In a new interview with LDaily, Georgii Heletukha, Head of the Bioenergy Association of Ukraine, discusses the current state of bioenergy in Ukraine. He analyzes the outlook for different segments — biomethane, bioethanol, electricity, and heat from biomass. Heletukha speaks frankly about why the market is stagnating, what is hindering development, what changes are needed in tariff policies, and why bioenergy is key to both decarbonization and Ukraine’s energy security.
LDaily: How would you describe the current state of the bioenergy market in Ukraine?
G. Heletukha: We’re seeing growth in biomethane and bioethanol production, but stagnation in electricity and heat generation.
LDaily: Which types of bioenergy do you consider the most promising for Ukraine?
G. Heletukha: All of them hold promise, but the conditions for development vary. Biomethane and bioethanol are export-oriented and, in effect, benefit from support systems in the EU countries to which they are exported. Electricity and heat from biomass, on the other hand, are geared toward the domestic Ukrainian market — where there are no incentives or preferential policies in place. Moreover, due to substantial subsidies on natural gas for households, this type of energy carrier is artificially made the cheapest option in this segment. As a result, replacing it with biomass, biogas, biomethane, or RDF becomes economically unviable. Similarly, heavy subsidies on electricity prices for households mean there is insufficient money circulating in the electricity market. The prices currently formed on the market do not allow for profitable electricity production from biomass or biogas — especially since the green tariff ended for new projects as of January 1, 2024.
LDaily: How ready is the Ukrainian market for large-scale implementation of bioenergy solutions?
G. Heletukha: It’s not ready. Significant changes are needed in the pricing and tariff policy for household energy carriers, along with possibly additional incentives for bioenergy projects. The main advantages of biomass-based energy are that it’s decarbonized — a direct response to global climate change — and that it’s a predictable energy source, which makes it suitable for dispatchable generation. This is essential for balancing the grid in a system with a high share of other renewables.
That said, such energy is usually more expensive than fossil-based alternatives. So, to put it simply: if we want to combat global warming, we need to provide additional support for biomass and biogas energy.
LDaily: How has the full-scale war impacted the implementation of bioenergy projects?
G. Heletukha: Occupation and destruction have had a negative effect on the sector, but only within about 5% — significantly less than in other renewable energy sectors or in traditional energy. This is largely due to the much greater geographic dispersion of bioenergy projects across Ukraine.
LDaily: What role can bioenergy play in strengthening Ukraine’s energy security during and after the war? Can it replace imported gas and ensure energy autonomy for communities?
G. Heletukha: It can — but a number of barriers need to be removed.
The graph shows the development of Ukraine’s bioenergy sector in recent years. It presents official data from Ukraine’s energy balances for 2010–2020. Statistics for the following years have not been published due to the wartime situation.
In 2020, the volume of “biofuels and waste production” in Ukraine reached 4,241 thousand tonnes of oil equivalent — equivalent to replacing over 5.2 billion cubic meters of natural gas annually.
This accounted for approximately 17% of Ukraine’s natural gas consumption in 2020.
The substitution occurred primarily in the heat generation sector through the installation of boilers and CHP plants powered by solid biofuels (firewood, wood chips, wood pellets, sunflower husk pellets, and straw) across private households, centralized district heating systems, and industry.
Ukraine also operates 140 MW of installed electric capacity running on biogas and 178 MW on solid biofuels. Between 2010 and 2020, the sector grew at an average annual rate of 11%.
In the city of Rivne, biomass accounts for roughly 30% of the heat supply — made possible by the commissioning of two large wood chip boiler plants (10 MW and 20 MW). These facilities help the city save approximately 10 million cubic meters of natural gas each year. The municipal utility RivneTeploEnergo plans to further increase the share of biofuel in the city’s district heating system.
Zhytomyr continues to develop biomass-based heat production. The city plans to launch five biomass-fueled power plants, which would enable a reduction of natural gas use in the municipal energy system by up to 70%.
In Zhovkva (Lviv region), biomass provides 40–50% of the city’s heat supply, thanks to two biomass boiler plants that serve around half the local consumers.
In Dubno (Rivne region), the share of heat from biomass is also around 40–50%. In the fall of 2022, Dubno became the first city in Ukraine to announce plans for fully converting its centralized heating system to local biomass sources. Bioenergy in Ukraine has the potential to continue expanding rapidly and displacing imported natural gas — provided that key barriers to sector development are addressed.
LDaily: What are the main financial, legal, technical, or administrative barriers currently holding back investors in the bioenergy sector?
