September 20 International Fertilizer and Agricultural News

September 21, 2026

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Pakistani ethanol producers, after losing preferential access to the EU’s industrial ethanol market in 2025, are striving to enter the EU fuel ethanol market via ISCC certification. This certification aligns with the EU Renewable Energy Directive (RED) and positions exporters to meet sustainability standards crucial for EU transport fuel blending targets. Despite economic challenges like import tariffs and certification costs, producers see significant potential due to competitive pricing and emerging demand for lower-emission biofuels. As of 2025, eight Pakistani ethanol plants, including Shah Murad and Chashma Sugar Mills, achieved ISCC certification. Bulk transport is gaining importance for cost efficiency, but the industry remains cautious about certification timelines and policy uncertainties, with hopes tied to a 2027 trade review.

Pakistani Ethanol Producers Seek Access to EU Fuel Market

After losing preferential access to the European Union's industrial ethanol market, major Pakistani ethanol producers are applying for International Sustainability and Carbon Certification, or ISCC, in an effort to expand sales to the EU fuel ethanol market.Delegates at the Asia Sugar and Ethanol Conference in Bangkok said more Pakistani producers were considering obtaining ISCC certification to supply bulk fuel ethanol to Europe.Pakistan has traditionally sold most of its ethanol to industrial customers in Europe. However, following changes to EU trade rules, suppliers are increasingly turning their attention to the fuel ethanol sector.The ISCC database shows that at least eight ethanol plants in Pakistan have obtained certification this year, including facilities operated by Shah Murad Sugar Mills and Chashma Sugar Mills. Producers hope to use the certification to support larger export volumes.

Noon Sugar Mills General Manager Rana Waseem told Argus on the sidelines of the conference that bulk cargoes and sipments in ISO tank containers each accounted for approximately half of the company's freight volume in 2025. However, the share of bulk shipments has increased this year.Market participants said access to the EU fuel ethanol market would encourage more bulk shipments. For large-volume trade, bulk transportation is generally more economical than ISO tank containers.The EU suspended preferential market access for imports of Pakistani industrial ethanol in June 2025. This policy change significantly weakened the competitiveness of Pakistani ethanol in its traditional industrial market, prompting some suppliers to explore opportunities in the fuel ethanol sector.The EU trade measures introduced in 2025 did not target fuel-grade ethanol. Historically, Pakistan's fuel ethanol exports to Europe have been limited because most producers lacked sustainability certification such as ISCC. Such certification is required for biofuels to meet the targets of the EU Renewable Energy Directive, or RED.

Price Competitiveness

European fuel ethanol prices remain significantly higher than Pakistani ethanol export quotations.According to the latest Argus assessments, RED-compliant T2 ethanol was assessed at USD 1,135.74-1,150.29/tonne FOB in the Amsterdam-Rotterdam-Antwerp, or ARA, region. Pakistani anhydrous ethanol was assessed at USD 790-810/tonne FOB.Market sources said the price difference highlighted the potential benefits of entering the EU fuel market. However, freight, certification, and other compliance costs would continue to reduce the economic returns from exports.Hunza Sugar Mills Head of Trading Rizwan Hussain told Argus that ISCC-certified ethanol could command a premium of USD 10-20/tonne over uncertified products.Other producers said the premium was difficult to quantify and could vary depending on the buyer and destination port.Pakistan's ethanol market is currently in its seasonal off-season ahead of the start of the sugarcane crushing season in November. Ethanol used to meet the EU's mandatory transport fuel blending targets must comply with RED sustainability requirements.Market participants noted that the third version of the EU Renewable Energy Directive, or RED III, places greater emphasis on reducing greenhouse gas emissions. This could make some Pakistani ethanol more attractive than competing supplies.However, certification remains a mandatory prerequisite for entering the tightly regulated fuel market.Pakistan's ethanol exports to the EU have declined since the 27-member bloc removed duty-free access for non-fuel ethanol in June 2025.

akistani exporters are now required to pay an import tariff of approximately USD 120/tonne on their ethanol products. This has reduced their competitiveness and forced producers to seek alternative export channels.Despite growing industry interest in fuel ethanol exports, market participants remain cautious. The ISCC certification process can take several months and requires independent verification of the entire supply chain, from raw material procurement through ethanol production.An applicant may also fail to obtain certification on its first attempt. In most cases, both the sugar mill and the ethanol production facility must be certified.Exporters are also closely monitoring whether Pakistan's trading status with the EU will be adjusted. A major supplier said the industry hoped a policy review in 2027 would improve market access conditions.For now, however, producers generally regard obtaining ISCC certification as the most realistic and practical route into the EU fuel ethanol market.The EU's decision to withdraw preferential treatment for Pakistani ethanol imports in 2025 was intended to restore fair competition.Meanwhile, the EU-Mercosur trade agreement will grant preferential access to specified quotas of South American ethanol, further intensifying competition among exporters targeting the European market.

September 20 International Forex News

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