EBRD lends €60 million for biofuels project in Ukraine

The European Bank for Reconstruction and Development (EBRD) has announced that it will be lending EURO 60 million to Ukrainian firm Lan-Oil LLC for the construction of a greenfield and privately owned biofuels project in Ukraine since Russia began its full-scale war on the country more than two years ago.

The funding will be backed by a financial guarantee from the European Union provided under Pillar II of the new Ukraine facility, the Ukraine Investment Framework.

This forms part of the new €150mn Ukraine Investment Framework Hi-Bar guarantee programme, signed at the Ukraine Recovery Conference (URC) today in Berlin. This programme supports both new and existing climate mitigation technologies, in particular in the energy sector, in line with the EU’s detailed Ukraine Plan.

EBRD said that a recent upsurge in Russia-Ukraine conflict has impacted Ukraine’s electricity infrastructure which has sharpened the need for investment in the country’s energy sector, one of the EBRD’s priorities for the country.

This project, signed at the Ukraine Recovery Conference (URC) in Berlin today, will contribute both to Ukraine’s energy security and the decarbonisation of the sector by building a domestic source of fuel supply, bioethanol, with 70 per cent lower greenhouse gas emissions than traditional fuel.

The sponsor is JSC Concern Galnaftogaz and OKKO Group, a leading distributor of transportation fuels in Ukraine. As of December 2023, JSC Concern Galnaftogaz owned and operated 396 OKKO-branded filling stations. It is a long-standing client of the EBRD.

The biofuel produced is expected to be compliant with the EU Renewable Energy Directive (RED III).

Energy security is one of the EBRD’s five investment priorities for Ukraine, along with support for vital infrastructure, food security, trade and the private sector. EBRD has made over €4.2 billion available to Ukraine since the start of the war.