Biogas and Biomethane: New Opportunities for Ukraine’s Energy Independence
Clear Course Towards Renewable Gases Development
On August 29, 2024, the panel online discussion “Biogas and Biomethane: New Opportunities for Ukraine’s Energy Independence” was held, organized by the UN Global Compact in Ukraine in cooperation with ExPro Consulting and the Bioenergy Association of Ukraine. Participants discussed the future development of the biogas and biomethane market, its potential contribution to Ukraine’s energy independence, export prospects to the European Union, and key challenges facing the sector.
At the beginning of the discussion, key market players—including government representatives, industry experts, and investors—highlighted the importance of biogas and biomethane for Ukraine’s energy strategy. Ihor Kovaliov, Director General of the Directorate for Resource-Efficient Transformations at the Ministry of Energy of Ukraine, opened the event by acknowledging the role of renewable gases in achieving energy security:
“The development of the renewable gas market is essential for both Ukraine and the European Union. The Ministry of Energy of Ukraine continues working on the development of biogas and biomethane, striving for further cooperation with partners,” said Kovaliov.
According to him, a key element of the strategy is the National Energy and Climate Plan for 2030, which envisions the annual production of 100 million cubic meters of biomethane. Additionally, an EU-Ukraine roadmap for biomethane exports is currently being actively discussed with the European Commission.
Investments and Regulatory Framework: How to Attract Investors?
Olena Lenska, Director of the Renewable Energy Department at the State Agency on Energy Efficiency and Energy Saving of Ukraine (SAEE), emphasized the importance of the investment climate and the need for proper legal regulation for market development:
“It is crucial to formulate a request to the European Union now to clarify whether the introduction of a Ukrainian biomethane registry will create any additional obstacles to exports,” Lenska stressed.
She pointed out that Europe already provides additional incentives for renewable gases, provided that sustainability criteria are met, and Ukraine must align with these standards. However, Ukraine’s biomethane registry requires significant improvements.
Feedstock and Profitability: Key Insights from Heorhii Heletukha
Heorhii Heletukha, Chairman of the Bioenergy Association of Ukraine, outlined the scale and potential of the biomethane market in Europe and Ukraine. He noted that Ukraine already has 83 biogas plants with a total capacity of 140 MW, but only two biomethane facilities currently operate, producing 6 million cubic meters of biomethane per year.
“The biomethane market in Europe is expanding rapidly. In Ukraine, seven new biomethane projects** with a total capacity of 111 million cubic meters per year are set to be launched soon,” Heletukha highlighted.
He also emphasized the feedstock base for biomethane production, stating that industrial livestock farming, crop production, and food processing are the primary sources of raw materials. Additionally, he calculated that the internal rate of return (IRR) for biomethane projects connected to the gas distribution network is 28.4%, making these projects economically attractive.
Coordination of Efforts: The Need for a Unified Regulatory Body
According to Heletukha, one of the main challenges in developing the biomethane sector is that multiple agencies oversee the industry, leading to a lack of coordination. He called for the establishment of a single governmental body responsible for biomethane policy coordination:
“There is no single government authority driving the biomethane sector forward! We need to designate a specific ministry to oversee the development of the biomethane sector and ensure inter-agency coordination,” Heletukha stressed.
Heletukha also pointed out that Ukraine’s biomethane legislation is already in place. The adopted amendments to the Customs Code of Ukraine allow for biomethane exports, but challenges remain:
- Connecting biomethane plants to gas distribution networks.
- Ensuring the sustainable development of the biomethane sector.
Representatives of the National Energy and Utilities Regulatory Commission (NEURC) confirmed their readiness to cooperate with network operators to resolve connection and gas quality issues.
Challenges for Exports and Investors
Oleh Riabov, Deputy CEO of the Gals Agro agribusiness holding, highlighted the difficulties facing potential investors, particularly the need to mitigate both military and political risks:
“The EU is not eagerly welcoming Ukrainian biomethane, as investors need to insure not only military risks but also political risks,” Riabov pointed out.
He emphasized that Ukraine must create better investment conditions than neighboring countries such as Poland and Slovakia, as without legislative changes, new projects may struggle to secure necessary funding.
Key Takeaways and Future Prospects
Vitalii Radchenko, Managing Partner at CMS Ukraine, noted that Ukraine already has five biomethane plants, which gives it an advantage over Poland, which has none. However, he stressed that differences in biomethane measurement standards between Ukraine’s gas transmission system operators (GTSO) and their European counterparts could create barriers for exporting biomethane.
At the end of the discussion, Olena Lenska summarized:
“Currently, only seven biomethane plants are ready for launch, and it remains uncertain whether we will meet our National Plan targets. However, when SAEE first launched the program for household solar panel installations, there were only 21 installations—soon, there were hundreds and then thousands. Once people realized that solar energy is a highly efficient and viable energy source, installations began increasing 4-5-10 times per quarter. Today, 26% of solar energy comes from household solar installations. The potential for biomethane is enormous, and if the right conditions are met, market growth will accelerate significantly,” Lenska stated.
Event Organizers
The discussion marked an important step toward developing Ukraine’s biomethane and biogas market, which will contribute to strengthening the country’s energy independence.
The event was organized by the UN Global Compact in Ukraine, in partnership with ExPro Consulting and the Bioenergy Association of Ukraine, as part of the Ukraine Energy Initiative.
The discussion was moderated by Vitalii Opryshko, Head of Ukraine Energy Initiative, and Daria Orlova, Editor of ExPro Electricity.