The introduction of this norm became part of the state's policy to green the transport sector, as well as fulfill European integration obligations and reduce energy dependence on oil product imports.

However, despite clear legislative intentions, the norm caused an ambiguous reaction from experts and market operators. At the same time, the Verkhovna Rada of Ukraine recently promptly adopted a decision to temporarily cancel fines for its non-compliance.

Ukrainian Energy found out why and what the prospects are.

An ecological alternative with logistical challenges

Bioethanol is ethanol produced from plant raw materials - mainly corn, sugar cane, beets, barley or even potatoes. The largest producers of this bioalternative to traditional gasoline are the USA and Brazil. In the long term, bioethanol can reduce harmful emissions from transport and reduce dependence on oil products.

However, as the founder of the Prime logistics group of companies Dmitry Lyushkin notes, in practice the new norm creates many risks. According to him, most networks that do not have access to high-quality imported fuel will be forced to mix gasoline with alcohol on site. This increases the likelihood of low-quality fuel, which is traditionally called "spoofing" in the consumer environment.

"When fuel is spoofed, additional profit appears - that is why it makes no sense to talk about a price increase. But no one will allow a decrease, so as not to suspect artisanal production," Lyushkin explains.

He also emphasizes that the market will still focus on large brands such as WOG or OKKO, which maintain high quality and, accordingly, a stable price.

Despite the formal introduction of 5 percent bioethanol in gasoline, the Verkhovna Rada these days almost simultaneously temporarily suspended the effect of penalties for violating this norm. 248 deputies voted for the relevant decision.

According to the current version of the law, gas stations that sell gasoline without the required bioethanol content would be subject to a fine of seven subsistence minimums (over 21 thousand UAH) for every thousand liters of such fuel. However, if the law is signed by the President, these sanctions will be suspended until January 1, 2026.

A similar relaxation applies to wholesale suppliers, who would have to report on biocomponents in the fuel sold. This norm is also postponed for almost a year.

Between goals and reality

Market experts have repeatedly warned about the technical, economic and logistical difficulties associated with the implementation of bioethanol in gasoline. The greatest concern is the issue of quality control of such fuel on the ground, since the mixing of alcohol is not always carried out in compliance with technological standards.

As a result, consumers may face deterioration of fuel characteristics, risks to engines and the need for careful selection of refueling.

The introduction of bioethanol into Ukrainian gasoline is a step in the right direction from the point of view of ecology and compliance with European approaches. At the same time, the lack of systemic control and financial incentives may narrow the real benefits of this decision. In the meantime, the country is balancing between the desire to modernize the fuel market and the need to protect the consumer from "home" experiments with alcohol.

A forced decision against the background of market instability

Energy expert Serhiy Kuyun explained that the reason lies in the operational difficulties that arose in the market after the introduction of the mandatory bioadditive. According to him, at the height of the season of high demand for fuel, Ukrainian importers faced a problem: most European suppliers are focused on the production of E10 gasoline, while Ukraine has not yet formed a stable infrastructure for such a product.

“European gasoline with bioethanol in a proportion of 10% is already the standard. But our market is not yet ready for its systematic consumption. We simply cannot keep up with the logistics. That is why a compromise decision was made to allow the sale of gasoline without bioethanol without penalties until the end of the year,” Kuyun notes.

At the same time, he emphasized that this step is not a rejection of the reform, but only its tactical correction. Moreover, there are already companies in Ukraine that have begun to design capacities for mixing fuel with alcohol on site.

“This is a good opportunity to fully switch to E10 starting next year. This will simplify purchases in the EU, develop the domestic bioethanol market and will not cause stress for the consumer,” the expert added.

People's Deputy Nina Yuzhanina called the decision to postpone fines unexpected and stated that it was supported in a hurry at a meeting of the specialized tax committee. The main argument was the need to replace the production of the Ukrainian oil refinery, which was put out of action as a result of Russian shelling.

“The plant supplied up to a third of the domestic gasoline market. Now we have to look for this volume abroad, and the fastest option is to buy fuel in the seaports of Greece or Turkey. But it does not contain bioethanol, so it was decided not to temporarily fine for the absence of an admixture,” Yuzhanina commented.

She also drew attention to the fact that the issue of importing petroleum products is directly related to the risk of supplying fuel of Russian origin.

“I asked a direct question to the head of Naftogaz, Serhiy Koretsky, about the risk of Russian fuel entering Ukraine through circumvention of sanctions. The answer was not entirely unambiguous. And later I read a message from the State Oil and Gas Administration about the activities of a “shadow oil hub” in the Mediterranean,” she added.

According to oil products market analyst Oleksandr Sirenko, today’s market situation, on the contrary, creates favorable conditions for the wider introduction of bioethanol.

