United Nations Development Programme
Country: Ukraine
Project Document
Project Title
Capacity Building for Low Carbon Growth in Ukraine
UNDAF Outcome(s):
Government of Ukraine adopts policy frameworks and
mechanisms to ensure reversal of environmental degradation,
climate change mitigation and adaptation, prevention and
response to natural and man-made disasters
Expected CP Outcome(s):
Government of Ukraine adopts policy frameworks and
mechanisms to ensure reversal of environmental degradation,
climate change mitigation and adaptation, prevention and
response to natural and man-made disasters
(Those linked to the project and extracted from the CP)
Expected Output(s):
(Those that will result from the project)
Capacity of partners strengthened to design and implement measures on
climate change (CC) and Energy Efficiency at local level
Implementing Agencies:
State Environmental Investment Agency
Brief Description
The project aims to assist Ukraine in developing a long-term low carbon development strategy,
focusing on achieving economic growth and avoiding concomitant increase in greenhouse gas
emissions. Ukrainian government’s overall institutional capacity to design and implement
climate change policies and measures will be improved by developing appropriate decisionmaking tools and analysis.
Programme Period:
2012-2016
Key Result Area (Strategic Plan)
______________
Atlas Award ID:
______________
Start date:
End Date
November, 2011
November, 2013
PAC Meeting Date
______________
Management Arrangements
NIM
Agreed by (Government)
Agreed by (UNDP):
I.
SITUATION ANALYSIS
Ukraine became Party to the UN Framework Convention on Climate Change (UNFCCC)
in 1997 and ratified the Kyoto Protocol in 2004, committing itself to stabilizing its
greenhouse gas (GHG) emissions for the period of 2008-2012 at 1990 level. Due to
economic decline following the break-up of the Soviet Union, Ukraine's greenhouse gas
emissions are currently 54% lower than in 1990. At the same time, the Ukrainian economy
remains among the most carbon intensive globally; the level of GHG emissions per unit of
GDP is three times higher in Ukraine than the average for OECD countries.
The trend of emission decline has already reversed, and from 2000 to 2007 Ukraine's
greenhouse gas emissions increased by 12%. Ukraine's government remains optimistic
about its long-term economic recovery and at the same time doubts the ability of the
country to decouple economic growth and increase in emission reductions. As its
submission to the Copenhagen Accord, Ukraine offered a target of 20% reduction of
greenhouse gas emissions by 2020 in comparison with 1990 as its possible commitment
under a future climate change regime. In absolute terms this represents an over 70%
increase from current emission levels and the least ambitious target of all post-2012
targets proposed by countries currently included in Annex I of the UNFCCC.
Although Ukrainian government is aware of the lack of ambition in its target, it currently
lacks the tools and resources to examine the realistic mitigation potential, analyze and
evaluate potential policies and measures that could contribute to stabilisation of emissions
in the country, particularly from the point of view of economic development and energy
security, and to lead a broad interagency process that could result in the formulation of a
long-term low carbon growth strategy.
II.
STRATEGY
The project aims to support the Government of Ukraine in steering the country on a low
emission pathway for Ukraine’s long-term economic development. To this effect, the
project will strengthen the institutional capacity of Ukraine to design and implement longterm policies and measures directed at reducing emissions of greenhouse gases and
enhancing absorption by sinks.
The project goal is development of a long-term strategy of low carbon growth of Ukraine,
that can be used by the Government of Ukraine to inform the formulation of its sectoral
processes domestically, and internationally.
The project team will pursue an integrated approach, allowing the Government of Ukraine
to utilize the tools, information, and support it requires in initiating, developing and
adopting a low-carbon development strategy. In particular, the project will
- Develop new generation GHG models and comprehensive projections of GHG
emissions;
- Prepare the concept of Ukraine's low carbon growth strategy by 2020 and 2050;
- Prepare enabling environment for the introduction of a domestic emissions trading
scheme in Ukraine;
- Improve the measurement, reporting and verification of greenhouse gas emissions;
- Strengthen institutional capacity to implement climate change policies in Ukraine.
Target group: Government of Ukraine, national scientific institutes, private sector entities,
public and non-governmental organizations, people of Ukraine.
2
The project team will pursue an integrated approach, allowing the Government of Ukraine
to utilize the tools, information, and support it requires in initiating, developing and
adopting a low-carbon development strategy.
As a foundation of a low-carbon development strategy, the team will help to develop a
new generation of GHG models and comprehensive projections of GHG emissions that
can be utilized by the government of Ukraine to inform its decision-making. The models
and projects will be designed flexible and user-friendly to enable for analysis of NEIA to
update them on a regular basis depending on the real-life economic development.
Building onto and feeding into the development of GHG models will be analysis of
mitigation opportunities in Ukraine, which will serve as a basis for the preparation of a
draft concept of Ukraine’s low carbon growth strategy by 2020 and 2050. The concept will
provide significant consideration of potential sources of financing of the low carbon
development, and will elaborate specific mechanisms the government may wish to
employ.
As one of such elements the project will consider, and help Ukraine in designing, a
domestic emissions trading scheme.
Furthermore, recognizing the interconnectedness between Ukraine’s domestic policies
and the international climate change policy and negotiations, the project will assist the
government of Ukraine in communicating its low carbon development strategy and
incorporating it in its international approaches, including its position in post-2012
negotiations.
Contribution to climate change mitigation or adaptation
The project activities will facilitate the setting and implementation of an ambitious vision of
Ukraine’s low carbon development. It will provide specific input towards long-term
mitigation policies, allowing Ukraine to take a proactive position in international
negotiations on the future climate regime.
Thus the project will not only assist Ukraine in reducing its emissions at a national level,
but it will also enable Ukraine to provide a significant contribution towards achieving 2540% reduction in Annex I emissions by 2020. The latter would be important for facilitating
