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Final Report The consulting company of DIW Berlin Final Report June 2014 Project “Capacity Building for Low Carbon Growth in Ukraine” Low Carbon Growth in Ukraine Final Report DIW ECON GmbH Dr. Lars Handrich Mohrenstraße 58 10117 Berlin Germany Phone +49.30.20 60 972 - 0 Fax +49.30.20 60 972 - 99 [email protected] www.diw-econ.de DIW ECON GmbH Dr. Ferdinand Pavel ii Mohrenstraße 58 10117 Berlin Low Carbon Growth in Ukraine Final Report Table of Contents Management-oriented summary ............................................................................................ 1 Executive summary ............................................................................................................... 3 1. Sectoral economic analysis ............................................................................................ 7 1.1 Introduction and summary of main results................................................................. 7 1.2 The Benchmarking Approach ................................................................................... 9 1.3 Benchmarking the metal industry ............................................................................ 11 1.3.1 Database .........................................................................................................11 1.3.2 The metal industry in selected countries ..........................................................13 1.3.3 Efficiency benchmarking ..................................................................................15 1.3.4 Adjustment for structural characteristics ...........................................................17 1.3.5 Summary and implications for the metal industry in Ukraine ............................21 1.4 Benchmarking the non-metallic minerals industry ................................................... 23 1.4.1 Database .........................................................................................................23 1.4.2 The non-metallic minerals industry in selected countries ..................................24 1.4.3 Efficiency benchmarking ..................................................................................26 1.4.4 Adjustment for structural characteristics ...........................................................27 1.4.5 Summary and implications for the minerals industry in Ukraine ........................31 1.5 Benchmarking the chemical industry....................................................................... 32 1.5.1 Database .........................................................................................................32 1.5.2 The chemicals industry in selected countries ...................................................33 1.5.3 Efficiency benchmarking ..................................................................................34 1.5.4 Adjustment for structural characteristics ...........................................................36 1.5.5 Summary and implications for the chemicals industry in Ukraine .....................41 1.6 Conclusion .............................................................................................................. 41 2. Short analytical papers on economic analysis of policy options to support low carbon policies ..........................................................................................................................43 2.1 Towards a low carbon growth strategy for Ukraine ................................................. 43 2.2 Assessing the innovation potential in Ukraine ......................................................... 44 2.3 Policy options for LCD in industry ........................................................................... 45 2.3.1 Introduction ......................................................................................................45 2.3.2 Status quo and the planned policies in industry ...............................................46 2.3.3 Potential for emission reduction in industry: Assessments from the literature ...51 2.3.4 What can the government do for the low carbon development? .......................51 iii Low Carbon Growth in Ukraine Final Report 3. Impact assessment of identified policies and measures and development of BAU scenarios until 2020 and 2050 .......................................................................................53 3.1 How to assess the potential of identified policies for low-carbon economic growth in Ukraine ............................................................................................................... 53 3.2 Model description .................................................................................................... 54 3.2.1 Building blocks .................................................................................................54 3.2.2 Production technology .....................................................................................55 3.2.3 Power sector ....................................................................................................57 3.2.4 Heat supply sector ...........................................................................................58 3.2.5 Taxes and subsidies ........................................................................................59 3.2.6 GHG emissions ................................................................................................60 3.2.7 Rest of the world ..............................................................................................60 3.2.8 Behavioural setup and equilibrium ...................................................................61 3.2.9 Dynamic elements ...........................................................................................62 3.2.10 Model closure ..................................................................................................63 3.2.11 Database .........................................................................................................64 3.3 Scenario analyses .................................................................................................. 70 3.3.1 The Business-as-Usual (BAU) Scenario ..........................................................70 3.3.2 Results of the Business-as-Usual scenario ......................................................82 3.3.3 The Energy-Efficient-Investments (EEI) scenario .............................................86 3.3.4 Results of the Energy-Efficient-Investments (EEI) scenario .............................91 4. Short-term, ad hoc expertise and consulting to decision makers and key stakeholders for current topics on the political agenda .............................................................................97 4.1 Introduction ............................................................................................................. 97 4.2 The challenge ......................................................................................................... 98 4.3 Analysis .................................................................................................................. 99 4.3.1 Expected yearly levels of GDP growth until 2020 .............................................99 4.3.2 The intensity of GHG emissions per GPD until 2020 ...................................... 100 4.3.3 Expected national GHG emissions: new adjusted estimations ....................... 101 4.3.4 Costs of reaching the 2012 Doha Amendment ............................................... 101 4.4 Conclusions .......................................................................................................... 102 5. Revised concept of a low carbon development plan of Ukraine: From Stabilisation to Sustainable Economic Growth ..................................................................................... 103 6. Findings from the economic assessment of a domestic ETS and possibilities for linking the ETS in Ukraine with other FSU countries ............................................................... 105 iv Low Carbon Growth in Ukraine Final Report References ......................................................................................................................... 107 Appendix A ......................................................................................................................... 114 Appendix B-1 ...................................................................................................................... 117 Appendix B-2 ...................................................................................................................... 129 Appendix C-1 Benchmarking for sustainable and economically viable technology options Appendix C-2 Towards a low carbon growth strategy for Ukraine Appendix C-3 Assessing the innovation potential in Ukraine Appendix C-4 The 2012 Doha Amendment to the Kyoto Protocol: Implications and Recommendations for Ukraine Appendix C-5 Benchmarking for sustainable and economically viable technology options Appendix C-6 Towards ratification of the 2012 Doha Amendment to the Kyoto Protocol by Ukraine: The revised projections of national GHG emissions Appendix C-7 MRV and linking a potential ETS in Ukraine with other systems Appendix C-8 From Stabilisation to Sustainable Economic Growth v Low Carbon Growth in Ukraine Final Report List of Figures Figure 1: Technical efficiency levels of metal industries in selected countries (in 2007) ........ 16 Figure 2: Structural characteristics of the metal industry in selected countries (2007) .........
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