The State Decarbonization Fund: Are we waiting for a sad future? shutterstock

The State Decarbonization Fund: Are we waiting for a sad future?

Oleksandr Pobel

The State Decarbonization Fund cannot finance climate measures

The State Fund for Decarbonization and Energy Efficient Transformation has been unable to start working in Ukraine for five months. It was officially launched on January 1 of this year, but in fact, the institution is still not working.

EcoPolitics found out that the fund receives money, but it is impossible to use it because the bylaws are not yet ready. In particular, it is necessary for the Cabinet of Ministers to approve the draft resolution "On Approval of the Procedure for the Use of the State Fund for Decarbonization and Energy Efficient Transformation."

The Ministry of Infrastructure and the State Agency on Energy Efficiency and Energy Saving worked together to create the relevant document. In April, the draft resolution was finally prepared and sent to the Government for approval. It is currently under consideration by the Secretariat of the Cabinet of Ministers of Ukraine.

Why does Ukraine need the Decarbonization Fund?

The State Fund for Decarbonization and Energy Efficient Transformation should launch the "polluter pays" principle in Ukraine. This principle implies that environmental taxes are used for energy efficiency and decarbonization measures. Such a provision exists in the European Union's Energy and Climate Action Management Regulation.

According to the Ministry of Infrastructure, the money from the Decarbonization Fund is to be spent on such measures:

  • financing of measures and programs on energy efficiency, increasing the share of renewable energy sources, reducing greenhouse gas emissions;
  • compensation of expenses of individuals and enterprises for energy-efficient measures;
  • payment of Ukraine's debts for borrowed money for energy-efficient modernization.

How much money is in the fund?

The Ministry of Infrastructure planned to attract about 26 million dollars to the institution. In April, the head of the State Energy Efficiency Agency, Hanna Zamazeyeva, said that the Decarbonization Fund can allocate funds for energy efficiency measures and decarbonization in the amount of 1.5 billion hryvnias.

In addition to the eco-tax, the fund can be replenished with loans and grants. However, according to the information of the Ministry of Finance of Ukraine, loan money was not attracted to the institution.

To whom will the fund be given after the division of the Ministry of Infrastructure?

MP from the Servant of the People faction Oleksandr Kachura said on May 8 that MPs had decided to divide the Ministry of Community Development, Territories and Infrastructure into two separate departments. According to Ukrayinska Pravda, this decision was supported by Prime Minister Denys Shmyhal. So it is likely that the ministry will be split.

How will these changes affect the work of the Decarbonization Fund? Obviously, they will not contribute to the rapid start of financing the necessary measures. The low capacity of certain government institutions habitually hinders the implementation of projects that Ukraine needs. Therefore, ambitious statements and plans for the Decarbonization Fund remain just that, statements and plans.

As EcoPolitic reported, a number of environmental experts expressed doubts about the work of the Decarbonization Fund.

Earlier, EcoPolitic wrote that a National Decarbonization Platform will appear in Ukraine.

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