successful and ambitious future global climate regime.
The project will also significantly contribute to further strengthening and development of
carbon markets by facilitating the introduction of an emissions trading scheme in Ukraine.
Establishment of an emissions trading scheme in Ukraine will support EU's goal of
creating a global carbon market by 2020 and promote the use of horizontal market
mechanisms for environmental protection in the Europe and the CIS region as well as
globally
Contribution to economic and social development in the project region and in the
country of implementation
A concept of a low carbon development plan of Ukraine will be prepared in close
collaboration with the government of Ukraine, setting out a vision of the country’s socioeconomic development in a carbon-constrained world up to 2020 and 2050.
Besides ensuring low emission growth, the plan will also map out a strategy for attracting
climate-friendly investment, incentivising low carbon businesses, and leveraging additional
resources for realization of the government's emission reduction goals.
3
Implementation of a low carbon development plan is expected to contribute significantly to
economic and social development of Ukraine by creating green jobs, promoting energy
efficiency and energy security, and improving access to a variety of financial resources to
stimulate the country's low carbon growth, including carbon markets and market-based
mechanisms.
Further effects of the project
Since its inception, the State Environmental Investment Agency has consistently strived to
advance the climate policy in Ukraine and to bring the benefits of the carbon markets to
the Ukrainian economy. Currently, Ukraine is one of the leaders in hosting emission
reduction projects among UNFCCC Annex I countries.
The project will continue the positive trend of increasing Ukraine’s institutional capacity
with regards to climate policy and carbon markets and thus will:
- enable Ukraine’s sustainable economic development through design and implementation
of policies promoting the country's economic growth without growth in greenhouse gas
emissions;
- promote the use of market-based instruments for environmental protection in Ukraine,
the CIS region, and globally;
- improve Ukraine's adaptability to the consequences of climate change;
- continue to raise awareness of climate change in Ukraine;
- contribute to an ambitious post-2012 climate protection agreement.
Securing sustainability after completion of support (long-term project financing,
management and institutional integration)
The State Environmental Investment Agency of Ukraine is a direct beneficiary of the
project. The project corresponds to and supports implementation of climate change policy
priorities of Ukraine. The project's sustainability and long-term financing of follow-up
activities will be ensured by the capacity and operations of the NEIA as a governmental
institution subordinated to the Cabinet of Ministers of Ukraine and financed from the
national budget of Ukraine.
All outputs of the project will be handed over to the government on their completion to
allow full access, updating, and modification according to the evolving needs and
circumstances of the government of Ukraine.
Duplicability of results, prominence and multiplier effect
Successful development and implementation of a low carbon growth strategy for Ukraine
will serve as a proof of concept and will allow disseminating Ukraine’s experience to other
countries in the region. The methods used in the process of developing the low carbon
growth strategy can be replicated; the lessons learned from the project will be shared with
neighbouring countries.
Furthermore, the efforts of Ukraine to establish an emission trading scheme will serve as a
test case and over time will facilitate successful development of domestic and regional
greenhouse gas markets. This would support and contribute to the promotion and
deployment of horizontal market-based mechanisms both in the former Soviet Union and
beyond.
The experience learned from this process will be transferable to other countries with
similar level of economic development, in particular among middle-income developing
countries.
4
Innovative character (technological, economic, methodological, institutional)
The project is first of a kind in the former Soviet Union which comprehensively addresses
post-2012 climate change regime and capacity building needs. Ukraine is the only country
in the Commonwealth of Independent States (CIS) and the only country in the former
Soviet Union outside of the EU that is actively pursuing the possibility of using an
emissions trading scheme as a long-term greenhouse gas mitigation policy.
Should the project go ahead, Ukraine would also be the only country in the CIS engaged
in the elaboration of a comprehensive long-term low carbon development plan. The
project's approach of using an integrated vertical of environmental policy tools, such as
monitoring of emission reductions, modelling of emission forecasts, harnessing carbon
markets and preparation of long-term climate policies on their basis has not been applied
previously on a similar scale in the former Soviet Union.
III.
PROJECT STRUCTURE AND ACTIVITIES
The Project activities will consist of four components:
1. New generation models and comprehensive projections of GHG emissions
The project will develop new generation models and comprehensive projections of GHG
emissions with a view to increase the understanding of the country’s emission trends and
develop new and effective policies for building a low carbon economy. To this purpose the
project will:
1.1 Carry out a detailed sectoral analysis of Ukraine's greenhouse gas emissions, with the
view of identifying specific emission trends and analysing their causes, including:
1.1.1 Identification and selection of sectors and subsectors
1.1.2 Analysis of historic emission trends and factors that have contributed to their
development
1.1.3 Identification and analysis of main emissions drivers
1.1.4 Analysis of linkages between economic development, development of the identified
sectors and the growth of respective sectoral emissions
1.2 Carry out sectoral economic analysis
1.2.1 Development of the specific fortcasting models of certain sectors Ukrainian
economy, depending on their respective contribution to national GHG emission
levels (energy, heat supply, etc)
1.3 Incorporation of available sector-specific Marginal Abatement Cost curves NEIA will
provide project team amd Responsible Partner with the sector-specific Marginal
Abatement Cost curves developed within the framework of complementary project
financed by EBRD.
1.4 Develop new generation of greenhouse gas models that will be suited for sectoral
emission modelling and can be adjusted regularly based on updated bottom-up
information about sectoral and installation-level emissions. This will include:
5
1.4.1
1.4.2
1.4.3
1.4.4
Review of existing projections/models, assessment of existing forecasts
