Ukraine is rapidly developing its biomethane sector with ambitions to become a major European supplier. Georgii Geletukha, head of the board at the Bioenergy Association of Ukraine, told bne IntelliNews that Ukraine has the potential to produce up to 20bn cubic metres of biomethane annually -- roughly what Ukraine already produces from its existing gas fields -- which could make it a significant player in Europe's renewable energy transition.

In the past six months MHP and Vitagro, two Ukrainian agricultural companies, have started exporting small amounts of biomethane to the European Union. The exports mark a significant milestone in a relative newcomer to Ukraine’s energy market.

Stimulated by green tariffs introduced in 2015 by former Ukrainian president Petro Poroshenko, Ukraine began building biogas plants in 2015. In October 2021 a law on biomethane passed by the Verkhovna  Rada kickstarted construction of Ukraine’s first biomethane plants. Whilst biogas is typically used locally to generate electricity and heat at the production site, biomethane can be injected into the national gas grid, and can therefore be exported.

Ukraine currently has three operational biomethane plants, producing 11mn cubic metres of biomethane per year. The plants were all built by Ukrainian agricultural companies on the site of their holdings. Gals Agro and Vitagro opened 3 mcm capacity plants in April 2023 and September 2024 respectively.

MHP started production at an 11 mcm capacity plant in January 2025. Four more plants are scheduled to come online in the near by the end of the year, taking Ukraine’s annual biomethane production to 111 mcm.

“The whole history of biomethane is from 2021 till 2025, and during this relatively short period – four years, including three years of war – we built seven plants. Not bad, in my opinion,” says Geletukha.

What makes Ukraine so well-placed for biomethane?

As Geletukha explains, Ukraine is well-positioned to rapidly expand biomethane production: “We are a very agrarian country with the biggest agrarian areas in Europe, at least. And correspondingly, we have the biggest amount of the resources for biomethane production. We have the materials for production of 21.8 bcm of biomethane per year.”

Agricultural land ownership in Ukraine is concentrated in the hands of large agricultural holdings and companies, referred to as "agroholdings." Agroholdings with more than 10,000 hectares account for 25-30% of the total farmland, whilst medium-sized agroholdings with between 1,000 and 10,000 hectares account for further 15-20%. These medium and large-size holdings generate enough feedstock to make biomethane plants economically viable. “A company which has 3,000 hectares and some livestock production is okay to produce biomethane already,” says Geletukha.

Ukraine has an extensive network of gas transmission and distribution pipelines covering the entire country. “You’re never far from the gas grid in Ukraine,” says Geletukha. This makes it cheaper and easier to connect new biomethane plants to the network, foregoing the need for significant additional investment in new pipelines.

Biomethane expansion is also being driven by the EU’s efforts to decarbonise and reduce reliance on Russian gas imports. Under the REPower EU initiative announced in September 2022, the European Commission set a target for the production of 35 bcm of biomethane per year by 2030, rising to 100 bcm by 2050.

“Ukraine can propose say 20 bcm [by 2050] – we potentially can cover about 20% of the European market of biomethane from Ukrainian biomethane. Ukraine can be the main supplier of biomethane to the European market and replace Russian natural gas. That's politically a nice picture, to replace Russian gas with Ukrainian biomethane,” says Geletukha.

As bne IntelliNews has reported, the expiration of Ukraine’s gas transit deal with Russia at the end of 2024 has left a vacuum in Europe’s energy supply that Ukraine hopes to fill with biomethane and other sources.

Biomethane production is currently only profitable for Ukrainian producers if they can export to Europe. “We have no incentives for biomethane production inside Ukraine,” says Geletukha. Whereas biomethane exported to the EU benefits from higher price premiums due to the European Emissions Trading Scheme, within Ukraine biomethane commands the same price as natural gas.

Ukraine is currently in the process of establishing a domestic emissions trading scheme: “The EU is pressing on the nearest start of this scheme, and according to current plans, it should start in 2032. This is a very critical precondition to be a member of the European Union. This is one of the important pieces of homework, without which we will not become a member,” says Geletukha.

Geletukha however says that the biomethane sector has been well supported by Ukrainian policy makers: “In my opinion, the government and parliament really provide good support to the sector because it's a relatively new sector.”

In 2024 the government passed a law allowing for the export of biomethane, exempting it from a wartime ban on natural gas exports.

Impact of war

“Of course, war has had a negative influence on all sectors in Ukraine, but on the biogas sector, the influence is not so strong as on the other sectors,” says Geletukha.

The percentage of power generating facilities destroyed or occupied in each sector bears this out: 70% of the wind energy sector, 30% of solar, 50% of hydropower, nearly 50% of nuclear and almost 80% of coal-fired plants have been lost as result of the war. In contrast, only 5% of the bioenergy sector has been affected.

The country’s bioenergy plants are well distributed around the country and are not attractive targets for the Russians: “there’s no sense in damaging them by rockets or missiles because the cost of the missile is comparable with the cost of this small plant.”

Nevertheless, the war has impeded the development of the sector. Foreign investors have for the most part stayed away: “From the seven [existing biomethane] plants, all seven plants [were built by] Ukrainian companies. There were no foreign investors in these plants.”

Foreign investment

To get anywhere near the target of 20bcm of biomethane per year, Ukraine will need to attract a huge amount of foreign investment: “To produce 20 bcm, total investment [required] is €40bn. Big money. Of course, it will be a long story. We plan to start now and finish somewhere in 2050. So we have 25 years. But even if you divide €40bn by 25, then we need €1-2bn each year to invest in biomethane,” says Geletukha.

Geletukha envisions half of this amount being supplied by foreign investors, with half provided by Ukrainian agricultural companies. Whilst larger holdings may have sufficient capital to build biomethane plants without foreign funding, medium-sized companies may provide attractive opportunities for investment in biomethane production:

“[Medium-size] Ukrainian agrarian companies provide the raw material, and foreign investors provide investment. They construct it jointly and they exploit jointly. It's a very logical agreement between these two types of companies,” says Geletukha.

It is far from certain however whether Ukraine will be able to secure the required amount of funding. As bne IntelliNews has previously reported, Ukraine has struggled to convince investors that investment in renewables is a real priority for the government. Ukraine also faces stiff competition from other biomethane producers within the EU – Poland has also has a large agricultural base and is unaffected by war risks.