Legislation barriers for bioenergy development in Ukraine and UABio proposals to overcome them
№
Barrier
UABio proposal
1
Law of Ukraine №5485-VI introduces to the
Law «On Power Industry» incorrect definition
of «biomass»:
“Biomass is a non-fossil biologically
renewable substance of organic origin in the
form of wastes of forestry and agriculture
(crop and livestock sectors), fishery and
technologically related industries, which is
subject to biodegradation, as well as the part
of industrial and municipal waste, which is
able to biologically decompose”.
Definition of term «biomass» shall be
corrected in the following way:
"Biomass is a biologically renewable
substance of organic origin which is
subject to biodegradation (products, wastes
or residues of forestry and agriculture (crop
and livestock sectors), fishery and
technologically related industries as well as
the part of industrial and municipal waste,
which is able to biologically decompose".
Not justified requirements on the local
content share, which come into force on
01.07.2013:
- Power from biomass: not less than 30%, if
construction of an object started after
01.01.2012 and the object will be
commissioned after 01.07.2013; not less than
50%, if construction of an object started after
01.01.2012 and the object will be
commissioned after 01.07.2014
- Power from biogas: not less than 30%, if
construction of an object started after
01.01.2012, and the object will be
commissioned after 01.01.2014; not less than
50%, if construction of an object started after
01.01.2012 and the object will be
commissioned after 01.01.2015
To abolish any requirements concerning the
local content share for the facilities that
produce power from biomass, biogas,
municipal solid waste, and by co-firing
biomass with fossil fuels.
2
Legislative acts that require amendments
To be corrected: Law of Ukraine «On Power
Industry»; Law of Ukraine «On Alternative
Fuel Types» (№ 1391-XIV from 14.01.2000).
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
3
4
5
Unreasonably low green tariff coefficient for
power generated from biomass, which equals
2.3.
Unreasonably low green tariff coefficient for
power generated from biogas, which equals
2.3.
Discriminatory approach for biogas plants,
commissioned before 01.04.2013
According to the Law of Ukraine № 5485
from 20.11.2012, installation generating
power from biogas and commissioned before
31.03.2013 inclusive, do not obtain “green”
tariff at all.
To introduce green tariff coefficient for
power generated from biomass on the level
2.7.
To introduce green tariff coefficient for
power generated from biomass on the level
3.0 for biogas of agricultural origin, and on
the level – 2.7 for all other types of biogas.
The law should be amended in such a way
that installations generating power from
biogas and commissioned before
31.03.2013 inclusive, shall be able to get the
"green" tariff along with objects
commissioned from 01.04.2013 to
31.12.2014.
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
6
7
8
Absence of “green” tariff for power generated
from municipal solid waste (MSW).
Absence of “green” tariff for power generated
via co-firing of biomass with fossil fuels.
Requirements for a local component of the
main pieces of equipment for electric power
facilities that use biomass and biogas, are
defined incorrectly, with errors in
terminology and without details required
Required is an introduction of “green” tariff
for power generated from MSW at least on
the level of 3.0.
Required is an introduction of “green” tariff
for power generated f via co-firing of
biomass with fossil fuels at least on the
level of 1.9.
Examples of errors in terminology are as
follows: use of term “furnace” (it shall be –
boiler: may be either thermal or steam),
“bioreactor for hydrolysis” (it shall be –
methane tank or reactor of anaerobic
digestion), and “cogenerator” (it shall be –
cogeneration unit).
However, these changes are necessary only
if the requirement on the local component
for projects claiming to obtain "green" tariff
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
To be corrected: Law of Ukraine «On Power
Industry».
UABio has developed draft law ”On making
amendments to some laws of Ukraine on
stimulating power generation from alternative
energy sources”
Authors: V.Yu. Medianyk, А.М. Blyzniuk,
V.V. Saldo, І.V. Popesku, G.V. Fedoriak.
Draft law – on the stage of agreement between
authors. Not registered.