Elaboration of Conceptual approach to GHG model (predesign)
Building of sectoral model shell
Development of interfaces with economic and sectoral growth projections, MAC
curves, GHG effects of low carbon growth strategies and policies
1.4.5 Development of reconciliation/alignment approach vs empirical data
1.4.6 Model testing and refinements
1.4
Prepare comprehensive projections of GHG emissions by sources and their
sequestration by sinks for the periods up to 2020 and up to 2050 with and without
implementation of climate change policies and measures:
- business-as-usual
- taking into account policies as measures as identified in the low carbon development
strategy
1.4.1 Description of business as usual (BAU) scenario including sensitivities
1.4.2 Run of BAU projections based on mainstream assumptions and sensitivities
1.4.2 Development of 2020/2050 projections based on selected assumptions regarding
climate change policy
1.5 Organize stakeholder consultations and broad outreach on the findings
1.5.1 Organizing stakeholder consultations to inform about the findings and assumptions
of the model
1.5.2. Providing training to NEIA and local consultants on the use of the model
Point Carbon will provide the international expertise on GHG modelling and analysis and
will be supported in it by local expert teams. UNDP Ukraine will be in charge of organizing
stakeholder consultations and outreach, as well as in charge of hiring the local experts for
the task.
The models will be handed over to the government on completion of the project to enable
the government to update greenhouse gas projections regularly based on the up-to-date
scenarios of the country’s socio-economic development.
2. Development of low carbon development plan
Building on the outputs of the modelling work, the project will assist the Government of
Ukraine in identifying and prioritizing a set of comprehensive integrated long-term
greenhouse gas mitigation policies and measures that could serve as a foundation of a
broad policy framework for achieving low carbon growth. The project will work closely with
national stakeholders in assessing priorities, emission reduction potential and feasibility of
a range of possible actions and initiatives directed at reducing greenhouse gas emissions
and enhancing absorption by sinks, and will provide specific recommendations with
regards to their implementation. Specifically the project will carry out:
2.1 Identification of policies and measures for low carbon growth that can be implemented
in Ukraine.
2.2 Assessment of the mitigation potential of identified policies and measures
6
2.3 Provision of support for low carbon policy analysis through short analytical papers on
economic analysis of policy options
2.4 Impact assessment of identified policies and measures at the macroeconomic and
sectoral levels; development of BAU economic scenarios of Ukraine’s development to
2020 and 2050, including but not limited to official government forecasts and development
strategies.
2.5 Analysis of alternative schemes to finance different strategies with special reference
on proceeds from Post Kyoto Instruments
2.6 Provision of short-term, ad hoc expertise and consulting to decision-makers and key
stakeholders for current topics on the political agenda
2.7 Preparation and presentation of the concept of a low carbon development plan of
Ukraine setting out a vision of the country’s new development path up to 2020 and 2050.
The concept will be prepared in close collaboration with the various branches of the
government of Ukraine, allowing for its comprehensive consideration, feedback and
follow-up. We anticipate strong participation of local consultants to be able to resolve
specific issues that might arise out of the consultation process.
2.8 Assistance to the Government of Ukraine in carrying out a broad stakeholder
consultation process, including high-level consultations, to support the development of the
concept, involving relevant ministries, government agencies, and civil society
organizations.
Implementation of Package 2 envisages close collaboration between Point Carbon, DIW,
and UNDP. As the leading expert organization, Point Carbon will coordinate the
preparation, formulation and presentation of low carbon emission strategy document.
Point Carbon will be supported by DIW expertise in economic analysis, while UNDP will
serve as a convener of the stakeholder process.
3. Preparing for introduction of a domestic emissions trading scheme
The government of Ukraine has identified emissions trading as one of the top priorities for
its climate change mitigation policy. The project will assist the government in preparing the
groundwork for the eventual introduction of an emissions trading system in Ukraine. This
will involve
3.1 Supporting relevant legal and regulatory analysis, legislative proposals, provide
necessary analytical support to enable their submission to the parliament of
Ukraine
3.1.1
Review of the current legislative proposals
3.1.2 Assessment of adequacy, identification of inconsistencies, assessment of
improvement potential of the current legislative drafts
3.1.3 Analytical response to feedback from stakeholder consultations
7
3.2 Carrying out broad stakeholder consultations with regards to the concept and
potential design of the domestic emissions trading scheme in Ukraine;
3.2.1 Preparing a consultation paper or a series of papers as a basis for a broad
consultation process about the main features and implications of an emissions
trading system. The paper will include various issues selected in agreement with
the Ukraine government, including but not limited to presentation of design options,
process issues, economic impacts, international linking, etc.
3.2.2 Organizing and contributing content at two stakeholder consultation meetings and
one open meeting with public.
3.2.3 Compiling and structuring the main responses from the consultation process
3.3 Preparing analysis to inform the development of the scheme's main elements,
such as its goals and objectives, aggregate and sectoral caps, approaches and
methods of installation-level allocation, MRV standards and other;
The current legislative proposals only partially address the critical issues and legislative
provisions required to set up an emissions trading program. While we do not expect that
the legislative process would result in a decision regarding the set up of the ETS, which
could be covered through government regulations, it would be well informed by a
structured and analytical approach to design of market based mechanisms as well as an
elaboration of the process steps required to plan and implement such markets.
3.3.1. Preparing a roadmap to establishing an emission trading scheme. The roadmap will
establish the required activities and milestones in the process of establishing an
emission trading program including, but not limited to identification of required
research, data collection, modelling and studies, establishment of appropriate
