-usual scenario by 2020, Ukraine would reportedly
need to spend approximately $20 billion - funds which Ukraine does
not have absent a mechanism to sell its excess carbon units,
according to Lupaltsov. Although Ukraine's current emissions are
approximately 60% of the 1990 level, Lupaltsov estimates it would
exceed its emissions target if it reaches its goal of doubling GDP
by 2020. As a result, Ukraine views income from the cap-and-trade
system as essential to reduced emissions. Lupaltsov opined that the
only chance for a binding agreement to succeed is if it is based on
economic principles and offers a market-based approach to climate
change.

3. (SBU) Comment: Ukraine supports the Copenhagen Accord and wants
positive movement toward a legally binding agreement that would be
favorable to Ukraine. A legally binding agreement that includes a
carbon trading scheme benefits Ukraine in that it would provide cash
for Ukraine's surplus carbon credits, and, presumably, it would
attract environmental investment into Ukraine. It is uncertain how
soon Ukraine will formally associate with the accord given the
ongoing change-over in government; however, it seems inevitable that
Ukraine will associate and will continue to press for a follow-on
binding agreement. End Comment.

TEFFT

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