G. Heletukha:
Financial Barriers
Legal Barriers
Administrative Barriers
LDaily: How effective is the current state policy in supporting bioenergy in Ukraine?
G. Heletukha: Unfortunately, responsibility for bioenergy development is fragmented across several ministries and agencies. Biomethane and electricity production from biomass fall under the Ministry of Energy. Heat production from biomass is overseen by the Ministry for Communities and Territories Development. Certain issues fall under the Ministry of Agrarian Policy and the State Agency on Energy Efficiency. I believe coordination between these bodies on bioenergy development is inadequate.
We have repeatedly proposed the creation of a single government body dedicated to the development of renewable energy in Ukraine, as well as the appointment of a Deputy Prime Minister specifically responsible for this sector.
LDaily: What changes do you expect — or demand — at the legislative level?
G. Heletukha: Amendments to existing laws, new incentives, and investor protections are all needed.
One pressing issue is the export of biomethane to countries outside the Energy Community. Under the Ukrainian law “On Amendments to Certain Legislative Acts of Ukraine” dated June 3, 2008, No. 309-VI, exports of biomethane to countries such as Switzerland and the United Kingdom are subject to a 35% export duty, making them economically unviable — despite strong interest from companies in those countries.
A viable solution would be to exempt biomethane from this duty and sign bilateral agreements recognizing Ukrainian guarantees of origin for biomethane. Encouragingly, draft law No. 13395, registered in the Verkhovna Rada on June 23, 2025, proposes to remove these barriers. We call for its swift consideration and adoption.
It’s also critical to eliminate the CO₂ tax on biofuels, including biomethane, following EU practices. Currently, such installations pay the same emissions tax as fossil fuel-based systems, putting them at a competitive disadvantage. The adoption of draft laws No. 9596 and No. 9597 (dated August 9, 2023) would help correct this unfairness.
Another major challenge is grid connection for biomethane producers. Operators face difficulties complying with the Gas Transmission System Code’s gas quality standard, which requires a higher heating value (HHV) of 10.06 kWh/m³ under standard conditions (25°C/20°C). The main reasons are: 1) Biomethane lacks higher hydrocarbons (ethane, propane, butane, pentane, hexane), which are present in natural gas and contribute to a higher HHV. 2) Upgrading technologies used to purify biogas to biomethane often cannot achieve the 97.5% methane concentration needed to meet the required HHV threshold.
In our view, it is critically important to adopt the updated version of the Technical Regulation for Natural Gasdated April 11, 2023, which allows for a heating value of 10.5 kWh/m³ under 25°C/0°C conditions.
Additional barriers include delays in obtaining technical specifications and signing interconnection agreements with the Gas Distribution System Operator — this process can take more than six months.
We propose amending the Gas Distribution System Code to introduce a standardized interconnection agreementwith a mandatory signing deadline of no more than 30 days from submission.
Lastly, during summer months, low gas consumption leads to pressure drops in the network, which can hinder or block biomethane injection. One proposed solution is to develop funding mechanisms for installing reverse-flow compressors, allowing biomethane to be pumped from the gas distribution system into the transmission system.
At the domestic level, Ukraine still lacks a clear national policy on the use of biomethane as a motor fuel.
There are no defined targets or incentives to encourage biomethane use in the transport sector. It would be appropriate to set national goals for replacing 5–10% of natural gas in transport with biomethane by 2030, to expand the network of refueling stations, and to promote the use of biomethane in public transport and agriculture. It is also necessary to develop technical standards for the use of biomethane-based CNG and LNG.
One of the key challenges facing the sector is the instability of financial settlements by the Guaranteed Buyer (State Enterprise), which creates serious risks for the operation and investment attractiveness of biogas electricity projects. Chronic payment delays and accumulated debts undermine investor confidence in the sector.
To stabilize the financial environment, it is essential to:
Another barrier to new biogas electricity projects is the mismatch between the current auction price cap (12 euro cents/kWh) and actual economic conditions. Most biogas projects cannot achieve profitability under this tariff.
Therefore, we believe the following measures are necessary:
These changes would enhance the sector’s financial viability, boost investment appeal, and support the development of projects with significant potential to contribute to Ukraine’s energy decarbonization.
A further critical barrier is the lack of clarity regarding Ukraine’s inclusion in the “interconnected gas system”recognized as a single mass-balance system in the EU. Under RED II and RED III Directives, only biomethane injected into such a system may count toward EU member states’ renewable energy targets.
Without formal recognition by the European Commission, Ukrainian biomethane cannot be included in EU climate reporting. This issue requires a political-level resolution between Ukraine and the EU, assuming Ukrainian producers comply with EU sustainability, emissions reduction, and traceability requirements.