governance and regulatory structures, options for linking with international
programs, stakeholder consultations, legislative proposals, detailed regulations,
implementation processes. The roadmap should also provide an indication of the
stages of the regulatory process required for the adoption and operationalisation of
a domestic ETS, prioritisation of issues that need to be adopted by law and issues
that can be resolved through direct government resolutions.
3.3.2 Preparing a design options discussion document. This document will inform the
government of Ukraine in terms of their understanding and assessment of an
emissions trading program as a greenhouse gas abatement policy instrument. The
document will outline the design of a cap and trade program and discuss the range
of design options as well as discuss a number of critical choices governments need
to make during the design and implementation of a trading program. Such critical
decisions include, but are not limited to the role of emission trading in relation to
other greenhouse gas reduction policies, the coverage of the program in terms of
gases and covered sectors, the allocation methodologies, the tightness of the cap,
safety valves, role of carbon credits such as CDM, linking to international programs.
The document will discuss the various options and relate choices to various criteria
such as implications for the stakeholders, efficiency of program, ease of regulation,
etc .
3.4 Assessing data needs and facilitating improvement of installation-level data
collection to inform the development of the national allocation plan;
8
3.4.1 Identification of data needs in support of the planning and modelling of an
emissions market including data needs of optional allowance allocation
methodologies
3.4.2 Analyze the proposal for a national GHG monitoring system and assess the
adequacy of proposed MRV regulations for the support of the emissions trading
program. Suggest appropriate amendments.
3.4.3 Identify existing sources of data and required improvement in data access and
reporting
3.4.4 Provide specific suggestions for improvement of the legislative and regulatory
framework supporting GHG reporting from potential covered sectors/entities
3.5 Providing economic assessment of proposed domestic ETS
3.5.1 Run GHG market model to analyse effects of emission trading program such as
carbon prices, reductions.
3.5.2 Run sensitivity analyses of selected design options
3.5.3 Provide input from emission market modeling to macro economic modeling
3.6 Assessment of possibilities for linking the ETS in Ukraine with other FSU
countries, particularly Kazakhstan
3.6.1 Prepare a briefing paper exploring potential and assessing issues and opportunities
for linking the ETS in Ukraine with emerging ETS systems in other FSU countries,
particularly Kazakhstan
4. Capacity building and climate policy support
The project will carry out additional supporting activities to strengthen the overall
institutional capacity for change policy implementation in Ukraine. In particular, the project
will support Ukrainian government in the application of project findings in international
policy processes and intersection of domestic carbon policies and international climate
negotiations.
The project will also support engagement of other branches of government by assisting
their participation in UNFCCC negotiating sessions, brining representatives of at least 3
different agencies, in addition to NEIA, e.g. Office of the President, Ministry of Economy,
Ministry of Energy. In addition, the project will work on engaging also representatives of
the Parliament in the international negotiating process.
A small part of the project budget is reserved in order to improve the measurement,
reporting and verification of greenhouse gas emissions, in particular by building capacity
to implement 2006 IPCC inventory guidelines and to address recommendations of
UNFCCC Expert Review Teams, contributing towards the monitoring of the project’s
performance.
Specifically the work tasks under package 4 will include:
9
4.1 Strengthening the overall institutional capacity for climate change policy
implementation in Ukraine.
4.1.1 Outreach activities with the aim to create broader official and political engagement
in climate change negotiations. The project team will work on ensuring participation
of representatives of at least 3 different agencies, in addition to NEIA, in the
UNFCCC process, e.g. Office of the President, Ministry of Economy, Ministry of
Energy and their appropriate briefing before the sessions. In addition, the project
will work on engaging also representatives of the Parliament in the international
negotiating process.
4.1.2 Advice on institutional capacity building and application of project findings in
international policy processes
4.1.3 Technical support to the government on issues of intersection of domestic carbon
policies and international climate negotiations
4.1.4 International outreach of Ukraine’s climate change policies, presentation of
Ukraine’s low-carbon development strategy.
4.2
Improve the measurement, reporting and verification of greenhouse gas
emissions
Improve capacity to implement 2006 IPCC inventory guidelines and to address
recommendations of UNFCCC Expert Review Teams on GHG inventories, contributing
towards the monitoring of the project’s performance.
5. Monitoring of low carbon policies
Post-project monitoring of implementation of low carbon measures and their
effectiveness.
10
IV.
RESULTS AND RESOURCES FRAMEWORK
Intended Outcome as stated in the Country Programme Results and Resource Framework:
Government of Ukraine adopts policy frameworks and mechanisms to ensure reversal of environmental degradation, climate change mitigation and
adaptation, prevention and response to natural and man-made disasters
Outcome indicators as stated in the Country Programme Results and Resources Framework, including baseline and targets:
Indicator: # of active green investment schemes (GIS)and energy efficient (EE) projects
Baseline: in 2010 (0 GIS and 250 EE- projects)
Target: 100 GIS and 500 EEprojects
Applicable Key Result Area (from 2012-16 Strategic Plan): Core Area III – Environment and climate change
Partnership Strategy
Project title and ID (ATLAS Award ID):
INTENDED OUTPUTS
Specify each output that is planned
to help achieve the outcome.
For each output, include a baseline
with associated indicators and
targets to facilitate monitoring of
change over time.
Each output shall ultimately become
a Project ID in Atlas.
Output 1 New generation
models and comprehensive
projections of GHG emissions
Baseline:
Indicators:
OUTPUT TARGETS FOR
(YEARS)
Use this column for more
complex projects where an
output takes more than one
year to produce.
INDICATIVE ACTIVITIES
List activity results and associated actions
needed to produce each output or annual
output targets.
Each activity result shall ultimately
become an Activity ID in Atlas.
Targets (year 1)




