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Economies on Transition: At the Crossroads of Development Olga Gassan-zade Center for Clean Air Policy, Ukraine SB-18, Bonn, June 9 2 EITs in the UNFCCC context Annex-I New EU members FSU » » » » » » » » » Russia » Ukraine Czech Republic Hungary Poland Slovakia Slovenia Latvia Lithuania Estonia Candidate countries » Romania » Bulgaria » Croatia 3 Differences in EITs Regional affiliations Political history Level of governance and the rule of law Development of institutions Investment climate Attractiveness for KP mechanisms 4 Per Capita FDI, 2000 450.00 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 0.00 C z Slo Es Po C r La H u Bu Lit Slo Ka R o R u U k ec v a t on lan oat t v i ng lga hua v e zak m a s s rai h R ki ne ary ria ni nia hs ni ia ia a ia d a a t an a ep ub 5 lic New EU and Candidate Countries Driven by accession History of private entrepreneurship Strong market and public institutions Active foreign engagement Diversification of GDP Previous experience with JI/AIJ Emissions trading as part of EU ETS 6 Russia and Ukraine Strategic focus in heavy industry Competitive advantage in labor and energy-intensive industries Driven by domestic rather than by foreign investment Gross inefficiencies in energy and industrial sectors (Ukraine: $15-16 bln) Lukewarm history with JI 7 Energy and Carbon Intensity in EITs, 1998 8 Source: Frankhauser, S. and Lavric, L. The investment climate for climate investment: Joint Implementation in Transition Industry Value Added in GDP 45 EU Ukraine 40 Russia Poland 35 Slovenia Lithuania 30 Slovakia 25 Latvia 20 1997 1998 1999 2000 2001 9 Conclusions The candidate countries appear best positioned to participate in JI New EU countries will be part of EU ETS Russia and Ukraine will not see the amounts of investment they need to change the situation in their industries, energy and carbon intensities are rising 10 Thoughts for the Future No reason to expect significant change in institutional development in Russia/Ukraine Climate change is not a priority in Russia/Ukraine If we fail to demonstrate that Kyoto can be a success this time there’ll be no case for the future. » Sustainable development » Good governance 11