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Ukraine: Article "Update On Foreign Investment In Ukrainian Agricultural Land"
Last Updated: 23 May 2013Article by Galina Khmarksaya Frishberg & Partners The moratorium on alienation of Ukrainian farm land has long prevented meaningful foreign investment into the Ukrainian agricultural sector. To somehow obtain access to agricultural land, instead of outright ownership foreign investors had to register Ukrainian companies that entered into lease agreements with landowners, most with a “right to buy” option if and when the moratorium will be lifted. However, if the current amendments to the legislation will be approved, the lifting of moratorium will not allow any legal entities to purchase their leased land despite any provisions to the contrary in their lease agreements. To add insult to injury, the suggested taxes and other mandatory payments to the state, will decrease any profits generated from the leased land. By way of background, at the end of 2012, the Verkhovna Rada (the Parliament) adopted Law №11315, further extending the moratorium on selling agricultural land until January 1 st , 2016, right after the next Presidential elections. Under the draft law, privatization of farm land will benefit the Ukrainian government first and foremost, followed by select Ukrainian citizens. For instance, potential buyers of farm land can only be (a) the Ukrainian government; ( regional state authorities; © the State Land Bank; or (d) Ukrainian citizens. Moreover, only the first three categories have the priority right to purchase any agricultural land that is offered for sale. All individuals who wish to own more than 100 hectars will need to obtain permission from GosZemAgenstvo (the State Land Agency). This is a highly controversial requirement because it allows government bureaucrats to decide which Ukrainian individuals can own large parcels of farm land. Significantly, even after cancellation of the moratorium, all legal entities (including those with foreign investment) would only be able to lease farm land, rather than buying it outright. The minimum term has been proposed to increase from 5 to 7 years, while the maximum term would remain at 50 years. Moreover, the minimum amount of lease payments would increase dramatically: if the draft law passes, the minimum lease amount will be 3% of the land’s value. Additional land tax of 1% of the value of 1 hectar will also be levied. If the farm land is not used according to its zoned purpose, the above taxes will increase by 1.5 times, which will be further increased on a yearly basis by 20%. Taking the above into account, unfortunately, the Ukrainian agricultural sector would remain stagnant (yet stable) for foreign investors for the unforeseeable future. Besides prolongation of the moratorium on sale of agricultural land, foreign investors would still be prohibited from owning agricultural lands even after cancellation of the moratorium. Thus, lease arrangements will remain the only way for foreign investors to gain access to agricultural lands (including land for personal farming or gardening). By way of exception to the general rule, a foreign legal or natural entity may inherit agricultural land. However, even in such case, the land will be subject to alienation within one year from the time of inheritance; otherwise, the ownership rights thereto would be revoked. In conclusion, there still have been no significant movements in Ukraine towards the liberation of the agricultural land market for foreign investors. If the draft law is of any indication, foreign investors will still not be allowed to purchase Ukrainian farm land despite any “buy-out” options that may exist in their current lease agreements. Instead, all legal entities (including foreign-owned companies) will be required to seek alternative ways attain agricultural land on a temporary basis by entering into short, medium and long-term lease agreements. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Continue reading
Explainer: How Much Carbon Can The World’s Forests Absorb?
11 June 2013, 5.35am BST Explainer: how much carbon can the world’s forests absorb? AUTHOR Peter Reich Scientific advisor, Hawkesbury Institute of the Environment at University of Western Sydney DISCLOSURE STATEMENT Peter Reich does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. Provides funding as a Member of The Conversation. uws.edu.au If deforestation is cut down, the world’s forests could act as a large net sink for carbon emissions. Flickr/sobriquet.net You are walking through the bush when you see an enormous tree trunk, tens of metres long, lying across the forest floor. Imagine you and several dozen friends lifting it by hand. Now you’ve literally grasped the significance of trees and forests when it comes to carbon sequestration – trees are heavy, and carbon accounts for almost half their dry weight, or biomass. The world’s forests are a net carbon “sink”. Each year they remove more carbon from the atmosphere by photosynthesis than they return via their own respiration, decomposition of dead roots, trunks and leaves, and by forest fires. That is how the growth and re-growth of forests around the world has slowed climate change in the past century. It has been estimated that between one-third and one-fourth of the total carbon dioxide (CO 2 ) emissions from burning coal, gas and petrol has been turned into wood and other plant parts through this process. Without that incredible ecosystem service, climate change would be much more extreme today than it already is. Despite advances in satellite remote sensing and ground inventories, our estimate of the area covered by forests globally is surprisingly shaky. We are unsure how much the trunks of all those trees weigh, nor can we know for certain the weight of their roots. It is even harder to figure out how much the total global forest biomass grows from one year to the next – a key figure that tells us how much of our annual CO 2 pollution has been scrubbed out of the air by forests. Forest ecologists like a challenge however, and there have been several attempts at estimating the forest carbon “sink”. Perhaps the most internationally comprehensive approach was an assessment of forest carbon stocks and fluxes across the globe between 1990 and 2007. They assessed the carbon content of live biomass, dead wood, litter, oil organic matter and harvested wood products in tropical, temperate and boreal forests, and examined how these stocks changed over roughly two decades. According to this analysis, intact forests and