Identification
and
selection of sectors for
sectoral GHG analysis
Analysis
of
historic
emission trends and
factors
that
have
contributed
to
their
development
Identification
and
analysis
of
main
emissions drivers
Analysis of linkages
between
economic
development,
development of the
identified sectors and
the growth of respective
1
2
3
Carry out a detailed sectoral analysis
of greenhouse gas emissions, with
the view of identifying specific
emission trends and analysing their
causes
Sectoral
Economic
Analysis
development
of
the
specific
forecasting models of certain sectors
Ukrainian economy (energy, heat
supply, etc), including incorporation of
available sector-specific MAC curves
Develop
new
generation
of
greenhouse gas models that will be
suited for sectoral emission modelling
and can be adjusted regularly based
RESPONSIBLE
PARTIES
SEIA, UNDP, Point
Carbon, DIW Econ
INPUTS
USD 741,000









sectoral emissions
Review
of
existing
projections/models,
assessment of existing
forecasts
Forecasting models of
certain
sectors
of
Ukrainian
economy,
including incorporation
of available sectorspecific MAC curves
Conceptual approach to
GHG model – predesign
Sectoral model shell
Development
of
interfaces
with
economic and sectoral
growth
projections,
MAC
curves,
GHG
effects of low carbon
growth strategies and
policies
Development
of
reconciliation/alignment
approach vs empirical
data
Model
testing
and
refinements
Description of business
as usual (BAU) scenario
including sensitivities
Run of BAU projections
based on mainstream
assumptions
and
sensitivities
4
on bottom-up information about
sectoral
and
installation-level
emissions
Prepare comprehensive projections of
GHG emissions for the periods up to
2020 and up to 2050 with and without
implementation of climate change
polices and measures; 1) business as
usual, 2) taking into account policies
and measures as identified in the low
carbon development strategy.
5
Targets (year 2)