An additional barrier is limited access to the German biomethane market. There is currently no official clarification on whether Ukrainian biomethane can be accounted for under Germany’s GHG quota system. Addressing this will require:
Key arguments in support include:
The Ukrainian biomass market continues to lack a transparent pricing mechanism and faces difficulties in concluding long-term contracts.
To address this, it is essential to create an electronic trading platform and to refine and adopt draft law No. 8052, which would enable the establishment of a national electronic biofuel trading system.
Legislative changes are also needed to stimulate the cultivation of energy crops.
Currently, the term “energy crops” is not defined in Ukrainian legislation, which creates legal uncertainty. A legal definition should be introduced by adopting draft law No. 12058, dated September 24, 2024.
Additionally, the short duration of land lease agreements poses a barrier to energy crop cultivation. It is therefore necessary to extend lease terms to at least 20 years for land used to grow such crops.
Another disincentive is the high lease cost of land, which makes the cultivation of energy crops economically unattractive. To counter this, a minimum lease rate cap should be introduced for degraded or low-productivity agricultural lands of state or communal ownership when used for energy crop cultivation.
The formal establishment of a biomethane register in Ukraine is not sufficient to enable exports.
Full functionality and legal recognition in the EU will only be possible after synchronization with the Union Database (UDB) — the centralized EU registry for guarantees of origin. The EU only recognizes biomethane certificates that are registered in or compatible with the UDB.
The lack of mutual recognition between the Ukrainian and EU systems renders Ukrainian guarantees of origin legally invalid within the EU market. This effectively blocks biomethane exports and significantly reduces the investment attractiveness of the sector.
To resolve this, it is critical to sign an intergovernmental agreement between Ukraine and the EU on the mutual recognition of guarantees of origin issued in Ukraine.
Ukraine’s biomethane sector is demonstrating strong positive momentum: the first export deliveries to the EU have been launched, large-scale certified projects are underway, and the technical infrastructure is in place to integrate biomethane into the national gas grid.
Ukraine’s biomethane production potential by 2050 is estimated at up to 21.8 billion cubic meters per year, positioning the country as a potential key supplier of biomethane to Europe.
At the same time, the sector’s full development is held back by a range of systemic barriers outlined earlier. Unlocking the complete potential of biomethane will require comprehensive solutions at the legislative, regulatory, and intergovernmental levels.
LDaily: Which technologies do you believe will be key to bioenergy development in the next 3–5 years?
G. Heletukha: For exports — advanced biofuels, including advanced biomethane.
For the domestic market — cogeneration based on biomass and biogas, and biomass boilers in centralized heating systems.
LDaily: Do you see potential for commercialization of Ukrainian innovations in bioenergy? Can domestic technologies compete and attract investment?
G. Heletukha: Yes. Ukrainian-made biomass boilers dominate the domestic market, and a significant share is exported. For biogas and biomethane plants, local equipment and services account for up to 50% of project value.
LDaily: What role can Ukraine play in the European bioenergy market? Can we be exporters, partners, or raw material suppliers?
G. Heletukha: We have excellent prospects as a biomethane exporter. By 2050, Ukraine could supply up to 20 billion cubic meters per year, which would cover up to 20% of the EU’s biomethane market.
LDaily: How do you assess the potential for integrating Ukraine’s bioenergy sector into the EU Green Deal? Does our sector meet European climate policies?
G. Heletukha: I believe there is no path to EU membership for Ukraine without adopting the Green Deal and aligning our energy and climate policies accordingly.
LDaily: Would it make sense to introduce a carbon credit certification and trading system in Ukraine for bioenergy projects? How might this stimulate investment and reduce emissions?
G. Heletukha: Absolutely. It’s a key component of a modern climate policy. Ukraine needs to develop a national greenhouse gas emissions trading system similar to the EU ETS. The Ministry of Environment plans to fully implement it by 2032.
LDaily: What role do you believe local communities can play in the development of bioenergy projects?
G. Heletukha: A critical role — especially in the development of heating systems and cogeneration based on biomass and biogas. In areas like electricity, biomethane, and bioethanol production, the key driver will be private business.
LDaily: Which of your completed projects do you consider the most significant, and why?
G. Heletukha: The launch of biomethane production and exports during wartime, in 2024–2025 — that’s a milestone achievement.
LDaily: What personally motivates you to stay in this field, despite the many challenges over the years?
G. Heletukha: I truly believe that without a full transition to 100% renewable energy, humanity faces a global climate crisis. Bioenergy is an essential pillar of that transition.