9
Excessive environmental requirements for
biomass fired boilers
Capacity, МW
0,1…1.0
Maximum allowable
emissions of particulate
matter, mg/nm3
150
1.0…50
50…100
50
100…300
>300
10 The complexity of tax exemptions
obtainment for imports of bioenergy
equipment
11 Subsidizing of domestic natural gas prices
for households and housing and communal
services enterprises makes biomass
uncompetitive in these sectors.
12 The CMU Decree from March, 20th, 2013 №
67 "On Approval of the Procedure and
Conditions of providing in 2013 subsidies
from the state budget to local budgets for debt
repayment..." establishes a mechanism for
for power generated from biomass and
biogas is not totally abolished.
Maximum allowable emissions of
particulate matter for biomass fired boilers
in Ukraine according to UABio proposals
(at the О2 concentration of 6% in exhaust
gases)
Maximum allowable
Capacity, МW emissions of particulate
matter, mg/nm3
300
0.1…1.0
1.0…10
150
>10
50
Amendments should be made to the Order by
the Ministry of Environmental Protection of
Ukraine №309 dated 27.06.2006 "On approval
of maximum allowable pollutant emissions
from stationary sources"
UABio position has been developed, but not
yet delivered to the Ministry of Environmental
Protection of Ukraine.
To simplify the procedure for obtaining
mentioned tax exemptions, to increase
transparency of such procedure and to
reduce time for decision-making on given
issue.
Amendments should be made to the CMU
Decree №444 dated 14.05.2008 and possibly to
the Tax Code of Ukraine.
Natural gas tariffs for households and
housing and communal services enterprises
shall be increased to a level that covers the
justified economic costs. That will improve
economic preconditions for the
implementation of projects for substituting
natural gas with biomass in these sectors.
It is proposed:
- To provide compensation mechanism for
established rates for generation and supply
of heat from alternative energy sources
(including from biofuels) to the preferential
It is necessary to implement a coherent policy
phasing out subsidies for domestic and public
consumers of natural gas.
UABio proposals are not developed.
UABio proposals are not developed.
It is necessary to make amendments to the
CMU Decree from 20th March 2013 №167 "
On Approval of the Procedure and Conditions
of providing in 2013 subsidies from the state
budget to local budgets for debt repayment of
providing subsidies only for consumed
natural gas in order to repay accounts by
enterprises that generate, transport, and
supply heat to the population.
Thus, discriminative conditions against heat
generating companies using biofuel are
created. Such companies are not able to
obtain the appropriate compensation in case
of mismatch of the actual cost of district
heating and of centralized water and
wastewater tariffs, approved and/or agreed to
by the state or local government.
13 Incorrect definition of “biofuel producer”
the Law of Ukraine “On Alternative Fuel
Types”:
“Producer of biofuel – a business entity that
directly produces biofuels from biomass”.
Incorrect definition of "biofuel":
"Biological fuel (biofuel) – solid, liquid or
gaseous fuel made of biologically renewable
resources (biomass) that can be used as fuel
or as a component of other fuels".
categories of consumers.
- To legislatively establish the share of
biofuels to be used in total heat generation
by the utilities.
- To establish equity for using different fuel
types for heat generation.
the difference in heat tariffs, service water
supply and sanitation that were made ,
transported and supplied to the population,
which occurred due to a mismatch of the actual
cost of district heating and of centralized water
and wastewater tariffs, approved and/or agreed
to by the state or local government".
Пропозиції БАУ сформульовано в листі
народному депутату С. Тігіпко, на основі
якого було підготовлено депутатський
запит та направлено його на розгляд в
КМУ.
UABio proposal has been formulated in a letter
to the parliament member S. Tigipko. On the
basis of mentioned letter the parliamentary
inquiry was prepared and submitted for review
to the CMU.
The definition shall be as follows:
Amendments shall be made in the Law of
“Producer of biofuel – a business entity that Ukraine “On Alternative Fuel Types”:
directly produces biofuels from biomass or
(№ 1391-XIV from 14.01.2000) and possibly
to the Tax Code of Ukraine.
whose core economic activity results in
biomass production, which is directly
used as a fuel” (or otherwise agricultural
UABio proposal are formed, but the new draft
enterprises, forestry, oil extraction plants
law is not developed.
etc. are not covered).
