Assessment of the potential for a biofuels industry in Ukraine

Abstract

Ukraine is the only major agricultural country whose production of biofuels has declined since 2010. Nevertheless, it has set a target of 11.5 percent of primary energy supply from biomass, biofuels and waste by 2035. Agricultural land needed to produce biofuels feedstock is calculated for two scenarios based on its current 11.5 percent target and previous 5.0 percent target specified as a share of transport energy consumption. The export orientation of Ukraine’s crop sector and resulting foreign currency earnings pose trade-offs if crops are diverted from exports to biofuel feedstocks. Given these trade-offs, policy options for developing a biofuels industry while satisfying Ukraine’s export and domestic markets are to (1) bring land not currently cultivated into production and (2) increase yield. Both options are found to have substantial potential.