Biogas projects in Ukraine: prospects, consequences and regulatory policy

H. Trypolska, O. Diachuk, R. Podolets and Maksym Chepeliev ()

Economy and Forecasting, 2018, issue 2, 111-134

Abstract: The paper focuses on the potential of biogas use in Ukraine. Regulatory policy options for biogas projects were considered, and economic assessment and assessment of biogas projects' environmental impact were made. The results show that the implementation of biogas projects in Ukraine leads to positive macroeconomic effects beginning in 2018-2019. In 2025-2029, additional GDP growth could reach 0.3%. Despite the fact that domestic consumers do not directly participate in investment processes, in the medium and long-run, all groups of households will have positive impact on the level of real income. Wide-scale implementation of biogas projects in Ukraine would lead to moderate structural changes, mainly causing a slowdown in coal output and use, natural gas mining, and steam and hot water supply. The greatest slowdown would be observed in case of coal whose demand is reduced due to the replacement by solid and gaseous biofuels. The use of biogas instead of burning fossil fuels would save 11.462-19.066 million tons of CO2eq. In order for biogas projects to become available for medium-sized businesses in Ukraine, governmental internal and external loan guarantees should be introduced; lower interest rates on loans through the cooperation of Ukrainian banks with international and domestic financial institutions should be implemented. The cost of capital needs to be reduced; dissemination of information on the benefits of biogas projects, the priority connection to the grid for electricity producers from biogas, the modernization of electricity grids and infrastructure are needed. And in the long term, compulsory use of biogas should be introduced for agro-industrial companies whose activities are related to the formation of wastes.

Date: 2018
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