Abstract
This article examines the development of Ukraine's liquid biofuels market, driven by the need to diversify its fuel supply amidst complete reliance on imported fuels for road transport. The country also faces challenges exporting agricultural feedstock for first-generation biofuels due to geopolitical disruptions since early 2022. In response, the production and use of liquid biofuels represent a strategic move to reduce dependence on fossil fuels while fulfilling international obligations, including the ones within the Energy Community and the European Union (EU). Ukraine must align with the EU's renewable energy targets as a candidate for EU accession. Using the methods of fuel consumption quantification, blending mandate assessment, and excise tax rate calculation framework, the article finds that the potential market demand for bioethanol in Ukraine is projected to range from 125 to 278 thousand tonnes and for biodiesel from 196 to 431 thousand tonnes in 2025-2031. Ukraine's biofuel production potential could reach 2.54 million tonnes of oil equivalent by 2050, with advanced biofuels expected to dominate. Current excise tax rates for bioethanol are considered appropriate and supportive of market growth. To foster further development, legislative amendments are needed to mandate biodiesel blending, along with awareness campaigns highlighting the benefits of biofuels. Additionally, vehicles using high biofuel blends should receive incentives similar to those of electric vehicles, such as access to preferential parking.