Drunk driving. Why biofuel is not the best idea for Ukraine
The parliament adopted in the first reading a bill on the mandatory use of at least 5% biofuel in gasoline from May 1, 2022. UNIAN found out what Ukrainians should prepare for.
Ukrainian motorists are facing big changes. If the bill (3356-d) on mixtures of gasoline and biocomponents, voted by the Verkhovna Rada in the first reading, is adopted in its entirety, from May 1, 2022, their "iron horses" will have to be refueled with new fuel. At the same time, experts emphasize that the environmental impact assessment should be carried out by an environmental laboratory, because it is important not only to fulfill the requirements of the association with the EU, but also to realistically take into account the consequences for nature and human health.
The initiative is not a know-how. Discussions about its implementation have been going on for several years, as the implementation of the "innovation" is one of Ukraine's obligations under the Association Agreement with the EU. The bill on the use of biocomponents in mixtures with gasoline was already considered by the parliament last year, but was sent for revision. And now it has been "revised".
Norms and fines
In the current version, the document defines the mandatory content of liquid biofuel (biocomponents) in all volumes of automotive gasoline at least 5% with an absolute error of plus or minus 0.5%. The previous bill, sent by the Rada for revision, provided for a mandatory biofuel norm of at least 5% from July 1, 2021, with a subsequent increase from July 1, 2022, to 6%, and from July 1, 2023, to 7%.
There are also exceptions - gasoline with an octane rating of 98 and higher, as well as those supplied for the needs of the Ministry of Defense.
Violators of the law will be punished: for non-compliance with the norms of biofuel content in gasoline, for each ton of released batch, the fine will be seven living wages (the previous bill proposed a fine of 10 living wages). For violating the deadlines for providing information on biofuel content up to seven days - a fine of 100 living wages, over seven days - 150 living wages (previously, one fine of 200 living wages was proposed for not providing information). The amount of the living wage is set annually when adopting the state budget. Today it is 2,294 hryvnias.
According to Andriy Gerus, head of the parliamentary committee on energy and housing and communal services, who presented the bill in the Rada, the document is important for ecology and the development of the agricultural sector. In addition, as the deputy noted, it is supported by the Energy Community, as "the bill complies with European practice."
Opinion of market players and expert assessment
The Oil and Gas Association of Ukraine opposed the adoption of the bill in its proposed form and called on people's deputies to refrain from adopting it. The NAU believes that the document on the mandatory use of liquid biofuel is premature and discriminatory.
"Before adopting such a tool, it is necessary to bring the motor fuel market into proper condition: clear it of the illegal segment, balance excise tax rates, and ensure effective fuel quality control," explains Nelya Pryvalova, president of NAU, regarding the association's position.
However, the Ukrainian Bioethanol Producers Association and "alcohol producers" hold a radically different opinion. They were "for" the adoption of the bill back in 2020. The document, in their opinion, will reduce dependence on energy imports, promote the development of biofuel production and the agricultural sector. And this means new jobs and additional budget revenues.
But not only market players are divided in their opinions. This also happens in the expert community.
Serhiy Sapegin, director of the "Psycheya" Scientific and Technical Center, considers the position of bioethanol producers quite logical: "In conditions where Ukraine is an importer of petroleum products, there will be a gradual replacement of imported fuel with bioethanol produced here. This will contribute to improving our trade balance by reducing imports. In addition, the expansion of bioethanol production will contribute to the creation of new jobs and an increase in budget revenues."
However, petroleum product sellers are clearly not interested in the changes proposed by the bill. After all, they will have to create additional production facilities and laboratories. In addition, additional regulatory bodies will appear. And, given that bioethanol is more expensive than gasoline, all this will raise the price of fuel.
"I think that operators and owners of gas station networks should go the way of developing their own bioethanol production. And in this way compensate for the increase in costs," the expert believes.
At the same time, he reminds that Europe is moving towards the production of next-generation biofuels - not from food crops, but from waste. "Ukraine, despite being the largest producer of agricultural crops, should also start producing biofuels from waste. But for some reason, no one talks about it. Our alcohol industry would do well to think about it. And that would be logical," Sapegin believes.
Not everything European is suitable for Ukraine
As for the consumer, the expert advised car owners: open the operating manual of your car and check what fuel can be used.
