The global warming that we are facing now induces international organizations to look for new ways how to overcome it, particularly through the use of financial levers and instruments. The framework development of climate finances for regional and local levels will allow using country and regions finances more efficiently for fight against climate warming that is the main function of climate finances in the current environment

Borysiuk, Olena V.

Datsiuk-Tomchuk, Mariia B.

Karlin, Mykola I.

Lipovska-Makovetska, Nataliіa I.

Stashchuk, Olena V.

Борисюк, Олена Володимирівна

Дацюк-Томчук, Марія Богданівна

Карлін, Микола Іванович

Ліповська-Маковецька, Наталія Іванівна

Стащук, Олена Володимирівна

Electronic Eastern European National University Institutional Repository

Karlin N., Borysiuk O., Stashchuk O., Datsyuk-Tomchuk M., Lipovska-
Makovetska N. CLIMATE FINANCES: REGIONAL AND LOCAL ASPECTS OF 
USE /  Perspectives of modem scientific research: Collection of scientific articles.  
Pegasus Publishing, Lisbon, Portugal, 2018.  p.57-60. 
Karlin Nicholai, 
Professor, Doctor of Economic Sciences  
Head of Department of finances, bank business and insurance 
Lesia Ukrainka Eastern European national university (Ukraine, Lutsk) 
Borysiuk Olena 
Ph.D., Candidate of economics, 
The Associate Professor of the Department of finances, bank business and 
insurance 
Lesia Ukrainka Eastern European national university (Ukraine, Lutsk) 
 Stashchuk Olena 
Ph.D., Candidate of economics, 
The Associate Professor of the Department of finances and credit 
Lesia Ukrainka Eastern European national university (Ukraine, Lutsk) 
Datsyuk-Tomchuk Maria 
Ph.D., Candidate of economics, 
The Associate Professor of the Department of Finance, Banking and 
Insurance, Lutsk Institute of Human Development of the University of "Ukraine" 
(Ukraine, Lutsk) 
Lipovska-Makovetska Natalia 
Ph.D., Candidate of economics, 
The Associate Professor of the Department of Finance, Banking and 
Insurance, Lutsk Institute of Human Development of the University of "Ukraine" 
(Ukraine, Lutsk) 
 
CLIMATE FINANCES: REGIONAL AND LOCAL ASPECTS OF USE 
 
Abstract. The global warming that we are facing now induces international organizations to look for new ways 
how to overcome it, particularly through the use of financial levers and instruments. The framework development of 
climate finances for regional and local levels will allow using country and regions finances more efficiently for fight 
against climate warming that is the main function of climate finances in the current environment. 
Key words: climate finances, structure of climate finances, challenges of climate finances functioning at 
regional and local levels, the Kyoto protocol, the Paris Agreement, European Union, special economic zones, Ukraine. 
 
 
 
