Ukraine could increase bioethanol production to 1 mln tons annually by removing regulatory barriers

Ukraine’s bioethanol industry has expanded its production capacity by more than 2.5 times over the past year and could eventually increase output to around 1 mln tons per year if regulatory obstacles are removed. This was announced during the roundtable “Ukraine’s Bioethanol Market: Regulatory Policy for Processing Development, Investment Attraction and European Integration.” Currently, 10 of the country’s 17 licensed bioethanol producers are operating, with annual production reaching 180–200 thsd tons.

The introduction of a mandatory minimum 7% bioethanol blend in A-92 and A-95 gasoline from July 1 has provided an additional boost to the sector. Market participants believe the new requirement creates opportunities for expanding deep processing of agricultural feedstocks, including corn, molasses, other biomass and food waste.

Ruslana Rymarska, President of the Ukrainian Food Manufacturers Alliance, said that bioethanol production creates added value within the country while increasing demand for domestic agricultural raw materials. According to her, a plant with an annual capacity of 100 thsd tons of bioethanol can process up to 350 thsd tons of corn or other biomass each year, creating around 150 direct jobs and up to 1,000 additional jobs in agriculture, logistics, energy and related industries. Construction of such a facility requires investments of $50–100 million, while the sector’s overall investment potential already exceeds $300 million.

However, industry representatives say further growth is constrained by regulatory issues. One of the main challenges is the lack of an EU-harmonized customs classification for undenatured bioethanol. According to Oleksii Lysiuk of the Ukrbioethanol Association, the absence of a dedicated customs code creates uncertainty among regulatory authorities regarding the product’s classification, complicating both production and exports.

Taras Mykolaienko, Executive Director of the Ukrbioethanol Association, noted that Ukraine must implement a number of EU directives governing the alcohol sector by January 2027. At present, blending bioethanol into gasoline involves complex tax administration procedures, registration of alcohol storage facilities, installation of additional metering equipment and the issuance of tax promissory notes for every shipment.

Industry participants believe that simplifying regulatory procedures and aligning Ukrainian legislation with EU rules could significantly accelerate the development of the bioethanol sector. This would help attract new investment, expand domestic processing of agricultural feedstocks, increase exports of value-added products and create the conditions necessary for Ukraine to raise bioethanol production to around 1 mln tons per year.