"When we are told that biofuel is an accepted norm in the EU, Ukraine is not quite suitable for this. Europe has an updated car fleet, for which the use of bioethanol is taken into account by the manufacturer. It immediately guarantees that the use of gasoline containing a certain amount of alcohol is permissible. For my car, this norm is up to 10%. If it's higher, the instruction literally says that "it is necessary to stop operating the car and contact the service department to make a further decision" regarding my actions. That is, the motorist may "lose" the obligations of the importer and manufacturer regarding warranty cases. And another risk is that in Ukraine, cars are mostly operated for decades, their fuel system is not ready to accept gasoline containing alcohol. It is not excluded that after refueling with such fuel, the car may completely stop. More aggressive in terms of corrosion, gasoline with alcohol can lead to mass failure of old cars. Europe is now actively stimulating the renewal of its car fleet, and all outdated equipment ends up on our market. Therefore, the risk is very high for us," the expert noted.
In this regard, according to him, the relevant bill requires more thorough preparation - taking into account not only European experience but also the realities of the Ukrainian market: "The document should clarify how the task will be solved. But the bill contains many terms that were not previously in the legislation, references to unclear laws, and due to such uncertainties, it is not clear how the law will be implemented. As they said, Ukraine can become a biofuel Kuwait, as we have a fairly large raw material base, but this needs to be approached thoughtfully," Sapegin concluded.
Serhiy Kuyun, Director of Consulting Group A-95, also notes that all innovations of the new bill are common practice, widely used in Europe, in the USA, and in Latin America, almost 80% of bioethanol is added to gasoline. But in Ukraine, the picture is different.
"There's chaos in the fuel market. No one controls the quality of fuel. Everyone sells what they want. And on top of all this, they propose adding bioethanol. This will only lead to a deepening of chaos. How to check at a gas station - who sells fuel with bioethanol and who doesn't? "Gray" dealers will not spend on very expensive bioethanol, on mixing technologies, they will not bother with the quality of this product, and one laboratory with good equipment costs a million dollars. Half of the market will not do this, but will sell ordinary gasoline, or "adulterated" gasoline imported without taxes, which will knock out the entire legal sector, which will be forced to spend on bioethanol, laboratories, on technologies for transporting and storing this capricious product," the expert notes.
In addition, according to Kuyun, even if the norms of the law are legally complied with, difficulties will inevitably arise in the production of this product. The expert reminds that the law does not state how this will happen.
The European market differs from the Ukrainian one in that the fuel proposed by deputies is produced there in factories. And we import 80% of petroleum products.
In other words, to implement the new law, Ukraine will have to ask foreign suppliers to produce gasoline with bioethanol for us at their facilities. But in that case, we will be stimulating the bio-industry of other countries. Another option is if manufacturers cannot or do not want to do this for us. Then we will have to develop our own production. But, unfortunately, there is not a word about this in the bill.
"Gasoline with alcohol cannot be stored for a long time. And what is supply from abroad? It's 7-10 days. And it's a risk. The product was released at the plant, in accordance with technical standards, but in what form it will arrive - no one can guarantee. No manufacturer will want to take such responsibility. Therefore, the same Lithuania produces gasoline without alcohol for Ukraine, although 95% of the gasoline for its domestic market they make with alcohol. For them, there are no problems to make it such for us too. But the whole problem is in supplies and storage, which remains a big question," says Serhiy Kuyun.
Overall, he considers the initiative correct, but not for the Ukrainian market. At least, not in its current form.
"All these initiatives in accordance with the Association with the EU are cool. And everything would work out if we had a civilized market. But we have 20% of the market in the shadows. Another part of the market is transitional, there is also enough adulterated stuff... A quality control system is needed. But who will control the bioethanol content? The law states that the company must provide information, but who will check this information, who will be responsible for it? And if so, then anything can be done on the market. And this, first of all, will be felt by the consumer," the expert concluded.
The bill on the mandatory use of liquid biofuels has only been adopted in the first reading. With high probability, amendments will be made to it by the second reading. And it would be good if all the comments of market experts were taken into account in them. Otherwise, this market will "re-paint" from "gray" to "black" again.
Nana Chorna