Key facts
- Vietnam will expand its fuel ethanol blending rates to 5% and 10% for all road fuels.
- The country's entire annual gasoline pool of 2.7 billion gallons will now require ethanol blending.
- Vietnam's total annual fuel ethanol demand is projected to be 243 million gallons starting in June.
- Approximately 160 million gallons of U.S. ethanol could be exported to Vietnam, valued at $300 million.
- Malaysia has removed import duties on U.S. denatured ethanol.
Vietnam has announced a significant shift in its fuel ethanol policy, mandating the integration of ethanol into its entire gasoline pool. The Ministry of Industry & Trade revealed a new roadmap that will expand the country's ethanol blending rates to 5% and 10% for all road fuels. This move is expected to create substantial demand for ethanol, particularly from U.S. producers.
Beginning in January, fuel distributors will transition RON95 gasoline to an E10 blend, with full compliance required by June 1. RON95 gasoline currently represents 80% of Vietnam's gasoline consumption. While E5 RON92, which accounts for 20% of consumption, can be sold until 2030, distributors are permitted to migrate it to E10 before then, with a full transition to E10 RON92 by 2031.
Caleb Wurth, USGBC regional director for Southeast Asia & Oceania, stated that Vietnam's entire annual gasoline pool of 2.7 billion gallons will now require ethanol blending. This is projected to result in a total annual fuel ethanol demand of 243 million gallons starting in June. With approximately 84 million gallons produced domestically, the potential export market for U.S. producers is estimated at 160 million gallons, valued at $300 million.
In parallel, Malaysia's recent U.S. – Malaysia Reciprocal Trade Agreement, announced in October, includes the immediate removal of import duties on U.S. denatured ethanol. While the tariff on undenatured ethanol will be reduced incrementally over nine years, this agreement is expected to enhance the competitiveness of U.S. producers in Malaysia's 4.5 billion-gallon annual gasoline market, opening avenues for blending in gasoline, sustainable aviation fuel, and bunker fuel.