Major Pakistani ethanol producers are seeking International Sustainability and Carbon Certification (ISCC) to expand sales into the EU fuel ethanol market after losing preferential access to the bloc's industrial ethanol sector.
Participants at the Sugar and Ethanol Asia conference in Bangkok said more Pakistani producers are considering ISCC certification to supply bulk fuel ethanol to Europe. Pakistan has traditionally sold ethanol to European industrial users, but suppliers are increasingly looking at fuel ethanol after changes to EU trade rules.
The ISCC database shows at least eight Pakistani ethanol plants have been certified this year, including ones owned by Shah Murad Sugar Mills and Chashma Sugar Mills.
Producers expect certification to support higher-volume exports. Bulk and ISO tank shipments were evenly split in 2025, but bulk cargoes have taken a larger share this year, Pakistan-based Noon Sugar Mills' general manager Rana Waseem told Argus on the sidelines of the conference. EU fuel ethanol access could prompt more bulk shipments, which are typically more economical than ISO tanks for larger volumes, market participants said.
The EU had suspended Pakistan's preferential market access for industrial ethanol imports in June 2025. The policy change significantly reduced the competitiveness of Pakistani ethanol in its traditional industrial market, prompting some suppliers to explore opportunities in the fuel ethanol segment instead.
Fuel-grade ethanol was not included in the EU's 2025 measures. Pakistan has historically exported little fuel ethanol to Europe because most production facilities lacked sustainability certifications, such as ISCC. The certifications are needed for biofuels used to meet the EU Renewable Energy Directive (RED) targets.
Competitive pricing
European fuel ethanol prices remain above Pakistani export values.
Argus last assessed RED-compliant T2 ethanol at $1,135.74-1,150.29/t fob ARA, against $790-810/t fob for Pakistan anhydrous ethanol. The price gap underlines the potential value of EU fuel market access, though freight, certification and other compliance costs still weigh on export economics, market sources said.
ISCC-certified ethanol could command a $10-20/t premium over non-certified material, head of trading at Hunza Sugar Mills, Rizwan Hussain, told Argus. Other producers said the premium is hard to quantify and may differ by buyer and destination. Pakistan's ethanol market remains seasonally quiet before the sugarcane crushing season starts in November.
Ethanol used to meet EU transport fuel blending mandates must comply with RED sustainability requirements. RED III's stronger focus on greenhouse-gas savings could make some Pakistani ethanol more attractive than competing supplies, but certification remains necessary to access the regulated fuel market, market participants said.
Pakistan's ethanol exports to the EU have declined since the 27-member bloc ended duty-free access for non-fuel ethanol in June 2025. Pakistani sellers now face import duties of about $120/t on their ethanol exports, reducing competitiveness and encouraging producers to explore alternative export channels, market sources said.
Despite the growing interest in fuel ethanol exports, participants are also exercising caution as ISCC certification can take several months, requires independent verification across the full supply chain from feedstock sourcing to ethanol production, and may not be secured on the first attempt. Both sugar and ethanol facilities typically need certification.
Exporters are also watching for possible changes to Pakistan's EU trade status. One major supplier said the industry hopes a 2027 review could improve market access, but producers for now increasingly see ISCC certification as the most practical route into the EU fuel ethanol market.
The EU suspended Pakistan's preferential treatment for ethanol imports in 2025 to restore fair competition, while the EU-Mercosur trade agreement will give specified South American ethanol volumes preferential access, intensifying competition among exporters targeting Europe.
