The biofuels market in Ukraine

Abstract

Paper focuses on the present condition of the biofuels market in Ukraine, Ukraine's international obligations regarding energy consumption from renewables by 2020 and possibilities to achieve the set goal. Theoretically, reaching the set goal is possible, but in practice the goal of 10% renewables in the transport sector by 2020 will probably be unachievable. The structure of energy consumption in 2020 is expected to be significantly different from that presumed by the National Action Plan on Renewables until 2020, and less biofuels would be needed to achieve the goal of 10% renewables in transport sector by 2020 than it is set out by the mentioned Action Plan. While maintaining the structure of fuel consumption by road subsector of 2015, in order to provide 10% of energy from renewables in the automotive sub-sector, about 164 thousand toe bioethanol and 256 thousand tons toe of biodiesel are needed. The abolishment of the mandatory blending of 5% of biofuels was inappropriate, as without this requirement market growth ceased. The measures to enhance biofuels market include reducing the excise duty rate for bioethanol compared with a rate of excise duty on petrol; adopting sustainability criteria of biofuels; expansion of types of biofuels; information campaigns to popularize biofuels; reducing the cost of parking for cars, marked for the use of large volumes of biofuels in municipal parking lots; permit for vehicles marked for the use of large amounts of biofuel to use the lanes for public transport; encouraging the market to sell biofuels with high content of biological components; providing financial preferences for sellers of petroleum products in order to create the infrastructure for blending of biological component of fuel. The article was prepared within the research project on "Economic policy of the development of integrated energy markets of Ukraine".