those re-growing after disturbance (like harvesting or windthrow ) sequestered around 4 billion tonnes of carbon per year over the measurement period — equivalent to almost 60% of emissions from fossil fuel burning and cement production combined. This news is not as good as it seems. During the time measured, tropical deforestation resulted in the release of almost 3 billion tonnes per year. Thus, globally, the net forest carbon sink amounted to just 1.1 billion tonnes per year or one-seventh of average emissions from fossil fuel burning and cement production over the period measured. These numbers suggest that forests, and tropical forests in particular, could play a key role in slowing the rise of atmospheric CO 2 in the decades to come. In the tropics, growth and re-growth of forests generated a colossal carbon sink of 2.8 billion tonnes of carbon per year. This largely, but not entirely, counterbalanced the equally colossal carbon emissions associated with deforestation of other tropical forests. As a result, the tropics served as a relatively small net source of carbon to the atmosphere since 1990. If deforestation continues unabated, and droughts and forest fires become more common, as is expected, then tropical forests could become a large net source of carbon to the atmosphere, heating up the pace of climate change. Disturbances to temperate and boreal forests from climate change-induced droughts, wildfires and windstorms could make the situation even worse. Conversely, if deforestation was to slow in comparison to continued growth of recovering and intact forests, tropical forests could serve as a large net sink of carbon in the future and make the United Nation’s Reducing Emissions from Deforestation and Forest Degradation ( REDD ) programme a meaningful contributor to offsetting emissions. Our best estimates of global forest carbon sinks and sources demonstrate the ongoing importance of forests to the global carbon cycle. Unfortunately, however, they do not provide a road map to the future. If forest “scrubbing of CO 2 ” declines while release of CO 2 remains stable or grows, the “braking” effect of the world’s forests on the pace of climate change will grow weaker, perhaps disappearing entirely. That would be truly bad news for the global climate and those who depend on it. And unfortunately, that is not just a lot of hot air. Continue reading
Carbon Cap & Trade Builds Global Momentum
By EV World Editorial Staff Policymakers in Washington, D.C. might be mired in the politics of intransigence, especially when it comes to carbon dioxide emissions, but California and nine U.S. states in northeast aren’t. They are taking action by implementing carbon cap & trade auctions to begin to reign in emissions of the climate-altering greenhouse gas, which just climbed past 400 parts per million (ppm) in Earth’s atmosphere – a concentration not seen in literally millions of years. And they aren’t alone, cities, regions and nations around the planet are starting to take similar action and what is emerging, according to Silvio Marccaci, is the beginning of a global trading system that will eventually link China, Australia, the European Union, and others, including those U.S. states and Canadian provinces astute and prescient enough to join in. Marcacci is a Washington, D.C.-based analyst who closely follows the Cap & Trade scene and writes about it for The Energy Collective and CleanTechnica websites. It was his article in the latter online publication about California’s recent, and third, carbon allowance auction that attracted EV World’s attention. Launched in 2012, the auction, which has the force of state law behind it, has completely sold out of its allowances at more than $14 a ton. That’s above the $10 floor. It turns out that what California is doing is just the tip of the proverbial iceberg, which might be a endangered metaphor, itself, on a warming planet. There are various carbon trading schemes popping up all around the planet. In fact, in a subsequent article appearing in the same publication, he reports that the World Bank has now identified 60 carbon pricing systems that are either already in place, like California’s or the even older Regional Greenhouse Gas Initiative, known as RGGI (pronounced ‘Reggie’), which is comprised of nine member states in the U.S. northeast, or are set to take effect shortly. Conservatives have long criticized such schemes as harming the global competitiveness of the United States. Fossil fuel lobbyists and their political allies have long thwarted efforts to implement either Cap & Trade or carbon taxes at the national level. Even President Barrack Obama has let it be known he won’t be spending on political capital on it. But then he may not have to, because states may be solving the problem among themselves, and with surprising economic payoffs. Marccaci points out that the one sector of California’s economy that has grown through the recession has been its ‘green’ energy sector from smart grid start-up in Silicon Valley to solar installers in San Diego, business is booming, in part because of the state’s progressive policies. One of those policies is to take the proceeds from the auctions and return 85% of it back to California rate payers in the form of a twice yearly credit on their utility bills. The remaining 15% is used to continue the build-out of green energy technologies. Meanwhile, pollution-wracked China recently announced that it, too, would be placing a cap on carbon emissions, joining up with the EU in a pan-continent trading system. Australia’s flawed carbon tax is being transitioned to a Cap & Trade system that will tie into one with New Zealand. The national governments of Chile, Brazil, Turkey and Ukraine, and Japan are reportedly considering creating similar systems. South Korea’s system is already in place and set to take effect. In this nearly 30 minute-long conversation with EV World’s publisher Bill Moore, Marcacci makes the case that what we’re seeing is the beginning to a global system to control and steadily begin to ratchet-down carbon emissions on a planetary scale, driven by the realization that if we don’t reign in CO2 we are on a path to average global temperatures which will make human civilization, as we know it, impossible to maintain. In his “World Bank Finds 60 Carbon Pricing Systems” article, Marccaci concludes: “If enough carbon pricing systems are online or planned by the next United Nations climate meetings, the power of international carbon markets as an economic and environmental stimulus may be too hard to ignore.” Continue reading
