Bioethanol in Ukraine: what is it, bioethanol production and market development prospects

(You Control Market Blog (Google Translation)) Formation of the bioethanol market in Ukraine: potential and benefits
The modern world is actively switching to renewable energy sources, and bioethanol is attracting special attention as an ecological alternative to gasoline. This fuel has a potentially strategic importance for Ukraine: it can help reduce dependence on oil imports, contribute to the implementation of European integration obligations in the field of climate and energy, and stimulate the development of agriculture.

Geopolitical challenges of recent years (in particular, the threat to energy security due to active military actions) have further emphasized the need for our own renewable fuels. Bioethanol also fits into global ESG trends - it is more environmentally friendly, contributes to the socio-economic development of regions and requires effective state regulation. This study analyzes global trends in bioethanol production and considers Ukraine's potential with a focus on regional characteristics, using YouControl's YC.Market analytical tool to assess the raw material base.

Stimulating the production of bioethanol in many countries is a matter of public policy. In the European Union, bioethanol is recognized as one of the most promising alternative fuels, and legislation establishes a gradual increase in its share in gasoline . According to EU directives, by 2010 gasoline should contain at least 5.75% biocomponents, by 2020 - 10%, with the prospect of further growth in the share of biofuels in the following years. Most developed countries have introduced similar standards: in the USA, E10 gasoline (10% ethanol) is common, in Canada - E8, in France and Poland - about 5%.

Government support (subsidies, tax breaks, quotas) plays a key role. At the same time, governments monitor that the expansion of biofuel production does not harm food security - it is important not to remove too much food in favor of fuel. The growing interest in bioethanol also coincides with ESG priorities : reducing greenhouse gas emissions (Environmental), developing rural areas and creating jobs (Social), and forming a transparent policy to support renewable energy (Governance) .

Ukraine, as part of its European integration, is also implementing relevant regulations - from May 1, 2025, Ukraine has introduced a legislative requirement to add at least 5% bioethanol to gasoline . It is worth noting that due to current market circumstances, the government has temporarily postponed penalties for failure to comply with this norm until early 2026. Thus, the regulatory framework for the development of the bioethanol market in Ukraine has already been created, which is an important signal to investors and agricultural producers about the long-term support of this industry by the state .

Ukraine has a powerful agricultural sector, which can become the basis for industrial production of bioethanol. Wheat, corn, barley, sugar beets, molasses - all these raw materials are produced in significant volumes within the country. Bioethanol as an additive to gasoline can bring a number of benefits: preserve oil resources, improve the environmental situation (less emissions of CO₂ and combustion products), increase the energy independence of the state and support the stability of sales for agricultural products . Given the cyclical nature of agricultural production, processing surplus crops into fuel can prevent a fall in prices for agricultural products and losses for farmers in harvest years. In other words, the development of the bioethanol industry is beneficial to both the agricultural and energy sectors at the same time.

Bioethanol production projects reduce the carbon footprint of transport, create new jobs, investments in rural areas and contribute to energy decentralization. In terms of governance, they require transparent mechanisms for public-private partnerships, effective regulation and control of fuel quality. Such a comprehensive impact meets the UN Sustainable Development Goals and the requirements of foreign investors, who are increasingly evaluating projects through the prism of ESG .

Ukraine already has a certain production base for bioethanol production. As of 2025, there are 17 bioethanol plants operating in the country , with a total capacity of about 430 thousand tons per year. This volume is theoretically capable of covering the domestic demand for bioethanol for E5 filling more than four times. With the strengthening of the European course on the Green Deal and a possible revision of trade quotas, Ukraine has a chance to become one of the key suppliers of bioethanol to the EU.

Ukraine has all the prerequisites for creating an extensive network of bioethanol plants, as the raw material base is well-supplied in almost every region. Using the YC.Market analytical system, we determined the number of agricultural companies in different regions (as of the end of October 2025) that can potentially supply raw materials for bioethanol . The sample included companies that are actively operating (not in a state of suspension), have relevant types of economic activity (01.11 - growing grain crops (except rice), legumes and oilseeds; 01.13 - growing vegetables and melon crops , root and tuber crops; 01.14 - growing sugar cane) and have annual revenue of more than 1 million UAH.

Conclusions
Ukraine has significant potential for developing its own bioethanol market. First, we have a powerful raw material base - developed agriculture is able to meet the needs of bioethanol plants without threatening food security, provided that it is properly planned . Second, state policy is already taking steps towards renewable fuels : requirements for the bioethanol content in gasoline have been introduced, which meets EU practices, and incentives are being created for investors (it is expected that the mandatory E5–E10 sales market will guarantee demand for bioethanol). Third, analytical tools such as YouControl Market allow a reasonable approach to the issue of choosing locations for new production facilities and finding partners , using up-to-date and objective data on companies and regions.

The realization of the bioethanol potential will bring a number of benefits to the state and business. Reducing fuel imports and replacing them with domestic bioethanol will increase energy independence and have a positive impact on the trade balance. Greenhouse gas emissions from transport will be reduced, which will improve the environmental situation and bring Ukraine closer to meeting climate goals. Rural areas will receive new production, jobs, orders for growing additional crops - therefore, an additional impetus for development. From an ESG point of view, the development of the bioethanol industry will confirm that Ukraine strives for sustainable, "green" growth, taking into account social and management aspects .

Of course, a comprehensive strategy is needed to achieve these results . The government should ensure transparent rules of the game: tax breaks for biofuels, grants or cheap loans for the creation of production facilities, quality control of fuel at gas stations so that consumers trust the new product. Businesses should invest in modern ethanol production technologies (including second-generation bioethanol from waste) and establish cooperation with farmers for a stable supply of raw materials. International cooperation and investments can also accelerate progress - global energy companies and financial institutions are interested in projects that meet the criteria of sustainable development. READ MORE