The definition shall be as follows:
Amendments shall be made in the Law of
"Biological fuel (biofuel) – solid, liquid or
Ukraine “On Alternative Fuel Types”:
gaseous fuel made of biologically
(№ 1391-XIV from 14.01.2000).
renewable resources (biomass) or directly in
a form of such resource that can be used as
UABio proposal are formed and several times
fuel or as a component of other fuels".
sent to the profile committee of the Verkhovna
Rada, but the new draft law is not developed.
14 Absence of subsidizing mechanism for
buyers of bioenergy equipment.
15 Absence of the National Biomass Action
Plan in Ukraine.
16 Opportunities of bioenergy are almost fully
ignored in the draft version of revised Energy
Strategy of Ukraine till 2030.
Share of biomass in the total energy demand
of Ukraine (draft of Energy Strategy
developed in 2012):
2011
2015
2020
2025
2030
1.24% 1.24%
1.24%
1.24%
1.24%
17 Incorrect wording in the Tax Code does not
allow us to use tax incentives on the sale of
electricity and heat produced from biofuel or
heat produced from biofuels (§ 15 subsection
4 of section XX of the Tax Code):
“15. Temporarily, until January 1, 2020, shall
To organize at the state level process of
subsidizing bioenergy equipment purchase
at the level of 20 ... 30% of its cost
(depending on the type of equipment)
To prepare and approve at government level
The National Biomass Action Plan
according to methodology of the European
Energy Community (similar plans
developed and adopted in majority of the
EU member-states).
Adequate bioenergy development goals
shall be established at the state level, inter
alia in the revised Energy Strategy of
Ukraine till 2030.
UABio proposals are not developed.
UABio proposals are not developed.
It is necessary to amend the draft version of
revised Energy Strategy of Ukraine till 2030.
UABio developed proposals and sent
corresponding letters to the following
agencies: Chairman of the Verkhovna Rada
Share of biomass in the total energy demand Committee on Fuel and Energy Complex,
of Ukraine (UABio proposal):
Nuclear Policy and Nuclear Safety,
2011 2015 2020 2025 2030
Martynenko N.V.; Chairman of the State
Agency for Energy Efficiency and
1.24% 1.5%
4%
7% 10%
Conservation of Ukraine, Pashkevich N.A.;
Vice Prime Minister of Ukraine, Boyko Yu.A.;
Head of the Presidential Administration,
Levochkin S.V.; First Deputy Head of the
Presidential Administration, Akimova I.M.;
Minister of Energy and Coal Industry of
Ukraine, Stavitsky E.A.
It is proposed to adopt a new version of the The appropriate changes to the Tax Code shall
corresponding item, namely,
be done.
“15. Temporarily, until January 1, 2020,
shall be exempt from taxation:
...
be exempt from taxation:
...
business profits derived by them from the
activity for the simultaneous production of
electricity and thermal energy from biofuels
and/or the production of thermal energy from
biofuels”
18 Article 21 of the Law of Ukraine "On Energy
Saving" requires manufacturers of heat and/or
electricity from biofuels undergo expertise on
energy conservation, despite of the fact that
the Tax code or the Customs Tariff Law
requires its passage only in certain cases:
«State examination of energy conservation is
a must in the process of law-making,
investment, management, and other activities
related to the production, processing,
transportation, storage, production and
consumption of fuel and energy resources, as
well as to obtain benefits under a tax and/or
customs legislation»
19 At the moment, for any activity on
cogeneration, irrespective of capacity and use
for their own needs, you must obtain a license
for cogeneration in accordance with the Law
of Ukraine "On the combined heat and power
(CHP) and the use of waste energy potential"
and the Terms and Conditions (licensing
terms) the business of the combined
production of heat and electricity. However,
business profits derived by them from the
sale of electricity and heat produced via
combined use of bio-fuels and/or sale of
thermal energy produced by the use of
bio-fuels”
It is proposed to adopt a new version of the
corresponding item, namely,
«State examination of energy conservation
is a must in the process of law-making,
investment, management, and other
activities related to the production,
processing, transportation, storage,
production and consumption of fuel and
energy resources, as well as to obtain
benefits under a tax and/or customs
legislation if state expertise on energy
conservation is a condition of receiving
these benefits under the relevant
provisions of tax and/or customs
legislation»
It is proposed by analogy with the license to
produce electricity establish cases where a
license is not required.
