Iryna Cheban

Department of Global Economics, National University of Life and Environmental Sciences of Ukraine,

Ukraine

irynacheban@ukr.net

ORCID 0000-0001-5265-0193

Development of liquid biofuel market: Impact assessment of the new support system in Ukraine

Anatoliy Dibrova

Department of Global Economics, National University of Life and Environmental Sciences of Ukraine,

Ukraine

dibrova@nubip.edu.ua

Abstract. In the light of the growing importance of biofuels in the world and Ukraine’s potential for its production, the current research focuses on analysing future development of liquid biofuel market and production possibilities in Ukraine until 2030 using the AGMEMOD model. The AGMEMOD model is an econometric, dynamic, partial equilibrium, multi-commodity model which has the capacity to evaluate changes in Ukrainian agricultural policy and the impacts of political decisions on the agricultural sector in Ukraine. The current paper offers an introduction of state aid in the form of direct support and tax preferences for liquid biofuels producers to meet the needs of the domestic market in biofuels and to achieve the indicative target of 10% consumption biofuels in the total consumption of motor fuel by transport sector till 2020. For the quantitative assessment of these effects, the AGMEMOD model was used. The results of this study indicate that implementation of the direct state support, introduction of the system of returning and cancelling excise duty for biofuels producers will stimulate the achievement of the indicative target of 10% biofuels’ consumption by the transport sector.

Received: May, 2019

1st Revision: October, 2019

Accepted: February, 2020

DOI: 10.14254/2071-8330.2020/13-1/17

JEL Classification: Q42, C32, C51, Q28

Keywords: liquid biofuel, econometric models, partial equilibrium, mandatory indicative target, Ukraine