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First the fall in oil prices and then the financial crisis undermined the development of biofuel market in Ukraine. The absence of the state support for this segment offers little room for optimism to the producers of biofuels, which while searching for the consumers began to master the new sales routes.

Although a law on stimulation of the biofuel industry was adopted last year, most bioethanol production projects, say nothing of biodiesel, were practically shelved. Thus, the company Energy Strategies and Biotechnologies (formerly Bioenergy Company), which has been producing Bio-100 fuel since 2007, having become disillusioned with the Ukrainian market, intends to transfer production to Moldova again.

Last year, the giant plant with a capacity of 100 ths. tons per year in Zolotonosha, owned by Kron-Agro, which, due to financial problems, was completed only by 90%, was not launched. However, this week it was reported that the production complex was bought by Continuum Company owned by the entrepreneur Igor Yeremeev (WOG fuel stations network).

According to Julia Berezovskaya, Marketing Director of FuelAlternative Company, the purchase of a biofuel producer by an oil trader can be a positive signal for other oil companies: "Indeed, it allows talking not only about the production of biofuels on an industrial scale, but also about its effective sale within the country." However, the players of the oil market and experts interviewed by "і" still disbelieve the fact of such a purchase, restrainedly assessing its likelihood.

The bill, proposed by Stepan Glus, which provides for the mandatory addition of bioethanol and biodiesel in the amount of 3% to regular petroleum products, also stalled in the parliament. The oil suppliers are against such a bill. They say that while the lion's share of petroleum products produced in the country does not reach the level of Euro-2, there’s no point in talking about a more environmentally friendly mixed fuel.

"By the year 2020, the amount of biofuel in the transport sector should reach 10% according to the EU directive of April 23, 2009. If we want to meet the European standards by that time, we should start right now. But we should not impose oil traders to add 3-5% of bioadditives to gasoline. It is more reasonable to make a market of environmentally friendly alcohol-hydrocarbon fuels, for example, E-85 (ethanol content is 85%. — note of "i"), which would develop together with the market of regular oil products. Such situation is observed with propane-butane," Vitalii Gorichko, Head of Oil Refining Industry Department of the Ministry of Fuel and Energy, said with a note that this recommendation will be submitted to the relevant government-parliamentary working group for consideration, the next meeting of which will be held on March, 11.

This idea is also supported by the few bioethanol producers; they note that only in this way it is possible to make a stable domestic sales market, without which the release of product will not be developed.

It is simply impossible to export it under current conditions: "Foreign markets, the producers counted on before the crisis, when oil costed more than 140 EUR/bbl, are now closed for the Ukrainian producers. After the collapse of quotations, ethanol prices fell by an average of 120-150 EUR, including domestic import duties of the EU countries. Under such conditions, it is a business of little promise to export the goods to the EC countries, because it is impossible to compete with the similar Brazilian product, the net cost of which is lower," Oleg Korol, Commercial Director of Techinservice (he specializes in the equipment and production of bioethanol — about 80 ths. cubic meters per year), explains. According to him, it is necessary to install a special adapter to change to the E-85 fuel, the cost of which will be significantly lower than, for example, the cost of gas pressure equipment for engine running on liquefied gas: "But unlike propane-butane which is two times cheaper than A-95 gasoline, E-85 will cost only 20% less than high-octane gasoline at a fuel station. And this difference is leveled off by the fact that the consumption of such biofuel is more by 20%," Mr. Korol said.

In the European countries this problem is solved due to high excise duties on regular petroleum products, which make them more expensive than ours by on average 1.5 times, while the prices for biofuels both in our country and abroad are at the same level. Taking into account the oil lobby in the Cabinet of Ministers and Parliament as well as the reluctance with which they raise prices for "social" goods through the increased taxation, a progress in this direction could not be expected. The second key obstacle for the development of the bioethanol market is that it is necessary to create a whole fleet of fuel stations selling a new product, because an auto adapted for green fuel can be filled with regular gasoline, but a large number of such jumps from fuel to fuel leads to premature engine wear. Therefore, the bioethanol consumption can be developed only with a helping hand from oil suppliers, who are ready to equip their fuel stations with special green modules.

In the meantime, the alternative ways of implementation keep the bioethanol market afloat. The few producers left afloat began to offer the oil suppliers special biological components for gasoline to increase their octane number: "It is easier to sell it than bioethanol for the same purposes. Alternative motor fuel component (AMFC) unlike bioethanol cannot be used for the production of alcoholic beverages. Except ethanol, it contains 1.5-2% of gasoline and other components. For this reason, the government decree No. 1114, according to which the buyer must provide a tax anticipation bill for the amount of excise duty to be paid and prove that this ethanol will not be used for the production of alcohol, etc, does not apply to this product. This long and complicated bureaucratic procedure, only after passing through which we are able to ship the product, made sale of bioethanol additives, which are more expensive than regular additives, even more difficult," a representative of Techinservice says, adding that it is AMFC which became of relatively stable demand among the owners of bulk petroleum tank farms who are experimenting with the formula of fuels. In view of this, the company has already transferred two of its plants, Ivashkiy State Spirits Distillery and Naumovskiy Spirits Distillery, to the production of the component.

Source: http://ubr.ua/