2020/2050 projections
based
on
selected
assumptions re climate
change
Stakeholder
consultations on the
findings
and
assumptions of the
model
12

Training for NEIA and
local consultants
1. Identification
of
policies
Output 2 Development of low Targets (year 1)
measures
for
low
carbon
growth
carbon development strategy

mitigation policies and
Baseline:
Indicators:






measures are identified
and evaluated
mitigation potential of
identified policies and
measures is assessed
series
of
analytical
papers providing shortterm, ad hoc expertise
and
consulting
to
decision-makers
and
key stakeholders
development
of
economic scenarios of
Ukraine’s development
to 2020 and 2050
assessment
of
macroeconomic
and
sectoral
impact
of
identified policies and
measures
assessment of financing
options
for
implementing Ukraine’s
low carbon strategy and
its elements
initial
stakeholder
consultations on the
elements of the low
carbon strategy
Targets (year 2)



formulation
of
the
concept of a low carbon
development plan of
Ukraine
Comprehensive
stakeholder
consultations, including
high-level
Follow-up
analysis
and
2. Assessment of the mitigation potential
of identified policies and measures
3. Provision of support for low carbon
policy analysis through short analytical
papers on economic analysis of policy
options
4. Impact assessment of identified
policies
and
measures
at
the
macroeconomic and sectoral levels;
development of BAU economic scenarios
of Ukraine’s development to 2020 and
2050, including but not limited to official
government forecasts and development
strategies.
5. Analysis of alternative schemes to
finance different strategies with special
reference on proceeds from post-Kyoto
instruments
6. Provision of short-term, ad hoc
expertise and consulting to decisionmakers and key stakeholders for current
topics on the political agenda
7. Preparation and presentation of the
concept of a low carbon development
plan of Ukraine setting out a vision of the
country’s new development path up to
2020 and 2050.
8. Assist the Government of Ukraine in
carrying out a broad stakeholder
consultation process to support the
development of the concept, involving
relevant ministries, government agencies
and civiel society organizations
13
SEIA, UNDP, Point
Carbon, DIW Econ
USD 1,285,200
based on the feedback
received
from
consultations
Output
3
Preparing
for Targets (year 1)
introduction of a domestic

review of the current
legislative proposal
emissions trading scheme
Baseline:
Indicators:







consultation paper
roadmap to establishing
an emission trading
scheme
design
options
discussion document
identification of data
needs
analytical support to
estimate implications of
a preliminary emission
trading proposal
carbon
market
modelling of emission
trading system
input from analysis of
emission trading to
macroeconomic
modelling
Targets (year 2)






organize and present at
stakeholder meetings
compile
results
of
stakeholder meetings
discussion paper on
findings
of
the
stakeholder consultation
process
recommendations
for
the establishment of an
national
GHG
monitoring system
input
to
legislative/regulatory
actions to improve data
access
analysis
of
design
options – interaction
1. Support relevant legal and regulatory
analysis,
legislative
proposals,
provide necessary analytical support
to enable their submission to the
parliament of Ukraine.
2. Carrying out broad stakeholder
consultations with regards to the
concept and potential design of the
domestic emissions trading scheme
in Ukraine
3. Preparation of analysis to inform the
development of the scheme's main
elements, such as its goals and
objectives, aggregate and sectoral
caps, approaches and methods of
installation-level allocation, MRV
standards and other.
4. Support in developing a national
allocation plan
5. Economic assessment of proposed
domestic ETS
6. Assessment of possibilities for linking
the ETS in Ukraine with other FSU
countries, particularly Kazakhstan
14
SEIA, UNDP, Point
Carbon, DIW Econ
USD 761,600


with
economic
modelling
assessment
of
the
possibilities of linking
Ukrainian ETS with
other FSU countries,
particularly Kazakhstan
legal and regulatory
analysis
of specific
hurdle issues within the
legislative proposals
Output 4 Capacity building and Targets (year 1)
climate policy support
Baseline:
Indicators:




participation
of
representatives
of
Ukrainian
agencies
other than NEIA in
UNFCCC
negotiating
sessions.
technical analysis on
issues of intersection of
domestic
carbon
policies
and
international
climate
negotiations
advice on application of
project
findings
in
international
policy
processes
organizing
of
side
events at UNFCCC
sessions promoting the
project and Ukraine’s
climate change policies
1. Strengthening the overall institutional
capacity for climate change policy implementation in Ukraine.
2. Improve the measurement, reporting
and verification of greenhouse gas
emissions, in particular by building
capacity to implement 2006 IPCC
inventory guidelines and to address
recommendations of UNFCCC Expert
Review Teams
Targets (year 2)


