Ukraine will develop the biogas market together with the EU: prospects and conditions

The Memorandum of Understanding between Ukraine and the European Union regarding strategic partnership in the field of biomethane, hydrogen and other synthetic gases appeared on the website of the European Commission.

"Thanks to the wide potential for sustainable production of renewable energy sources, in particular sustainable biogas and biomethane, as well as hydrogen, it is appropriate to ensure Ukraine's close cooperation with EU initiatives to significantly increase the share of renewable energy consumption by 2030 and to strengthen the mechanism for achieving the sustainability of renewable energy, recognizing that the fact that nuclear energy occupies a significant place in the structure of the Ukrainian energy industry," the Memorandum states.

The key aspects of cooperation are the coordination of the certification procedure in accordance with EU requirements, the identification and elimination of administrative, technical and regulatory barriers, the creation of a predictable and reliable investment structure, as well as the regulatory and administrative foundations of the development of ecosystems for the local production and consumption of biomethane, hydrogen and other synthetic gases in Ukraine.

The creation of regulatory and administrative foundations for the development of competitive and transparent cross-border markets and trade and the integration of business entities from Ukraine into the global certification system recognized by the EU are also envisaged

As noted about the new partnership in the Bioenergy Association of Ukraine, it will facilitate the production, trade, transportation, storage and use of renewable gases, such as biomethane, hydrogen, its derivatives, as well as other synthetic gases and gases obtained through sustainable production.

It is worth noting that, according to the Deputy Minister of Agrarian Policy and Food of Ukraine Vitaliy Golovny, Ukrainian farmers are currently able to provide 80-90% of raw materials for their own bioenergy.

"Ukraine has a high potential of raw materials, 80-90% of which can be provided by farmers. We are ready to join initiatives in bioenergy, as they contribute to the development of the agricultural industry, in particular, they help in processing, reducing the load on logistics, as well as in added value," he emphasized.

In turn, the head of the State Energy Efficiency Agency, Valery Bezus, noted that during 2023, an IT solution for the biomethane register will be developed, which will be convenient for all stakeholders, producers, potential buyers, users, and guarantee providers to work with.

"At the same time, we will conduct negotiations with European platforms regarding the recognition of these guarantees and synchronize the register we are working on with the possibilities of exporting guarantees of origin," Valery Bezus added.

It is worth noting that, according to the representative of the ETG company Andrii Bilenkoy, bioethanol is an interesting idea for Ukraine, if it is produced from corn. In general, it is possible to focus on securing a 10% share of the European bioethanol market, which is 1.8 million tons of corn.

Yes, this is only 10% of the total supply of corn in Ukraine, but it will provide added value and additional stability to domestic prices. The only question is where to produce bioethanol, the expert emphasized. With the capacities we have, we are able to process 0.5 million grains. But these plants produce alcohol, not bioethanol. In order for alcohol to become bioethanol, it is necessary to increase its concentration to at least 99.3%. Not every factory can produce ethyl alcohol of this concentration.

The Ministry of Agrarian Policy, on the other hand, emphasizes that there are enough capacities for bioethanol processing in Ukraine, and there is a trend towards their growth. As for biodiesel, its only prospect in Ukraine is its production in small quantities by farmers for their own consumption, especially now, when there is a problem with both the export of raw materials and the import of petroleum products. This was reported by the representative of the ETG company Andriy Bilenky. According to him, the development of biodiesel production in Ukraine stops the presence of a by-product — glycerin, which is difficult to dispose of. Another important factor is that biodiesel on the market is supported by legislation.

In general, market participants point out that if a norm regarding the mandatory share of biofuel in the total volume of liquid motor fuel is adopted at the legislative level, there will be a stable demand for such fuel. It will become economically feasible to produce biofuel not only as a reserve for your farm, but also for sale on the market.

Can the production of biodiesel and bioethanol actually become a window of opportunity for Ukraine, increase the gross domestic product and create additional jobs, and what factors inhibit the development of this industry? This issue was recently discussed by experts during the Trend&Hedge Club meeting. According to Enkorr.ua, pre-war consumption of diesel in Ukraine reached 7 million tons, and gasoline - 2 million tons. According to Andrii Bilenkoy, the maximum share in the domestic market of biodiesel and bioethanol can be estimated at no more than 10% of the consumption market. Therefore, to produce this amount of biofuel, approximately 700,000 tons of vegetable oils (for biodiesel) and 400,000 tons of corn (for bioethanol) will be needed. However, in parallel with the foreign market, Ukraine needs to pay attention and enter the European market. After all, in the EU, various vegetable oils are processed for the production of biodiesel, the largest of which is rapeseed oil. The expert explains that the EN14214 standard, which clearly specifies the chemical and physical parameters of the fuel, limits the use of sunflower and soybean oil. This is especially noticeable for the production of winter brands of biofuel in Europe, where mainly rapeseed oil is used. Currently, Ukrainian rapeseed is already present on the biofuel market. According to AgroChart, up to 2 million tons of rapeseed were exported before the war, from which almost 0.8 million tons of biodiesel can be produced. This means that about 5% of the biodiesel produced in Europe is produced from Ukrainian rapeseed. The necessary capacities for the production of biodiesel in Europe have already been built, the boom in the construction of processing plants has passed, so there is no point in creating such capacities in Ukraine.

Let's add that the Government considers bioethanol and biogas as alternative types of energy that can ensure Ukraine's energy sustainability. In particular, this opinion was expressed by the same Deputy Minister of Agrarian Policy and Food of Ukraine Vitaly Holovnia. According to him, the agricultural sector, in particular the processing industry, has significant opportunities for this. Effective use of the processing industry will allow to partially replace traditional types of energy both at the local and national levels.

"In order for the processing industry to develop, it is necessary to implement certain legislative initiatives. In particular, allow the addition of bioethanol to motor fuels. The corresponding draft law is being prepared for the second reading in the Verkhovna Rada of Ukraine. The addition of bioethanol to motor fuels will help reduce the load on grain logistics and ensure the sustainability of the energy industry as a whole," noted Vitaliy Holovnya.

According to him, there are enough capacities for bioethanol processing in Ukraine, and there is a trend towards their growth. In particular, thanks to the privatization of distilleries.

"I am sure that in 2023 we will feel that the alcohol industry has started working. Biomethane processing plants are vertically integrated. That is, the raw material after the production of bioethanol is a derivative for the production of biogas. And from biogas it is possible to produce both electricity and purify it into biomethane," the Deputy Minister emphasized.

He also said that currently the Ministry of Agrarian Policy, together with experts, is preparing projects for the regulation and development of the processing industry, support programs for producers. Currently, they use a preferential "green tariff", that is, a mechanism that stimulates the use of renewable energy sources.