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  • The state of Ukrainian liquid biofuel market in 2010

    State of Ukrainian liquid biofuel market in

    The modern biofuel types can be divided into bioethanol (obtained at the distillery), biodiesel (made from rapeseeds, sunflower, straw), solid fuel (produced from various plant by-products), and biogas (product of the biological breakdown of organic matter).

    In Ukraine the liquid biofuel (bioethanol and biodiesel) production is slowly developing for lack of real government assistance. Producers will be able to count on certain profitability only after legislative authorization of the standards of the obligatory biofuel additives in traditional petrol. The Law of Ukraine “About Alteration to some Legislative Acts of Ukraine Concerning the Procurement of Biofuel Utilization and Production” was put in force on January 1, 2010. Now, domestic raw material suppliers can make use of tax remissions (zero rate) while importing the profile equipment. It is noteworthy, that the Law of Ukraine, which stimulates the production of gasoline with bioethanol additives (reformulated gasoline), has been valid on Ukrainian market since 2007, and excise tax on such fuel types was lowered from 60 to 30 EUR/t. Also, zero rate of excise tax was established on bioethanol fuel produced in a country.

    The Cabinet of Ministers has approved the government program of energy efficiency rise for 2010-2015. Its priority directions are the reduction of the amount of natural gas and oil products in the fuel balance, and their replacement by the other kinds of energy resources (primarily obtained from renewable energy sources). Finally, in 2010 the Energy Community Ministerial Council has approved accession of Ukraine to the Energy Community by a solid vote. It imposes a responsibility to phase in the EU fuel standards including an EU Strategy for Biofuels.

    As for bioethanol, the BFM Group company director Andrey Stadnik confirmed: “His domestic producers are running risks consciously as the core legal framework is still unfinished.” “However, “Techinservice” enterprise intends to start up the line of petrol component production called "The Alternative" (APC) made of 98% of ethanol", - the "Techinservice” sales director Oleg Korol announced. The fuel market gamblers have already shown their interest in this type of fuel, because APC is exclusively ethanol fuel and cannot be used in the alcoholic beverage industry.

    And after two-year break the BFM Group together with the strategic foreign investor has returned to the construction project of the new bioethanol plant with productive capacity of 100 ths. t/y; the used raw material is fodder corn.

    By the way, the standards of the obligatory biofuel additives in traditional petrol can be soon adopted in Ukraine. The appropriate legislation is being developed by the special fuel-energy complex working party in the Supreme Council committee. The adoption of a law about additives of biofuel E85 (85% of ethanol, obtained from the agricultural production, the rest is octane petrol-95) is the most probable. Currently, the harmonization of the biofuel production mechanism and preferential terms, which the government will grant to the oil companies and to the distilleries, are being in process. In case of adoption of the law, the oil companies will have to organize the market of new fuel. Also, it should be mentioned that the switch to the fuel with such high ethanol content (85%) implies obligatory engine upgrading.

    In the event of adoption of the obligatory additives, home market will get a shot in the arm. But, in view of expected surplus of the product in the world in 2010, Ukrainian ethanol will be hard to export. The annual potential of ethanol production at the Ukrainian distilleries is priced at more than 200 ths. t. Accordingly, Haisyn state spirits distillery has already been licensed to produce bioethanol from sugar beet waste. The modernization of productive capacities has cost 3,5 million euros. Now the enterprise will be able to produce up to 100 ths. t of biofuel per year. And Sugar Union “Ukrros” intends to invest in the creation of such capacities at the Gubynykha Sugar Plant (110 ths. t of corn bioethanol per year) at least 30 million dollars.

    Altogether in Ukraine the amount of distilleries is about 70, and almost half of them are unprofitable. On average, only 51% of the “Ukrspirt” concern plant capacities are used, therefore reorientation of the plants on biogasoline production can not only decrease the country’s dependence on the oil products import, but also increase profitability of productions.

    As for biodiesel, a few enterprises has already been built in a country including one of the major ones in Kalush (Ivano-Frankivsk Region), where as early as in 2007 an enterprise with annual capacity of 180 ths. t started working in the territory of “Oriana” chemical enterprise.

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    Views: 5280 Published: 20-09-2010

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    The state of Ukrainian liquid biofuel market in 2010


    Ukrainian liquid biofuel market