Biofuel installations receive a zero hryvnia environmental tax rate

The Verkhovna Rada of Ukraine adopted in the first reading the government bill "On Amendments to the Law of Ukraine "On Alternative Fuels" regarding the creation of a register of installations that use biofuel as the only type of fuel".

As the representative of the government in the parliament, Taras Melnychuk, said, this bill envisages the creation of a register of plants that use biofuel as the only type of fuel for the purpose of administration, setting the rate of zero hryvnia environmental tax for emissions of carbon dioxide, which are formed during the burning of biofuel by plants.

It is also envisaged to consolidate the provision that the administration of the register of installations using biofuel as the only type of fuel will be carried out by the central executive body, which implements state policy in the field of effective use of fuel and energy resources, energy saving and alternative types of fuel.

Earlier, at the beginning of summer, the Verkhovna Rada of Ukraine adopted in the second reading and as a whole the project of the Law on the mandatory use of liquid biofuel (biocomponents) in the field of transport. As noted in the press service of the Apparatus of the Parliament, the purpose of the law is "to create a regulatory framework for the development of the sphere of production, circulation and use of liquid biofuel by transport." In particular, the implementation of the provisions of the Directive of the European Parliament and the Council of the European Union on encouraging the use of energy produced from renewable sources in terms of ensuring Ukraine's international obligations regarding the share of energy from renewable sources in the gross final volume of energy consumption in transport is envisaged. The mentioned Law establishes from June 1, 2025 a mandatory content of at least 5% of liquid biofuel (biocomponents) in all volumes of automobile gasoline sold from wholesale and retail fuel outlets. Exceptions will be gasoline with an octane number of 98 and higher and gasoline supplied for the needs of the Ministry of Defense, the State Reserve and for the creation of minimum reserves of oil and oil products.

We will remind that the Cabinet of Ministers of Ukraine expanded the possibilities of the state program "Affordable loans 5-7-9%". Now entrepreneurs will be able to use it to purchase and install gas-powered, including biogas, power generation units. The relevant resolution of the CMU was adopted at the government meeting on June 18. The document provides that entrepreneurs will be able to spend the loan funds received under the program to finance the construction and installation of gas turbine, gas piston, and biogas generation plants. The maximum amount of a soft loan for relevant purposes is up to UAH 150 million, the term of crediting is up to 10 years.

It should be noted that non-compliance with release requirements and untimely or non-presentation of information on the content of liquid biofuel (biocomponents) in volumes released in the customs territory of Ukraine from places of production and wholesale of motor gasoline fuel are classified as offenses by law. Therefore, some are already starting to prepare for changes. For example, OKKO GROUP is starting to work on the concept of a large biodiesel plant. Vasyl Danylyak, CEO of the company, told about this in an interview with Forbes. In his opinion, the company has a fairly big perspective on biodiesel and fairly strict mandates are in place in Europe. Therefore, some Eastern European countries will only join these mandates in 2025. In Romania, for example, the diesel mandate will start working next year, as well as in other countries. Currently, the company has not yet decided where the biodiesel plant will be located, but the resource that OKKO has is not enough to start construction. Currently, the annual production capacity of biomethane in Ukraine is 6 million m³ - 3 million m³ at the Hals Agro holding plant in the Chernihiv region and 3 million m³ at the Vitagro holding in the Khmelnytskyi region.

As previously reported, a biofuel exchange is being created in Ukraine, and for this the Government calls on business and farmers to increase the share of alternative fuels on the market. The memorandum on cooperation has already been signed by the State Agency for Energy Efficiency and Energy Saving and the Ukrainian Energy Exchange. Currently, the priority is to create a transparent and competitive biofuel market. According to Kostyantyn Shevchuk, Deputy General Director of the Ukrainian Energy Exchange LLC, bioenergy is one of the strategic directions for replacing natural gas. However, for the development of the direction, it is necessary to create appropriate conditions on the market, which do not really exist today. Therefore, in his opinion, the transition to exchange trading will significantly affect the price dynamics in the biofuel market, and the trading will come out of the shadows.