1. Economies on Transition: At the Crossroads of Development Olga Gassan-zade Center for Clean Air Policy, Ukraine SB-18, Bonn, June 9

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3. 3 EITs in the UNFCCC context  New EU members »Czech Republic »Hungary »Poland »Slovakia »Slovenia »Latvia »Lithuania »Estonia  FSU »Russia »Ukraine  Candidate countries »Romania »Bulgaria »Croatia Annex-I

4. 4 Differences in EITs Regional affiliations Political history Level of governance and the rule of law Development of institutions Investment climate Attractiveness for KP mechanisms

5. 5 Per Capita FDI, 2000

6. 6 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 New EU and Candidate Countries

7. 7 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

8. 8 Source: Frankhauser, S. and Lavric, L. The investment climate for climate investment: Joint Implementation in Transition countries, EBRD, 2003 Energy and Carbon Intensity in EITs, 1998

9. 9 Industry Value Added in GDP

10. 10 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

11. 11 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