INTRODUCTION 
In the modern context of progressing climate warming on the planet pointed by 
top-level scientists, climate finances are becoming a vital component of ecological 
economy and they should involve financial instruments of ecological plan. First of all, 
it refers to financial levers of influence for environment conservation integrally as well 
as financial instruments for climate warming control on the planet, financial incentives 
and fines for statutory level compliance for use of natural resources, water resources, 
land use, recycling of waste etc. It is important to summarize all these financial 
instruments and levers and on their basis to work out the system of climate finances 
that would comprise all levels of climate management stipulated in the Kyoto protocol 
and its follow-up amendments as well as in the Paris Agreement. Moreover, the 
structure of climate finances should cover not only geopolitical and state levels, but 
regional and local levels as well. 
The Kyoto protocol that entered into force on February 16, 2005, put the Clean 
Development Mechanism (CDM) into operation. Its main points include the following 
activities: a developed country invests in a project to reduce greenhouse gas emissions 
in a developing country and assumes the total volume of emission reduction in the 
course of this project implementation. According to the UN statistics 7.8 thousand 
projects have been implemented via CDM in 107 countries and they resulted in global 
reduction of emissions by 1.5 billion tons of carbon dioxide equivalent. At the same 
time almost 75 % all these projects are accounted for 4 countries: Brazil, China, India 
and Mexico [1]. In addition to that, we should take into consideration the fact that 
China is the largest emitter of greenhouse gases in the world [2, р.44]. 
At the same time the following fact triggers concern that many developed 
countries (particularly EU-members) are not able to fulfill the conditions of either the 
Kyoto protocol or the Paris Agreement in the stipulated deadlines. For example, Poland 
has to close almost all coal mines to fulfill its conditions, but it generates opposition of 
labor unions and the population. The similar situation is characteristic for most 
localities of Donbas and Kryvbas, Ukraine. Attraction of climate investments in the 
abovementioned regions from international financial organizations and more effective 
use of the already granted ones could be the proper way out. But this demands to 
develop real business plans of attracting foreign climate investment in order not to 
make delays in their implementation as it happened to so-called Japanese Kyoto credit, 
the part of which had to be reimbursed. 
In general, the analysis of foreign and Ukrainian references to the 
abovementioned range of problems allows giving a definition of climate finances. It is 
a set of financial relations between particular countries of the world as well as inside 
these countries concerning use of financial funds, levers, instruments, standards and 
regulations that promote and contribute to conservation and improvement of climate 
conditions and are aiming at proper management of factors of production and 
sustainable development on a scale of the whole world and groups of countries as well 
as at the level of a separate country, its region, a specific territorial community [3, р. 
73]. The objectives of climate finances are a set of financial levers, instruments, 
standards and regulations that are facilitative of conservation and improvement of 
climatic conditions with the aim of proper management of factors of production and 
supporting sustainable development in the world and in a separate country. The 
structural elements of climate finances are fixed in general terms in the Kyoto protocol, 
in the Paris Climate Agreement, in the documents of EU, other regional organizations, 
in the documents of certain countries directed at fight against climate warming. The 
first and foremost points at issue are development of renewable power, energy saving, 
the maximum level of waste processing, forest conservation, introduction of electric 
transport etc. and use of proper financial instruments for it. Correspondingly parties to 
climate relations are international organizations (the United Nations, EU etc.), 
particular states acting through their governments and parliaments, regions of a 
country, territorial communities, households. 
The initiative by the Sweden government is very important for implementation 
in Ukraine. It involves the government grant-in-aids for households that compensate 
60 % cost of household power generation systems, first of all, for heat production. This 
program will function till December 31, 2019; its maximum amount is up to 50 
thousand Swedish krona (5600 US dollars).  The aid grant is applicable to batteries, 
wiring, systems, control, and smart concentrator of power, construction and installation 
for houses with solar systems on the roofs. In principle, with the help of this and other 
initiatives Sweden intends to abandon burning of fossil fuels for electric-power and 
heat production till 2040. The above said Swedish program is similar to the analogous 
example in Germany where 19 thousand domestic power storage systems were 
installed [4, р.11]. 
Use of so-called “warm credits” can become a benefit for climate activities at a 
local level. The Ukrainian state banks give credits to borrowers through State Agency 
of Energy Efficiency and Saving. The payment of interest and the principal of the loan 
will be effected after the project completion within the credit term (5 or 10 years). The 
average rate for a “warm credit” amounts to 25 %, and the local compensation for a 
borrower is from 10 to 15 % from the total cost of credit servicing. The compensation 
for borrowers-individuals to buy gas/electricity-free boilers in the private section 
equals to: the sum for borrowers that do not get subsidized utilities is 20 %, for 
borrowers that get subsidized utilities is 35 %. The compensation for condominium 
associations (or another type of dwellers’ association) to take other energy efficient 
measures may come from 40 to 70 %, depending upon availability of utilities subsidies 
recipients living in a block of flats. 
In recent years the new objective of climate finances is climate innovations, first 
of all, directed at production boosting of renewable energy sources, above all, using 
solar, wind, water, biomass energy etc. As a consequence more and more companies 
(particularly in PR China) have started to make equipment for power generation from 
renewable sources. Thus, in the depressed regions of Ukraine where special economic 
zones could be created it is necessary to encourage establishment and functioning of 
such companies, especially to use tax incentives. It would help reach climatic indicators 
for our country set for the year of 2050. In particular, in Ukraine the share of wind 
power plants in the structure of electrical power generation should reach 45 % in 2050, 
solar power plants – 36 % [5, р.2]. 
The state has not paid due attention to steps and measures to encourage business 
to use renewable energy and introduce appropriate technologies in Ukraine on the 
whole as well as at local levels so far. The expert analysis of priorities in the budget 
policy of Ukraine showed the government disregard of solving environmental 
problems (they were only mentioned in the budget resolution in 2013), insufficient 
attention has also been given to state support for implementation of environmentally 
friendly technologies. All the abovementioned facts do not help conservation and 
multiplication of natural recourses and capital of Ukraine. 
Conclusions. For climate conservation not only at the country level but also at 
regional and local levels it is important to give an impetus to and use financial 
incentives for development of power-generating cooperatives that are becoming widely 
used in the developed countries, their establishment is also of great importance for 
Ukraine both at the country and regional and local levels, but on a first-priority basis 
they are essential for rural zones. What is more, regional authorities and municipal 
governments should be liable for conformity of use of available renewable power 
sources with international standards of environmental quality, particularly with the EU 
standards.  
The significant challenge is supervision over the efficiency of functioning 
mechanisms of climate finances that are often used insufficiently at local levels in 
many countries where the civil society is still being formed as well as in Ukraine. Thus, 
it is crucial to expand and apply e-declaration mechanisms to incomes of all Ukrainian 
civil servants, equal-status employees and members of their families.  
 
REFERENCES: 
1. Gerasymchuk Z. V. Y. O. Molchak Y.O., Khvesyk M. A. Ecological and economical 
bases of water consumption in Ukraine: school-book. Lutsk: Nadstyrya, 200. [in Ukrainian]. 
2. Karlin M. I. (2009). Finances of foreign countries: school-book.  Kyiv: Condor, 368. 
[in Ukrainian]. 
3. Karlin M.I., Borysiuk O.V., Stashchuk O.V. (2017). Positive and negative stimulus in 
the system of climatic finances. Challenges and opportunities of scientific thought development: 
Collection of scientific articles. 2017, рp.73-82. [in English]. 
4. Knjazhansjkyj V. I. (2016). Pro skasuvannja moratoriju na eksport ukrajinsjkogho lisu 
/ Denj. 2016, pp.11. [in Ukrainian]. 
5. Samajeva Ju. (2017). Uzjaty ta ne zrobyty. Dzerkalo tyzhnja. 2017, pp.1-6. [in 
Ukrainian]. 


Climate finances: regional and local aspects of use

http://esnuir.eenu.edu.ua/bitstream/123456789/15647/1/%d0%a1%d0%a2_%d0%9a%d0%bb%d1%96%d0%bc%d0%b0%d1%82%20%d1%84%d1%96%d0%bd%d0%b0%d0%bd%d1%81%d0%b8.pdf

Climate finances: regional and local aspects of use

Abstract

Similar works

Full text

Available Versions

Electronic Eastern European National University Institutional Repository