presentation
of
Ukraine’s
low-carbon
development
strategy
internationally
timely and satisfactory
resolution
of
the
recommendations
of
UNFCCC
Expert
15
SEIA, UNDP, Point
Carbon
USD 244,800
Review Teams on GHG
inventories
Output 5 Monitoring
Targets (year 1)

implementation
Baseline:
Indicators:
monitoring report on
implementation of low
carbon measures and
their effectiveness
1.
Post-project
monitoring
of
implementation of low carbon measures
and their effectiveness.
Targets (year 2)

monitoring report on
implementation of low
carbon measures and
their effectiveness
-
16
SEIA, UNDP, DIW
Econ
USD 54,400
V.
MANAGEMENT ARRANGEMENTS
Project Organisation Structure
Project Board
Senior Beneficiary
Executive
Senior Supplier
Government of Ukraine
State Environmental
Investment Agency
UNDP, BMU
Project Assurance
UNDP
Project Manager
Project Support
Responsible Party
Responsible Party
Project Team
Point Carbon
DIW Econ
Locally Recruited
Experts
Implementation of the project will be guided by UNDP Programme and Operations Policies
and Procedures (POPPs) under the National Execution modality, as is the norm for the
programmes and projects supported by the United Nations system.
The UNDP Executive Board (former Governing Council) has highlighted that the execution
of the projects by the governments is an effective way to build capacities and promote the
institutions sustainability (UNDP Governing Council decisions 90/21 and 91/27).
National execution is considered to be the norm since it is expected to contribute most
effectively to:

Greater national self-reliance by effective use and strengthening of the management
capabilities, and technical expertise of national institutions and individuals, through
learning by doing;

Enhanced sustainability of development programmes and projects by increasing
national ownership of, and commitment to development activities;

Reduced workload and integration with national programmes through greater use of
appropriate national systems and procedures.)
Please see the standard Project Management Arrangements adopted for this particular
project below. Two types of the participatory bodies are envisaged under this modality:
Project Board (PB), which is a project governing body mandatory under UNDP POPPs.
The Project Board approves project work plan and authorises project revisions as
necessary. This group contains three roles:
1) Executive (role represented by NIP) that holds the project ownership and chairs
the group,
2) Senior Supplier (role represented by UNDP and BMU) that provides guidance
regarding the technical feasibility of the project, and
3) Senior Beneficiary (role represented by the Ministry of Economy of Ukraine or any
other state body duly authorized by the Government of Ukraine for coordination of
the international technical assistance) that ensures the realization of project benefits
from the perspective of project beneficiaries.
Potential members of the Project Board are reviewed and recommended for approval
during the Local Project Appraisal Committee (LPAC) meeting. PB meets every six
months on the initiative of the National Project Director (NPD).
The Project Steering Committee (PSC), an advisory body that will be established for the
project to give advice and guide project implementation, chaired by the National Project
Director. The PSC will consist of representatives of all key stakeholders and will ensure the
inclusion of community level interests. Potential PSC participants will be NEIA, Ministry of
Economy, Ministry of Environment, UNDP, BMU as well as Point Carbon and DIW-Econ in
a capacity of the Responsible Parties. The PSC will monitor the project’s implementation,
provide guidance and advice, and facilitate communication, cooperation, and coordination
among stakeholders and other project partners. At the initial stage of project
implementation, the PSC may, if deemed advantageous, wish to meet more frequently to
build common understanding and to ensure that the project is initiated properly.
MANAGEMENT ARRANGEMENT
This project will be implemented under Country Programme Action Plan 2012-2016 as
the Nationally Implemented (NIM) Project with the State Environmental Investment
Agency as the National Implementing Partner (NIP). The NIP shall be responsible for the
overall management of the project, primarily with regard to the responsibility for the
achievement of the outputs (results), impact and objectives from the side of the
Government of Ukraine. Similarly, the NIP will be accountable to UNDP for the use of
project resources.
NIP mechanism of project implementation ensures a principal role of the state in the project
activities and national ownership for the projects results with the UNDP, Project Team and
Responsible Partners (Point Carbon and DIW Econ) providing expert and technical support
without substitution of the national structures/mechanisms.
The ultimate responsibility in the NIP for managing the project will be placed on a senior
Government official who shall be designated as the National Project Director (NPD). It is
expected that the NPD will devote significant part of the working time on the project. Duties
and responsibilities of the NPD are described by the NPD Handbook. In the fulfilment of its
responsibilities to achieve the results, the NPD will get support from the Project Board
(PB).
The authority of the NPD will be delegated to the Project Manager (PM) for day-to-day
implementation management. When guidance is required by the Project Manager (PM),
including recommendation for UNDP and NIP on approval of project revisions, the PB is
responsible for making on a consensus basis management decisions for a project. Project
reviews by PB are made at designated decision points during the running of a project, or as
necessary when raised by the Project Manager. This group is consulted by the Project
Manager for decisions when PM tolerances (i.e. constraints normally in terms of time and
budget) have been exceeded.
Page 18
The Project Manager has the authority to run the project on a day-to-day basis on behalf of
the Project Board within the constraints laid down by the Project Board. The Project
Manager is responsible for day-to-day management and decision-making for the project.
The Project Manager’s prime responsibility is to ensure that the project produces the
results specified in the project document, to the required standard of quality and within the
specified limits of time and cost.
Project implementation will be governed by provisions of the Project Document and UNDP
POPPs. The project will utilize a direct payment modality. Governance of the Project will be
supported through annual work planning as well as reporting and monitoring the delivery of
results and impact on the basis of the results framework. The annual work plans as well as
progress reporting will be the responsibility of the project management and will be
approved by NPD in close consultation with UNDP.
The work plan will be implemented upon its endorsement by NIP and UNDP. The endorsed
work plan will serve as an authorization to the Project Manager to disbursement of funds
and project implementation. Implementation responsibility will be put on the Project
Manager in close partnership with the NIP in terms of ownership and UNDP – in terms of
advisory support.
CONTRACTUAL ARRANGEMENTS AND RESPONSIBILITY OF PARTNERS
UNDP will keep overall responsibility for the implementation of the project. UNDP will
undertake the administrative management of the project, contracting of the local
consultants as well as organization stakeholder consultations, including high-level
meetings, with the Ukrainian government. Point Carbon will lead the substantive
management of the project. In terms of the project staff, UNDP will hire a Project Manager;
Point Carbon will supply the project’s Chief Technical Advisor. BMU-nominated experts
DIW Econ will act as a partner responsible for the economic analysis in the project.
Implementation of the project will be guided by UNDP Programme and Operations Policies
and Procedures (POPPs) under the National Implementation modality. The National
Environmental Investment Agency in the capacity of the National Implementing Partner
(NIP) shall be responsible for the overall management of the project, primarily with regard
to the responsibility for the achievement of the outputs (results), impact and objectives from
the side of the Government of Ukraine. Similarly, the NIP will be accountable to UNDP for
the use of project resources.
Point Carbon and DIW Econ will act as the Responsible Parties liable for the respected
components of the project. The funds for the Responsible Parties will be allocated in the
annual budgets and will be realised by tranches under the special individual agreements
against delivery of agreed outputs.
UNDP POPPs defines Responsible Party as “partners that have been engaged by the
implementing partner to carry out activities within a project. If designated as implementing
partner, a competitive process must be undertaken, but it is not considered a procurement
action (the Local Project Appraisal Committee reviews the proposal to designate the
responsible party and verifies its competitiveness)”.
Page 19
VI.
MONITORING FRAMEWORK AND EVALUATION
In accordance with the programming policies and procedures outlined in the UNDP User Guide, the
project will be monitored through the following:
Within the annual cycle
 On a quarterly basis, a quality assessment shall record progress towards the completion
of key results, based on quality criteria and methods captured in the Quality Management
table below.
 An Issue Log shall be activated in Atlas and updated by the Project Manager to facilitate
tracking and resolution of potential problems or requests for change.
 Based on the initial risk analysis submitted (see annex 1), a risk log shall be activated in
Atlas and regularly updated by reviewing the external environment that may affect the
project implementation.
 Based on the above information recorded in Atlas, a Project Progress Reports (PPR) shall
be submitted by the Project Manager to the Project Board through Project Assurance, using
the standard report format available in the Executive Snapshot.

