Exemption from CO2 tax for companies that burn biofuels: The Rada has made the first step

Exemption from CO2 tax for companies that burn biofuels: The Rada has made the first step shutterstock

Anna Velyka

The decision was adopted by 238 votes

The people's representatives adopted as a basis draft Law No. 9596 "On Amendments to the Tax Code of Ukraine regarding the establishment of a rate of zero hryvnia of environmental tax for carbon dioxide emissions for installations that carry out such emissions as a result of burning biofuels."

This was announced by MP Yaroslav Zheleznyak in Telegram.

Currently, paragraph 243.4 of Article 243 of the Tax Code of Ukraine determines the tax rate for carbon dioxide emissions by stationary sources in the amount of 30 UAH per 1 ton.

The bill provides for the use in Ukraine of generally accepted world practices for the development of the use of biofuels for energy production. Thus, according to the Methodologies of the Clean Development Mechanism of the UN Framework Convention on Climate Change, the SO2 from burning biomass is not taken into account.

In global practice, biofuel is considered a CO2-neutral fuel, because when it is burned, as much carbon dioxide is produced as was absorbed by plants during growth.

In September 2022 Ecopolitics reported that State Energy Efficiency and Ministry of Energy have prepared 2 draft laws designed to exempt companies burning biofuels from paying taxes on CO2 emissions. The authors of the documents claimed that their adoption will remove one of the barriers in attracting investors to the installation of boilers and cogeneration plants on biofuel, and will also contribute to bringing Ukrainian legislation into line with European legislation.

In November 2023, the president of Ukraine Volodymyr Zelenskyy approved decision of the National Security and Defense Council of Ukraine "Regarding additional measures to strengthen the stability of the functioning of the energy system and prepare the national economy for work in the autumn-winter period of 2023/24". It, in particular, obliged the government to provide support in the parliament to the adoption of draft law No. 9596 "On amendments to the Tax Code of Ukraine regarding the establishment of a zero hryvnia environmental tax rate for carbon dioxide emissions for installations that carry out such emissions as a result of burning biofuel" and draft law no. 9597 "On Amendments to the Law of Ukraine "On Alternative Fuels" regarding the creation of a register of installations that use biofuel as the only type of fuel".

June 18, the Verkhovna Rada of Ukraine adopted as a basis government draft law No. 9597 "On Amendments to the Law of Ukraine "On Alternative Fuels" regarding the creation of a register of installations that use biofuel as the only type of fuel".

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