Bioenergy & Biobased Opportunities in Ukraine, June 2013
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Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 1 of 80 Bioenergy & Biobased Opportunities in Ukraine, June 2013 Market Study Food sectors in Ukraine - Part B: Biomass processing industry Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 2 of 80 Table of contents Page Introduction 4 Summary 5 1 General overview of the branch 7 1.1 Biomass feedstock and its energy potential 7 1.2 Biomass processing 15 1.3 Production analysis and key players by sub-sectors 21 1.3.1 Heat on biomass 21 1.3.2 Biogas, Heat and electricity on biogas 22 1.3.3 Solid biofuels 23 1.3.4 Bioethanol 25 1.3.5 Biodiesel 26 1.3.6 Bio-fertilizers 27 1.3.7 Biobased polymers 28 1.4 Sales system 28 1.5 Price survey 29 1.6 Foreign trade 33 2 Trends, drivers and barriers to sector development 39 2.1 Main trends 39 2.2 Main drivers 39 2.3 Major barriers 40 3 Branch regulation 42 3.1 Branch structure 42 3.2 State programs 43 3.3 Associations 44 3.4 Events and exhibitions 44 3.5 Legislation 45 3.6 Taxation 48 4 Standardization and certification 51 4.1 National standards 51 4.2 International standards 52 5 Investments in the sector 53 6 Financing the sector 53 7 Technology and equipment 54 Market Study Food sectors in Ukraine - Part B: Biomass processing industry Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 3 of 80 8 SWOT analysis 57 9 Opportunities for Dutch SMEs 59 Annex 1 Sector associations 61 Annex 2 Sector events and exhibitions 65 Annex 3 Major market participants 69 Table A. Largest boilers on solid biomass in Ukraine 69 Table B. Largest biomass and biogas processing companies for power generation 70 Table C. Largest producers of solid biomass products 72 Table D. Producers of bioethanol and biofuels with bioethanol additives 74 Table E. Largest producers of biodiesel 76 Table F. Announced investments in the sector 77 Market Study Food sectors in Ukraine - Part B: Biomass processing industry Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 4 of 80 Introduction This report contains the results of a study done on the Ukrainian biomass processing industry carried out by Tebodin Ukraine. The study was carried out on the request of the Ministry of Economic Affairs, Agriculture and Innovations of the Netherlands. The point of interest of the report is focused on processing of agricultural, agro industrial and wood wastes into the non-food biomass products - biogas, bioelectricity, solid and liquid biofuels, bio fertilizers and bio polymers. The main objectives of the market study are: to provide the latest information on the biomass sector of the food market of Ukraine; to describe major trends and problems of the biomass sector; to indicate business opportunities for Dutch companies in Ukraine. The overall aim of this market study is to study the market opportunities and strengthen the position of Dutch companies in the biomass processing sector in Ukraine. The main focus of the market study was put on the following biomass feedstock: Straw of cereals and other crop waste; Animal wastes; Agro industrial wastes; Sunflower husk; Wood waste. The main Dutch-end target groups for whom the research is addressed are: Exporters of equipment Exporters of knowledge and services (certification) Exporters of processed goods (top price segment) Investors For this market study alternative sources of information were used such as information from the State Statistics Committee of Ukraine, the Ministry of Agrarian Policy, the State Customs Committee of Ukraine, State Agency of Forest Resources of Ukraine and other Ukrainian and international organizations. During the sectors research, the branch authorities and companies operating in the market were contacted directly and interviewed. Their opinions are also accounted in the report. Market Study Food sectors in Ukraine - Part B: Biomass processing industry Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 5 of 80 Summary Biomass refers to one of the most perspective renewable energy sources (RES) coming from carbon containing organic materials of plant or animal origin (wood, agricultural residues, manure, specially grown energy crops, organic portion of solid waste and sometimes peat). Using various transformation processes such as combustion, gasification, pyrolysis the biomass is either transformed into biofuels, bio heat, bioelectricity, animal feed, bio fertilizers and bio chemicals. Ukraine has a good chances and enough potential for dynamic development of bioenergy. Annually in Ukraine is produced 110 -120 million tons of biomass feedstock (straw of cereals and other crop waste, animal and agro-industrial wastes). Of the total amount about 54% are further processed, 45% are wasted and only about 1% are used for electricity and heat production. The economic potential of primary agricultural residues per year is estimated at the equivalent of 14-20 million tons of conventional energy per year. Overall biomass