On December 5, the European Union and Mercosur, a South American trade bloc that includes Argentina, Brazil, Paraguay, and Uruguay, finalized a new trade agreement that could significantly impact ethanol imports into the EU. According to a fact sheet from the European Commission, the deal includes a reduction in ethanol duties, which is expected to support job creation within the EU. One of the key provisions of the agreement is the establishment of a duty-free quota of 450,000 metric tons of ethanol, designated for use by the chemical industry. In addition, a separate quota of 200,000 metric tons will be gradually phased in over five years for all other uses, including fuel. The fuel segment is the largest consumer of ethanol in the EU, with 4 million metric tons of the 6 million metric tons of ethanol consumed annually in Europe used in fuels.

Despite the potential economic benefits, the European Renewable Ethanol Association (ePURE) has strongly criticized the agreement, calling it a "bad deal" for the EU's renewable ethanol sector, European farmers, and the broader goal of achieving strategic industrial and agricultural autonomy. ePURE contends that the deal allocates a substantial share of the EU ethanol market to Mercosur countries, estimating that the agreement could account for 12% of total EU production capacity. Furthermore, ePURE points out that the EU ethanol market is already fully open to imports from a variety of countries and is not experiencing significant growth. In addition to these concerns about market share, ePURE has raised alarms about EU policies that have restricted ethanol consumption and production. The association argues that these policies, along with the Mercosur agreement, could jeopardize investments, jobs, and the EU’s energy independence and food security. It also warns that the agreement undermines efforts to decarbonize industries such as aviation, maritime, and chemicals.

ePURE has called on the EU to develop a more coherent and visionary plan that would allow EU producers to compete on equal terms with Mercosur countries. The association believes that without such a strategy, the EU risks losing out on its renewable energy and agricultural goals.

On the other hand, the Brazilian sugarcane industry association, UNICA, has expressed support for the trade deal, highlighting the new opportunities it creates for Brazil's sugar and bioenergy sectors. UNICA notes that the agreement will enable Brazil to expand its market presence in Europe, diversify exports, and enhance the competitiveness of its sugar-energy industry, which remains committed to sustainable production and a low-carbon economy.

As the agreement moves forward, the EU will face the challenge of balancing economic opportunities with the protection of its domestic industries and ensuring fair competition in the ethanol market.