Green to Gold: barriers to and driving forces for biogas investments in Ukrainian agribusiness sector

Dmytro Romets, Thomas Decker and Klaus Menrad

No 212883, 6th (VI) Large Farm Management Conference, September 16-18, 2015, Kyiv, Ukraine from Institute of Agricultural Development in Transition Economies (IAMO)

Abstract: Since 2009 Ukrainian Government has been planning to increase the share of renewable energies (RE) in the country´s energy mix and to promote the natural gas substitution by the use of biomass and biogas production. Notwithstanding their many environmental, economic and social advantages, after several years of policy making none of them have been implemented on large scale. The aim of this paper is to create insight into the underlying factors of this troublesome trajectory of biogas technologies in Ukrainian agribusiness sector and to shed new light on biogas investment decisions by large agricultural companies. We investigate the investment decisions of large-scale farms, with the objective to identify the main determinants of their choices. Our findings reveal that large-scale farms show related investment thresholds. Their investment decision regarding biogas is mainly driven by the projects´ capital costs and payback period. But the other important issue is the potential of energy cost reduction through natural gas substitution and a perceived need of waste recycling. Nevertheless, there are systemic problems that hamper investments in biogas in Ukraine, such as lack of capital, geopolitical uncertainty and investor´s perceived risk. The analysis provides several lessons to take into account when developing policies for the acceleration of the biogas production in the agricultural sector of Ukraine.

Keywords: Agribusiness; Environmental Economics and Policy; Research and Development/Tech Change/Emerging Technologies; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 6
Date: 2015-09-16
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaml15:212883

DOI: 10.22004/ag.econ.212883

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