potential of Ukraine is estimated to 15-20% of primary energy consumption. Currently, a small portion of the existing potential is realized into practice. In 2011 Ukraine consumed 1.3 million tons of conventional energy from biomass which is 0.7% of the total consumption of primary fuel. The biggest share (about 50%) of the biomass consumption is covered by agricultural residues (mainly sunflower husk) and wood waste. Such a gap between the potential and actual biomass processing to energy is explained by the range of problems. The most critical of them are: unregulated procedure of tariff formation and cross-subsidizing of prices for heat and electricity, lack of modern technologies and difficulties with financing. Straw of cereals and other crop waste (about 26 million tons): is used as fuel in small straw-fired boilers and in straw-fired district heating plant; processing into briquettes and pellets is at the early stage of development; biodegradable polymers from vegetarian materials containing cellulose or starch (corn, sugar beets, potatoes) and waste of crop processing plants are not produced. Animal wastes (about 28 million tons): Currently only 10 biogas installations are operational in Ukraine. They are mostly used for production of heat for own needs (without electricity). The resulting sludge (of manure) at the end of the digestion process being a fertilizer – is not commonly used. Agro industrial wastes (about 15.6 million tons): Wastes of milk and meat processing suitable to produce biogas are practically not used. About 5 Ukrainian state-owned companies and 2 private plants produce bioethanol from waste of alcohol and sugar production. Some breweries use the waste products of yeast production for biogas production for own heating. Sunflower husk (about 10 million tons): is widely used (almost 70% )for production of pellets and briquettes; as by-product for seed oil production is used at plant’s boilers; about 50% still are available for sale; there are only few examples in other industries to burn of sunflower husk together with traditional fuel for heat and power production; husk gasification – currently is not used. Market Study Food sectors in Ukraine - Part B: Biomass processing industry Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 6 of 80 The most widespread use of 2.5 million m3 of wood biomass are: processing into briquettes and pellets, most of which are exported to EU countries; direct burning of wood wastes (or as briquettes and pellets) in small capacity pyrolysis boilers, water- heating and steam boilers for heating. Mainly, these are single units installed at several enterprises of Ukraine, aiming to save traditional fuel. In addition, small wood burning boilers are sometimes installed for heating applications in schools, kindergartens, hospitals and other social institutions. Gasification of wooden waste for producing a combustible gas that could be used alone or as mixture with natural gas for electricity generation as well as biofuel production from wood biomass – are not developed. The main drivers of the sector development are considered to be: Agricultural and agro industrial production become the main ‘currency source’ for the country and will be developing in the nearest perspective; Energy dependence on import and constantly growing prices on natural gas force to look for alternative fuels; Necessity of upgrading and increasing of energy efficiency of the obsolete heat and power utilities infrastructure; EU sustainability and energy saving targets – increasing demand for biofuels from Ukraine; Favorable taxation and recent legislative initiatives; ‘Green’ tariff for electricity produced from agricultural residues. Dutch business can serve as a provider of knowledge, technology and equipment supplier for biomass processing, bioenergy and biofuel industries. Wide opportunities open in biomass/bioenergy assessments and various consultancies, upgrading of power and heat infrastructure, setting up sustainable biomass production and processing, international trade with energy crops and solid fuels, development of local biofuels supply/logistics chains and production, creation of rural biogas and bio-fertilizers productions, matchmaking/co- financing/partnership. Market Study Food sectors in Ukraine - Part B: Biomass processing industry Tebodin Ukraine CFI Report number: 71834-B-R Date: 10 May 2013 Page: 7 of 80 1 General overview of the branch 1.1 Biomass feedstock and its energy potential Ukraine has large stock of biomass available for energy production. Main characteristics of the biomass feedstock market: In 2011 Ukraine produced 1101-1202 million tons of biomass feedstock (Straw of cereals and other crop waste, animal and agro-industrial wastes). Of total amount about 54% are further processed, 45% are wasted and only about 1% are used for electricity and heat production. Most extensive biomass resources are crop residues (85.9 million tons) and energy crops (23.2 million tons) as reported by Biomass Ltd.