Economies in Transition: At the Crossroads of Development

By Olga Gassan-zade, Centre for Clean Air Policy, Kiev, Ukraine

Fourteen countries undergoing the process of transition to a market economy are included in the Annex I of the UNFCCC and are thus eligible for international emissions trading and joint implementation (JI) under Kyoto Protocol. Their inclusion in Annex I roughly reflected their degree of industrialization and consequently the level of their GHG emissions. In 1990, the Eastern European countries included in Annex I were responsible for about 30 per cent of all GHG emissions in Annex I countries and about 22 per cent of all global GHG emissions, with Russia, Ukraine and Poland being respectively the second, fifth and seventh largest contributors to climate change among Annex I countries.

Thirteen of the economies in transition (EITs) assumed numerical reduction targets among 38 countries listed in Annex B to Kyoto Protocol. They are

• - 8% for Bulgaria, Czech Republic, Slovakia, Estonia, Latvia, Lithuania, Romania, Slovenia;
• - 6% for Hungary and Poland;
• - 5% for Croatia; and
•   0% stabilization for Russia and Ukraine.

Belarus, while part of Annex I to the UNFCCC, has not assumed emission reduction obligations under Annex B.

Economies in transition are generally expected to benefit from participation in the Kyoto Protocol mechanisms, either through Joint Implementation or through emissions trading. Most of the transitional countries are likely to have a surplus in the first commitment period because their GHG emissions reduced substantially following the economic downturn that accompanied the fall of the communist regimes in the region. The amount of surplus is estimated between 696 to 1356 Mt CO₂ equivalent. Additionally, low energy efficiency levels, high carbon intensity of the energy supply and lack of renewable energy technologies make the countries with economies in transition attractive for cost-effective GHG reduction projects under JI.

Bundling transitional countries into one homogeneous group, however, would be incorrect because major differences exist among them in terms of their political and economic circumstances, such as degree of their political transition, scale of their economies, level of industrialization and attractiveness for outside investment. The scope of these differences, their roots and implications for domestic climate policy and for international climate-related activities will be the focus of this paper.

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