“The transition to E10 gasoline would allow us to harmonize purchases with the European market, where this formula is standard. This will not only simplify logistics, but also reduce the cost of foreign currency purchases of gasoline without additives, which are then mixed in Ukraine,” he noted.

Sirenko added that the first weeks of sales of gasoline with bioethanol in the E5 format have already demonstrated that the Ukrainian market is quite capable of adapting to such changes. Therefore, in his opinion, an entirely logical step would be to expand the bioethanol program to the full E10 format.

Despite certain difficulties and temporary compromises, the gasoline market in Ukraine is gradually preparing for the full integration of bioethanol. If the momentum is not lost, from 2026 the state will be able not only to reduce dependence on imports, but also to stimulate domestic production, which will have a positive impact on energy security and the economy as a whole.

The European ethanol market is in a fever

Spring 2025 was marked by an unexpected failure in the European ethanol market. At a time when demand is usually expected to increase and, accordingly, prices to rise, the market showed the opposite dynamics. In April-May, the cost of ethanol fell below the psychological mark of 600 euros per 1,000 liters excluding taxes - a level last recorded in mid-2024. This is already forcing market players to talk about overheating of supply and possible production shutdowns, in particular in Ukraine.

Even at the beginning of 2025, the market showed growth - in February, the price of ethanol with high environmental parameters (at least 64% reduction in greenhouse gas emissions) in northwestern Europe reached about 700 euros per cubic meter. This was the highest figure since August 2024. But in the spring, the trend changed: according to Trading Economics, as of May 8, the price had dropped to about $1.71 per gallon, which after conversion is significantly less than 600 euros per cubic meter.

Ethanol prices in Europe continue to decline under the pressure of several factors at once. First of all, these are excessive imports from the USA and Brazil, which have led to oversaturation of the market. Despite the attempts of the European Commission to introduce mechanisms for controlling the import of biofuels at the end of 2023, large volumes continue to arrive, creating an excess of supply against the background of limited demand.

Another important factor is added to this - the rise in prices for raw materials, in particular corn and wheat. In Ukraine, France and a number of other European countries, droughts and crop failures have led to an increase in the price of grains, which, in turn, has made ethanol production more expensive. At the same time, the market price of ethanol itself continues to fall, which calls into question the profitability of processing, especially for those countries that do not have strong state support or developed export logistics.

No less significant is the problem of demand. Although some EU countries are gradually switching to standards such as E10 with a higher ethanol content, this is not enough to absorb the excess supply. The spring period is usually the off-season for fuel consumption, which further reduces market activity.

The situation is also complicated by the high competition between European producers and importers. The former are forced to reduce prices in order to maintain their presence on the market, while the latter offer cheaper products using cheaper raw materials - such as sugar cane in Brazil.

The situation on the oil market also plays a role. Stable or low prices for oil and gasoline reduce interest in more expensive alternatives, in particular, ethanol as a biocomponent.

In addition, the cost of greenhouse gas emission allowances also has a significant impact. During periods when the prices of these allowances fall, the economic benefit from using cleaner fuels decreases, and with it the incentive to invest in biofuel components.

For Ukraine, the situation on the European market creates particularly critical pressure. In conditions when ethanol prices fall and the cost of raw materials increases, domestic producers lose any economic motivation to maintain production.

According to analysts, in the event of continued low profitability, about 200-300 thousand tons of grain crops that were traditionally processed into ethanol may remain outside the production chains. This, in turn, threatens to reduce domestic grain consumption, reduce purchases from farmers and, potentially, increase tension in the agricultural market.

If the trend continues, some Ukrainian ethanol enterprises may stop production or go into idle mode. At the same time, the market is not confident in stable imports of biocomponents, which calls into question the implementation of mandatory standards for bioethanol in Ukrainian gasoline.

The fall in European ethanol prices is not just a local market correction, but a mirror of deeper structural problems: global competition, climate risks, instability of biofuel policies. For Ukraine, this is a challenge that requires a comprehensive response — from reformatting the domestic bioethanol market to attracting investments in logistics, exports, and new production technologies.

Despite the difficulties in the market and the challenges that accompany the introduction of bioethanol in Ukraine, this area remains an important element of the state’s energy strategy. Fulfilling European integration obligations, environmental safety, and reducing import dependence are the main factors pushing the country to develop the biofuel market. At the same time, the situation in Europe demonstrates that stable growth is possible only under the condition of a balanced policy, support for the national producer, and clear interaction between business and the state. The coming year will show how quickly the Ukrainian system will be able to adapt to new challenges.

Olena Marchenko, specially for “Ukrainian Energy”