30/07/26
Spain waste ethanol demand to rise on tight supply
London, 30 July (Argus) — Spain's newly adopted transposition of the EU's
renewable energy directive (RED III) will raise demand for ethanol, especially
advanced ethanol. But the legislation will constrict ethanol imports, thus
tightening overall ethanol supply. The increased biofuels mandates under Spain's
REDIII will support ethanol demand once implemented, in 2027 at the earliest.
But demand for advanced ethanol, made from waste-based feedstocks listed in
Annex 9a of the EU's renewable energy directive, is also markedly set to grow in
Spain as of 2027, thanks to a new advanced bioalcohol sub-obligation under the
implementation of REDIII. The mandate will start at 0.1pc of gasoline
consumption in 2027 and rise to 5pc by 2040. This is a unique sub-mandate to
Spain, as most EU member states do not have exclusive waste-based gasoline
targets. France and Italy, for example, have bioethanol sub-targets, but none
specifically for waste-based ethanol. In other EU countries, like Germany and
the Netherlands, there are sub-quotas for waste-based, or advanced, biofuels,
not limited to ethanol. According to Spain's Strategic reserves agency, Cores,
the country consumed just over 7mn t of gasoline in 2025. Based on this figure,
the new sub-mandate could generate an initial demand of approximately 7,000t of
advanced ethanol or biomethanol in 2027, rising to over 350,000t in 2040. The
total ethanol production of the four operational plants in Spain amounts to
647,065t/yr, according to Argus data. Only one of these units makes second
generation, waste-based, ethanol, from grape marcs and wine lees, and has a
nameplate capacity of 258,293t/yr. Notably, Spanish producers do not solely
supply their domestic market. Eurostat data shows that Spain exported 441,055t
of ethanol in 2025, with an almost 47pc (206,808t) share being supplied to
France and just over 24.5pc (108,292t) going to Greece. Arbitrage opportunities
for suppliers exporting to Spain look to fall from 2027. This is because Spain's
RED III framework legislates that only undenatured ethanol is eligible for
compliance under the renewable transport fuel targets, opposed to denatured
ethanol which contains additives making it unfit for human consumption. Spain
imported 308,096t of ethanol in 2025, according to Eurostat data, with just over
61pc, or 189,027t of this being denatured product. The US was Spain's largest
supplier at 141,579t, all of which was denatured ethanol. The change in
legislation means that imported ethanol will all be subject to the maximum
import duty of €192/m³ for undenatured product, compared with a lower €102/m³
duty for denatured ethanol. The Netherlands made the same change in its RED III
draft in October. Germany and France also already exclude denatured ethanol
imports from their national transport mandates. This transition to undenatured
ethanol, aligning with the policy of other key EU countries, may reduce
opportunities for arbitrage with the EU . This is because it would thereby
prevent some exporters, like the US, from sending denatured cargoes to profit
from lower tariffs, and make those cargoes that have been sent more expensive
after clearing customs. By Toby Shay Send comments and request more information
at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights
reserved.
