The Ministry of Energy proposes to exempt energy from biofuels from taxation

The Ministry of Energy of Ukraine published the draft Law of Ukraine "On Amendments to the Tax Code of Ukraine regarding the establishment of a zero tax rate for carbon dioxide emissions for installations that make such emissions as a result of burning biofuels" for public discussion.

The adoption of the draft law will contribute to an increase in energy production from biofuels in Ukraine and the further transition of enterprises from fossil fuels (coal, gas, peat) to the use of this type of fuel, which is produced from biologically renewable sources of organic origin

Now enterprises and other business entities that burn biofuels at stationary sources of pollution also pay a tax for carbon dioxide emissions of UAH 10 per ton, which and other business entities that burn other energy carriers and emit pollutants into the air.

However, this state of affairs does not correspond to world practice. According to the Clean Development Mechanism Methodologies of the United Nations Framework Convention on Climate Change, biofuels are considered CO2 neutral fuels, as their combustion produces as much carbon dioxide as was absorbed by plants during growth.

In all EU member states, taxes on carbon dioxide emissions from energy production are also not applied. For example, Denmark levies taxes on the production, processing, storage of fossil fuels for heating, in particular, an energy tax on petroleum products, coal, lignite and coke, or a CO2 tax on certain energy products, but biofuels are exempt from taxation.

The situation is similar in Sweden and the UK, where fossil fuels are taxed but biofuels are exempt from taxation.

What will the draft law change?

It is proposed to set a zero environmental tax rate for installations that are included in the register of installations using exclusively biofuels.

The creation and maintenance of a register of installations using biofuels as the only type of fuel will be carried out by the State Agency for Energy Efficiency and Energy Saving following the procedure established by the Cabinet of Ministers.

The document of the draft law is available via the link.

To recap, biomethane can replace 8 billion m3 of gas per year.

Tags: gas, bio-TPP, Biogas, renewables, draft law, ecology, decarbonisation, The Ministry of Energy, carbon neutrality

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