European Commission president Ursula von der Leyen said the commission will consider authorising a higher 20pc ethanol blend in gasoline (E20) in the revision of the policy framework for fuels, in a letter to three MEPs this week.
Von der Leyen wrote in response to a letter from the three German MEPs — Norbert Lins, Peter Liese and Jens Gieseke — sent in June last year, in which they proposed the accelerated standardisation and market launch of E20 fuel. They said that this higher blend could "make a significant contribution to achieving our climate goals without placing an undue burden on citizens."
In her response von der Leyen said that the "the commission confirms the role that higher biofuel blends can play in the decarbonisation of existing fleets".
But she also said that the commission would take into account "possible problems related to the suitability of engines of existing vehicles for this fuel, as well as the need to incentivise investment in advanced biofuels".
Currently the maximum ethanol blend permitted in the EU is 10pc (E10). Authorising E20 would double the amount of ethanol that could be blended into gasoline, but no timeframe on such a decision was provided.
The EU-27 imported more than 1mn t of undenatured ethanol in 2025, according to Eurostat data.
EU energy commissioner Dan Jorgensen said last month that increasing the uptake of biofuels could substitute fossil fuels and alleviate pressure on markets, when discussing the "potentially prolonged disruption" of oil products supplies caused by the US-Israel war on Iran and resulting closure of the strait of Hormuz. This point was not mentioned by von der Leyen in her letter.
The US will allow refiners and retailers to supply E15 gasoline — a higher than usual blend — in some states from May, and will waive other fuel rules as part of attempts to temper pump prices that have surged because of the war. Argentina has done the same, while some Asia-Pacific countries are considering increasing blending levels.
In Europe, indirect effects of the war caused ethanol prices to rise. Average 75pc greenhouse gas emissions-saving crop-based ethanol hit its highest since September 2022 on 13 April. Romania has decided to remove the requirement to blend 8pc biofuels into gasoline because it pushes prices for the fuel up.
Prior to the Iran war, the European ethanol market was already structurally short coming into the year. And member states' mandated targets continue to increase under the EU's latest Renewable Energy Directive (RED III). But provisional application of the EU-Mercosur interim Trade Agreement is set to begin on 1 May, a deal that will allow reduced import tariffs on a total of 200,000 t/yr to be phased in incrementally across six years.
Rising bio-mandates for road fuels are likely to add further pressure to the already waning demand for European gasoline. Europe's primary export outlets — the US Atlantic coast and west Africa — have reduced their reliance on European gasoline, becoming increasingly self-sufficient.
Since Europe is structurally long on gasoline — producing more than it consumes — falling export demand has led to higher stock levels compared with historic averages in recent years. Participants have pointed to plentiful stocks across Europe this year, with some traders suggesting waning demand may lead to an oversupplied European market. Refiners have begun slowing gasoline blending activity to curtail production, in part due to the backwardation caused by the US-Iran war, which tightened prompt global energy supplies, but also because of limited outlets.