For this purpose to complete article 8 of the
Law of Ukraine "On the combined heat and
power (CHP) and the use of waste energy
potential" of the next part 4
The Energy Conservation Act shall be
amended
Changes shall be made to the Law of Ukraine
"On the combined heat and power (CHP) and
the use of waste energy potential" of the Law
of Ukraine "On Heat Supply", Rules and
Regulations (Licensing Conditions)
the business of the combined production of
heat and electricity, the Terms and Conditions
(licensing terms) the business of the production
of thermal energy for district heating plants
to produce electricity for their own needs or
for sale (other than sales in the WEM) from
biomass or biogas to 10 MW do not need
licenses.
"The activities of combined heat and power
generation business entities without a
license is permitted if the value of installed
capacity, or supply of electricity and
thermal energy is less than parameters
Similar changes can be made to the legislation defined in the terms and rules of the
on the production of thermal energy.
business of the combined production of heat
and electricity."
Paragraph 2.1. of The terms and conditions
(licensing terms)
the business of the combined production of
heat and electricity in the following
paragraph (necessary to determine the
capacity of heat) shall be amended as
follows:
“Not subject to licensing activities of
businesses for combined heat and power
generation, which have in their property
cogeneration plant produces electricity and
heat using biofuels, the installed capacity of
less than 10 MW and/or __ Gcal/h, and
intend to sell the produced electricity,
regardless of the installed capacity in the
wholesale electricity market of Ukraine.”
Regarding the heat, it is necessary to add to
article 23 of the Law of Ukraine "On Heat
Supply" the following paragraph
"The activity of the production of thermal
energy entities without a license is
and plants with the use of non-conventional or
renewable sources of energy
permitted if the total capacity or less heat
output indicators defined in the terms and
rules of the business of heat and electricity
generation”.
In 1.2. of The terms and conditions
(licensing terms) of the business of
producing thermal energy for district
heating plants and plants using nonconventional or renewable energy sources
by the following paragraph (necessary to
determine the capacity of the heat) shall be
also added:
"Licensing is not subject to the activities of
business entities for the production of
thermal energy, which have in the
ownership or use of basic equipment
produces heat using biofuels, the installed
capacity of not more than __ Gcal/h, and do
not intend to sell the produced heat energy
of the base equipment."
20 Lack of stimulating the production of
alternative electricity from biomass other than
green tariff for companies who can not or do
not wish to receive green tariff
21 No emission requirements for biomass-fired
boiler depending on the biomass fuel supply
system and power equipment.
A minimum rate of return in setting tariffs
for electricity, and the overall profitability
of the combined production of heat and
power from biomass shall be fixed
To bring in line with the procedures of the
EU. (for biomass at О2 – 11%)
Make graduation by:
fuel type
a) wood biofuels (wood chips,
sawdust, etc. including in the form
In the Law of Ukraine "On Electric Power
Industry" it is necessary to introduce a new
article
UABio proposals are not developed
22 Lack of incentives and encourage to
generators of thermal and electrical energy to
increase production efficiency and switching
to the use of biomass as fuel
23 The level of bids for equipment, materials and
services higher than market prices.
24 The difficulty of obtaining the objects of the
of pellets and briquettes);
b) biofuels based on agricultural
waste (husks of sunflower,
buckwheat, canola, straw, corn
stalks and sunflowers including in
the form of pellets and briquettes);
c) solid biofuel from animal waste
and sewage.
- Thermal capacity of installations (up
to 100 kW; 100-500 kW;
- 500-1000 kW; 1-5 МW; 5-20 МW;
20-50 МW, over 50 МW.)
