Ukraine is actively introducing various alternative renewable energy sources, including biofuel, which is being used on a small scale, mostly in small populated areas. The Verkhovna Rada recently passed a bill ordering large cities to begin using it (by 2010). President Yushchenko did not consider it, and therefore did not sign or veto it. As a result, this document, as important as it is for Ukraine, is in limbo. Meanwhile, our country is sustaining losses precisely because of the absence of biofuel legislation.
Leonid Kozachenko, president of the Ukrainian Agrarian Confederation, says that these losses are considerable. The legislative standstill is slowing down Ukraine’s already sluggish agrarian growth rate. Biofuel can be produced from raw agricultural materials, such as rape, corn, soybeans, sugar beet, and other crops. Given normal conditions, Ukrainian farmers could earn some 10 million dollars extra every year, and this money would introduce cardinal changes to the situation in the countryside. By relying on bioenergetics, Ukraine would also be able to meet Europe’s increasing demands for biofuel.
Of course, national independence in terms of energy supplies comes first. We can achieve it by adopting alternative technologies. Vasyl Motsny, Ukraine’s Deputy Minister of Agriculture, sounds quite optimistic when he shares his views on the prospects of cheaper energy sources. Kozachenko, however, believes that biofuel will only help hold back energy resource prices. There is also a big problem of the rise in demand and, consequently, in the price of raw materials in the sphere of bioenergetics; this will spark a rise in prices for foods, such as milk, meat, and bread.
Acceptable prices for the new- generation energy source can be set only by producing it on a large scope. This, in turn, requires larger crop plantings.
This year the Ukrainian government heeded the recommendations of experts and adopted measures to increase the raw material base of bioenergetics. Thus, Ukraine is expected to harvest some 1.2 million tons of rape, almost two times more than last year. However, increasing the raw material base will not solve the problem, says the deputy minister of agriculture. Our country mostly exports alternative energy sources to Saudi Arabia, Egypt, and other countries. Meanwhile, the creation of a network of processing factories in Ukraine appears to be a more rational way of lowering energy supply costs.
Motsny says that, in order to launch this alternative mechanism, it is necessary to modernize existing facilities. This year (2007) the government allocated 15 million hryvnias to re-equip several alcohol-producing factories so that they can start manufacturing methanol instead of ethanol. There are plans to build 19 enterprises in various regions of Ukraine. Lviv and Kyiv oblasts already have the documentation for the construction of factories capable of producing an annual 100,000 tons of biofuel. In addition to such long-term projects, the government proposes more radical measures, like a subsidy worth 50 hryvnias per hectare of rape for the manufacture of biofuel, per farmer. There will be tax benefits, like excise exemptions.
At the same time, budget appropriations are not enough to quickly launch this alternative energy supply mechanism. Preliminary estimates show that in 2007 the investment component may amount to several hundred million hryvnias. “There are many investors with sackfuls of hard cash hanging around Ukraine, who are waiting for the starting signal. What’s holding back the long-awaited investments is the absence of legal guarantees,” says Mykhailo Hladii, chairman of the Parliamentary Committee on Agriculture and Land Relations. There must be laws that set forth clearly formulated rules of the game for foreign investors, but there is no one to adopt them.
