It’s not just about the environment: when will gas stations across Ukraine finally start selling gasoline blended with Ukrainian bioethanol, and why does it matter?
13 March 16:34
On March 11, a law came into effect that updated the guidelines for the development of Ukraine’s market for gasoline blended with bioethanol, bringing a measure of optimism to Ukrainian bioethanol producers. [Komersant] investigated whether this optimism is justified.
The importance of introducing regulations in Ukraine regarding the mandatory bioethanol content in gasoline was explained at the time not only by the environmental friendliness of such fuel and its improved characteristics. Much was also said about the interests of Ukrainian bioethanol producers, who could hope that their products would find a new Ukrainian consumer. But since May 1 of last year, the relevant provisions of the Law “On Alternative Fuels”—at least those intended to ensure oversight and accountability—have never taken effect. This was attributed to the market’s inability to supply gas stations with sufficient quantities of the fuel. But the time for preparation is running out.
New Guidelines and Old Problems
The changes enshrined in the law stipulate that the mandatory bioethanol content in gasoline must exceed 7%, and penalties for market operators failing to meet bioethanol content requirements in gasoline are deferred until July 1, 2026.
Although gasoline containing bioethanol is generally available at gas stations even now. The explanation is simple: since domestic oil refining has collapsed, Ukraine has to rely on fuel from Europe, where it is “enriched” with bioethanol. The only question is what kind of bioethanol it is—domestic or foreign. And that is a problem. Not just for Ukrainian bioethanol producers. Oleksandr Sirenko, an analyst at the consulting firm “NaftoRynok,” explains .
“Most operators, while the war is ongoing in the country, want to buy the ready-made blend rather than prepare it themselves at oil depots due to the risk of being hit by Russian missiles or UAVs. But there are also those who have been adding bioethanol to gasoline in Ukraine for a long time and have been trading it for many years. And this state of affairs, in essence, already provides grounds to speak of anti-competitive practices. I think, given that we have established exports of Ukrainian bioethanol abroad—and these exports are precisely to the countries from which we purchase fuel—it can be assumed that Ukrainian bioethanol will be transported back and forth in fuel tankers. “Although this cannot be stated with certainty, since bioethanol is also produced in Europe, the likelihood is very high,” the expert notes.
The law permits blending fuel with bio-components only at the fuel production site and/or the wholesale fuel trading site, and it also sets several additional requirements for those who will be engaged in this activity. And this is yet another, though not the only, bottleneck. Oleksandr Sirenko continues.
“There are several issues that prevent me from saying that the bioethanol gasoline market will be fully operational here starting July 1. Specifically, I’m referring to the Technical Regulations. The State Environmental Inspection is still not ready to conduct inspections at gas stations. And if the law is implemented under such conditions, it means that some will sell bioethanol, while others, in the absence of oversight, will not implement the bioethanol program. Although if the State Environmental Inspection cannot conduct inspections due to the lack of any changes in the regulations, then I believe another organization can and should do so. Because the law must be enforced. There are also problems with issuing licenses for the production of such gasoline with added bioethanol. I’ve heard that local tax authorities are blocking the issuance of such licenses,” the expert notes.
In fact, there is still time to remove these obstacles. And also to consider how to make the most of Ukraine’s existing bioethanol production capacity.
An analysis of this market segment, recently conducted by Pro-Consulting, showed that the industry in Ukraine is predominantly export-oriented precisely because of the low level of domestic consumption. Pro-Consulting Senior Consultant Yaroslav Kulikovsky considers the postponement of liability for non-compliance with bioethanol content standards in gasoline to be one of the main limiting factors. Among others are the lack of gasoline production within Ukraine; the impact of the war on fuel infrastructure; and the need for investment in fuel blending infrastructure.
More is not always better
Discussions about the vast potential of domestic bioethanol production are traditionally underpinned by the recognition that Ukraine has a developed agricultural sector and that wheat, corn, barley, and sugar beets—the raw materials for bioethanol production—are grown in the country in large quantities. But all this gives reason to talk not only about the industry’s strengths.
According to YC.Market, as of 2025, there were 17 bioethanol production plants operating in the country with a total capacity of about 430,000 tons per year. And this is a problem, since Ukraine currently has a surplus of bioethanol.
Georgii Geletukha, head of the Bioenergy Association of Ukraine, explains .
“We have quite a lot of existing bioethanol production capacity. We’re talking about first-generation bioethanol production, which amounts to over 400,000 tons per year. The problem is that the market doesn’t need that much bioethanol. Our export quota to the EU is 125,000 tons of bioethanol per year. That means we can sell 125,000 tons there. There is some domestic consumption in Ukraine, but not nearly enough to use up those 400,000 tons. “We would need to mandate the addition of bioethanol to gasoline at a level of preferably 10%. But even if it were 10%, that would, in my opinion, only ensure consumption of 200,000 tons of bioethanol in Ukraine,” the expert notes.
And although current production capacity is utilized at less than half its capacity, the question of why so much of it has been built in Ukraine—given sufficiently low domestic consumption and limited export opportunities—requires an explanation. Georgiy Geletukha’s perspective.
“When there were major problems with grain exports in 2022, the ports were idle, and many farmers began building bioethanol plants. Their logic was that we would process corn into bioethanol and find a market for it somewhere. And now three more large plants are under construction. Although the export quota remains the same—125,000 tons,” the expert notes.
By the end of 2025, Ukraine exported only 111,200 tons of bioethanol, which is 11.9% higher than the figure for the same period in 2024. This raises another logical question: is there reason to hope that Ukraine’s rapprochement with the European Union will reverse the trend and that Ukrainian bioethanol will eventually find new consumers in Europe? Georgiy Geletukha responds.
“In Europe, there is primarily demand for second-generation biofuels, that is, those produced from waste. There is a clearly defined list of these wastes. Bioethanol, however, is considered a first-generation biofuel because it is produced either from corn or sugar beets. And accordingly, both are food products. Or even if bioethanol is produced from molasses—a byproduct of sugar processing—it is used in animal feed production. In other words, we are effectively producing bioethanol from products that can be used either as animal feed or as food. And this is not currently being strongly encouraged in Europe,” the expert notes.
According to EU plans for 2030, the bioethanol content in gasoline should be 14%. Priority is given specifically to second-generation bioethanol, while no more than 7% is allocated for first-generation fuel. As noted by Pro-Consulting, the bioethanol market in Ukraine will develop precisely under the influence of global decarbonization trends, the growing role of alternative fuels, and EU environmental policy. Yaroslav Kulikovsky, Senior Consultant at Pro-Consulting, emphasizes:
“The following trends will be decisive: the integration of the Ukrainian market into the European energy space; stricter environmental requirements for fuel; the continued export orientation of producers; the development of second-generation biofuels; and growing domestic demand driven by regulatory requirements.”
And here it makes sense to recall: for example, in India, which is actively building bioethanol plants in an effort to reduce petroleum product imports, starting in 2025, vehicles will run on gasoline meeting at least the E20 standard; in Brazil, at least 30% ethanol is added to regular gasoline; and in France, several thousand gas stations offer gasoline with a bioethanol content of 60–85%.
Author: Serhiy Vasylovych
