Analysis Voluntary Carbon Pricing Programs for their Further Adoption by Ukrainian Enterprises

Abstract

The wide spreading of the voluntary carbon pricing practice will lead to the efficiency of governmental policies towards low-carbon an economy, since they will be able to adopt clearly anticipated price policies in Ukraine and other countries. But adopting the internal carbon pricing programs by domestic enterprises is challenging due to expose to political, energy, financial and other crises in Ukraine and should be carefully studies in prior. Thus we offer considering best experiences of European companies that have already effectively and efficiently incorporated carbon pricing schemes into their management processes and strategic decisions. For this purpose, the theoretical issues of implementing voluntary carbon pricing programs by domestic enterprises have been investigated. Theoretical and practical base of the article consists of general economic and environmental economic principles, works of international and national scientists in the field of carbon pricing. This study provides analysis of the effective tools of mitigating risk associated with climate change policy and regulations, which can be applied by domestic firms in Ukraine. Using internal carbon pricing programs as a risk management tools, we described potential benefits, costs and limitations of the program. We also introduced the business study case how to apply the internal carbon pricing tool, in particular, shadow price by a company. This example proposes a methodological approach to implementing a shadow price tool. Thus, can be applied by domestic company in order to identify the feasibility of low-carbon emission investment and make right investment decision towards decarbonisation. Further analysis reveals that internal carbon pricing programs can be implemented by domestic firms as an efficient strategy and enable a greenhouse gas emissions reduction in compliance with the future or current national target. Our study provides practical recomendations through which Ukrainian companies can address climate risk and provide guidance to governments and regulators for the forming and further implementation of national environmental policies.