a project Lesson-learned log shall be activated and regularly updated to ensure on-going
learning and adaptation within the organization, and to facilitate the preparation of the
Lessons-learned Report at the end of the project

a Monitoring Schedule Plan shall be activated in Atlas and updated to track key
management actions/events
Annually
 Annual Review Report. An Annual Review Report shall be prepared by the Project
Manager and shared with the Project Board. As minimum requirement, the Annual Review
Report shall consist of the Atlas standard format for the QPR covering the whole year with
updated information for each above element of the QPR as well as a summary of results
achieved against pre-defined annual targets at the output level.
 Annual Project Review. Based on the above report, an annual project review shall be
conducted during the fourth quarter of the year or soon after, to assess the performance of
the project and appraise the Annual Work Plan (AWP) for the following year. In the last year,
this review will be a final assessment. This review is driven by the Project Board and may
involve other stakeholders as required. It shall focus on the extent to which progress is being
made towards outputs, and that these remain aligned to appropriate outcomes.
Page 20
VII.
LEGAL CONTEXT
This project document shall be the instrument referred to as such in Article 1 of the SBAA between
the Government of (country) and UNDP, signed on (date).
Consistent with the Article III of the Standard Basic Assistance Agreement, the responsibility for the
safety and security of the executing agency and its personnel and property, and of UNDP’s property
in the executing agency’s custody, rests with the executing agency.
The executing agency shall:
a) put in place an appropriate security plan and maintain the security plan, taking into account
the security situation in the country where the project is being carried;
b) assume all risks and liabilities related to the executing agency’s security, and the full
implementation of the security plan.
UNDP reserves the right to verify whether such a plan is in place, and to suggest modifications to
the plan when necessary. Failure to maintain and implement an appropriate security plan as
required hereunder shall be deemed a breach of this agreement.
The executing agency agrees to undertake all reasonable efforts to ensure that none of the UNDP
funds received pursuant to the Project Document are used to provide support to individuals or
entities associated with terrorism and that the recipients of any amounts provided by UNDP
hereunder do not appear on the list maintained by the Security Council Committee established
pursuant
to
resolution
1267
(1999).
The
list
can
be
accessed
via
http://www.un.org/Docs/sc/committees/1267/1267ListEng.htm. This provision must be included in all
sub-contracts or sub-agreements entered into under this Project Document.
Page 21
VIII. ANNEXES
Annex 1:
Risk Analysis.
Risk
Rating
Mitigation approach
The low carbon development
strategy does not recieve
sufficient backing of the wider
Ukrainian government.
Medium
The project foresees a wide stakeholder consultation strategy, with a flexibility to react on issues
raised by other ministries and agencies. The engagement of other ministries will be ensured
through creation of a an advisory project panel soon into the start of the project.
Various stakeholders show
lack of initiative to cooperate
Low
The involvement of key representatives from relevant agencies and organizations at an early
stage will help strengthen the legitimacy of policy and institutional reforms.
Lack of data to carry out
quality
estimations
and
forecasts
Low
Ukraine regularly submits National Inventory Reports to UNFCCC and has a record of GHG
emissions from 1990 to 2008. Additionally, State Statistics Committee of Ukraine provides
comprehensive statistical data.
Lack of engagement of the
industry in the ETS elaboration
Low
A great number of Ukraine’s large scale industrial companies own facilities in the EU, and
operate under EU ETS. There already exists significant understanding of the carbon market and
an expectation that development of a domestic emissions trading market is inevitable in the
future.
Lack of expertise and
capacities
limit
the
success
of project processing
Low
UNDP Ukraine successfully operates substantial portfolio of projects, has clear
procedures and expert data-bases enabling the involvement of the most
talented national and international expertise for its projects.
Annex 2:
Implementing partners
1. Implementing partner
Name
Point Carbon, a Thomson Reuters company
Institution
Private sector
Postal code, town/city
Akersgata
55,
0180 Oslo, Norway
Country
Norway
Legal form
Public Limited Company
Non-profit status:
Total staff
200
Staff for the project
12
Year established
2001
Turnover [€/year]
21 million
Experience in the
region [years]
target
yes
3rd
floor
no
6 years
Experience
of
activities
relevant for the project 9 years
[years]
Expertise and experience relevant for the project
Point Carbon, a Thomson Reuters company is a world-leading provider of
independent news, analysis and consulting services for European and global
Page 22
power, gas and carbon markets. Point Carbon’s comprehensive services provide
professionals with market-moving information through monitoring fundamental
information, key market players and business and policy developments.
Point Carbon has had an office in Ukraine since 2004, working on climate change
policy and carbon market developments.
Function/role in the proposed project
Point Carbon will contribute to the project through its unrivalled experience in
mathematical and economic modelling, forecasting methodologies, identification
and assessment of mitigation policies, advice on establishment of an emissions
trading scheme, as well as support in the UNFCCC negotiations.
Page 23
2. Implementing partner
Name
DIW econ GmbH
Institution
Private Sector
Postal code, town/city
10117 Berlin
Country
Germany
Legal form
GmbH
Non-profit status:
Total staff
13
Staff for the project
6
Year established
2007
Turnover [€/year]
1200000
Experience in the
region [years]
yes
no
target 13
Experience
of
activities 13
relevant for the project
[years]
Expertise and experience relevant for the project
see "projects"
Function/role in the proposed project
Economic analysis, support with evaluation of policies and measures
Annex 4:
Carbon Monitoring
The project will not result in direct emission reductions. The goal of the project is to enable Ukraine
to design long-term low carbon development policies, which will result in reduction of emissions on
the national level. Exact level of emission reduction potential will be discovered over the course of
the project.
Ukraine is an Annex I country and reports its emission reductions and absorption by sinks on an
annual basis. In addition, the project envisages a small budget to allow Ukrainian experts to
improve the quality of GHG reporting.
Upon conclusion of the project, a monitoring report on the implementation of low-carbon
measures and their effectiveness will be delivered to BMU.
Annex 5:
Terms of Reference for Steering/Advisory Committee
To ensure effective, transparent and participatory development of the low Carbon Growth Strategy of
Ukraine, political will to support and implement the strategy from the side of Ukrainian Government and
policymakers as well as wide involvement the Ukrainian national authorities to the project activities an
Advisory Committee on the Capacity Building for Low Carbon Growth in Ukraine project will be established
1. The Committee will be formed by representatives of the following institutions:
a. State Environmental Investment agency of Ukraine
b. Secretariat of Cabinet of Ministers of Ukraine
c. The Ministry of Economy of Ukraine
d. Ministry of Finance of Ukraine
e. Ministry of Energy of Ukraine
f. The Ministry of Transport and Communications of Ukraine
g. The Ministry of Environmental Protection of Ukraine
h. The Ministry of Regional Development and Construction of Ukraine
i. The Ministry of Agrarian Policy of Ukraine (Department of Rural Development)
j. The Ministry of Housing and Communal Services of Ukraine
k. The Ministry of Education and Science of Ukraine
l. The National Agency of Ukraine for Efficient Use of Energy
m. Administration of the President of Ukraine
n. Verhovna Rada (Parliament),
o. BMU
p. United Nations Development Programme, Ukraine
q. European Union Delegation Office, Ukraine
r. World Bank
s. EBRD
Should the need arise, representatives of other institutions, organizations and enterprises can be invited to
participate in the Steering/Advisory Committee.
2. In compliance with main goal of the Project, the Advisory Committee will:
 Initiate and provide a platform for the a high-level policy dialogue on the low carbon growth of
Ukraine
 Serve as a vehicle to enlist high-level governmental support to the development of the low
carbon growth strategy;
 Strengthen the existing policy dialogue mechanisms in the government, insure interagency
cooperation and explore other consultative mechanisms for low carbon growth of Ukraine;
 Insure project policy advise and recommendations integration to the relevant national policies
and strategies;
 Assist in elaboration of draft legislation and other documents related to project implementation
and its coordination with relevant national programmes;
 Coordinate and facilitate the participation of line ministries, relevant government and nongovernment agencies
 Ensure that regional and local authorities are duly informed about the project and benefited from
its resultsfully authorized to participate.
3. The Advisory Committee is entitled to:
 Hear regular reports on Project implementation;
 Charge its members with assignments related to drafting of relevant legislation;
 Involve experts from governmental agencies and local authorities, upon consent of their superiors;
 Issue recommendations to the national executive and elected institution as per implementation of the
Project.
4. The Advisory Committee is co-chaired by a Chairperson who is appointed by the Government of Ukraine
and UNDP Ukraine on a rotation basis. UNDP Ukraine will coordinate and guide the committee’s
activities.
5. Regular meetings of Steering Committee are held as frequently as needed and at least twice a year.
6. Meetings are chaired by Chairperson.
7. Decisions of Steering Committee taken within the limits of its competences have a nature of a
recommendation and are obligatory for the review by national and local governments, as well as other
enterprises, institutions and organizations.
Page 28
8. Organizational, information, technical and financial support to the activities of Project Steering Committee
is provided by the Project, UNDP and National Implementation Partner (NEIA). Project Management Unit
acts as Secretariat of the Steering Committee.
Page 29