Ukraine's Ministry of Energy proposes to exempt biofuels from environmental tax
The Ministry of Energy of Ukraine proposes to establish a zero rate of environmental tax on CO2 emissions resulting from the combustion of biofuels.
The Ministry of Energy of Ukraine has published for public discussion the draft Law of Ukraine "On Amendments to the Tax Code of Ukraine regarding the establishment of a zero carbon dioxide emission tax rate for installations that carry out such emissions as a result of biofuel combustion."
"It is proposed to establish a zero environmental tax rate for installations included in the register of installations that use exclusively biofuels. The creation and maintenance of the register of installations that use biofuels as the sole type of fuel will be carried out by the State Agency for Energy Efficiency and Energy Saving in the manner established by the Cabinet of Ministers," the ministry's press service said in a statement.
According to the Ministry of Energy, the adoption of the bill will contribute to increasing 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 produced from biologically renewable sources of organic origin.
According to the agency, currently enterprises and other business entities that burn biofuels at stationary sources of pollution also pay a carbon dioxide emission tax of 10 hryvnias per ton, just like other business entities that burn other energy carriers and emit pollutants into the atmosphere.
However, this state of affairs does not correspond to world practice. According to the Methodologies of the Clean Development Mechanism of the United Nations Framework Convention on Climate Change, biofuel is considered a CO2-neutral fuel, because when it is burned, as much carbon dioxide is formed as was absorbed by plants during growth.
The Ministry of Energy reminded that in all EU member states, carbon dioxide emission taxes for energy production are also not applied. For example, in Denmark, taxes are levied on the production, processing, and storage of fossil fuels for heating, including an energy tax on petroleum products, coal, lignite, and coke, or a CO2 tax on certain energy products, but biofuels are exempt from taxation.