- According to the fuel supply system
including: (manual and automatic
supply)
- According to the number of hours
of use of installed capacity and
facilities for periodic burning
It is proposed in setting tariffs for heat and
electric power to fix the minimum level of
profitability for companies producing and
selling all or part of thermal and electrical
energy generated via cogeneration.
Additional preferences to manufacturers
that implement thermal energy from
biomass for the needs of the population.
Prices of municipal heat supply,
implementing measures to improve energy
efficiency and the use of biomass for heat
production at their own expense to eliminate
the need for tendering.
UABio proposals are not designed. It is
necessary to amend Law of Ukraine "On
Power Industry" and Law of Ukraine "On Heat
Supply"
25
26
27
28
29
budget and municipal property for lease or
concession.
Complicated and excessive demands on
reporting objects heat and power generation
of small installed capacity – the same
requirements as for the large manufacturers
The lack of adequate detailed statistical
information in the context of the use of
different types of biomass (wood, agricultural
waste, solid waste, peat ...), and the
production of heat and power for each type of
biomass.
The Law of Ukraine № 1391-XIV "On
alternative fuel" contains an incorrect
definition of the term "biomass":
“Biomass is a non-fossil biologically
renewable substance of organic origin in the
form of wastes of forestry and agriculture
(crop and livestock sectors), fishery and
technologically related industries, which is
subject to biodegradation, as well as the part
of industrial and municipal waste, which is
able to biologically decompose”.
The Law of Ukraine № 1391-XIV "On
alternative fuel" contains an incorrect
definition of the term "solid biofuels": "Solid
biofuels – solid biomass used as boiler fuel,
including wood, peat, sawdust, wood chips,
straw and other agricultural waste, pellets
and briquettes produced from biomass,
charcoal and carbonaceous material".
Paragraph 23, Subsection 2, "Features of
levying value added tax", Section XX of the
Statistics authorities shall expand existing
reporting formats for consumption and
production of energy resources and
supplement them with other biofuels (wood,
agricultural waste, solid waste, peat ...)
Definition of term «biomass» shall be
To be corrected:; Law of Ukraine «On
corrected in the following way:
Alternative Fuel Types» (№ 1391-XIV from
"Biomass is a biologically renewable
14.01.2000).
substance of organic origin which is
subject to biodegradation (products, wastes
or residues of forestry and agriculture (crop
and livestock sectors), fishery and
technologically related industries as well as
the part of industrial and municipal waste,
which is able to biologically decompose".
The definition of "solid biofuel" should be
corrected as follows:
"Solid biofuels – solid biomass used as
boiler fuel, including wood, peat, sawdust,
wood chips, straw and other agricultural
products, waste and residues, pellets and
briquettes made from biomass, charcoal
and carbonaceous matter".
Period of exemption should be prolonged,
and types of headings adjusted as follows:
To be corrected:; Law of Ukraine «On
Alternative Fuel Types» (№ 1391-XIV from
14.01.2000).
Tax Code of Ukraine shall be amended.
Transitional Provisions of the Tax Code of
Ukraine № 2755-VI, establishes the following
benefits: Temporary until 1 January 2014
from taxation to VAT transactions for the
supply, including operations the import of
waste and scrap of ferrous and non-ferrous
metals and wood of heading 4401, 4403, 4404
according to the UKT VED (except briquettes
and pellets commodity subcategories UKT
VED 4401 30 90 00) are exempted. Lists of
such waste and scrap of ferrous and nonferrous metals approved by the Cabinet of
Ministers of Ukraine.
Operations for export to the customs export of
goods specified in this paragraph shall be
exempt from value added tax.
"Temporarily until January 1, 2020 from
taxation to VAT transactions for the supply,
including the operation of the import of
waste and scrap of ferrous and non-ferrous
metals and wood of heading 4401, 4403,
4404 are exempted according to the UKT
VED. Lists of such waste and scrap of
ferrous and non-ferrous metals approved by
the Cabinet of Ministers of Ukraine.
Operations for export to the customs export
of goods specified in this paragraph shall
be exempt from value added tax ".