by The ethanol market has witnessed significant growth in recent years owing to various factors such as growing demand for fuel ethanol in transportation, increasing adoption of E10 and E15 fuel blends across regions such as North America and Europe. Ethanol is primarily used as a biofuel and fuel oxygenate which reduces vehicle emissions and enhances air quality. It is produced by fermentation of sugar and starch crops such as corn, sugarcane, and cellulosic materials. Ethanol fuel is considered environment-friendly and a renewable alternative to gasoline.
The global ethanol market is estimated to be valued at US$ 114.02 billion in 2023 and is expected to exhibit a CAGR of 3.9% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
The global ethanol market is driven by growing blending mandates and blending targets set by governments across regions. Various countries have implemented mandatory blending targets for biofuels including ethanol to reduce dependence on fossil fuels and curb carbon emissions from the transportation sector. For instance, the US has instituted a blending mandate requiring transportation fuel to contain a minimum of 10% ethanol, also known as E10. Similarly, Brazil has set a mandatory blending target of 27% ethanol in gasoline. Growing emphasis on reducing carbon footprint and curtailing air pollution is prompting policymakers to increase blending mandates which is positively impacting the ethanol market.
Market Dynamics:
Growing blending mandates is one of the primary drivers propelling the ethanol market. Various countries have instituted minimum blending mandates to increase the usage of biofuels including ethanol. For instance, implementation of E10 blending in the US and increased blending targets in Brazil and China are augmenting the demand for fuel ethanol. In addition, favorable government policies and subsidies to support ethanol production is also boosting the market. However, price volatility of feedstock including corn and sugarcane poses challenges to market players regarding rising production costs. Moreover, limitations in the infrastructure for transportation and storage of ethanol fuel also hinders market growth. Ongoing research & development in cellulosic ethanol and technological innovations to produce ethanol from non-edible feedstock provide lucrative opportunities for ethanol market expansion over the forecast period.
Segment Analysis
The global ethanol market is dominated by the fuel additive segment which holds around 85% of the total market share. Ethanol is predominantly used as a gasoline additive or fuel extender to increase octane and improve vehicle emissions. It serves as an effective substitute for gasoline with relatively high octane rating but lower carbon intensity and greenhouse gas emissions. Various governments across countries like US, Brazil etc actively promote ethanol blending in gasoline to reduce dependence on crude oil imports and curb air pollution.
PEST Analysis
- Political: Countries like US and Brazil provide subsidies and tax incentives to support domestic ethanol production. They have also mandated blending of ethanol in gasoline to around 10% level.
- Economic: Ethanol serves as a cheaper gasoline alternative and also provides income and employment in the agricultural sector. It helps in moderating international crude oil price volatility.
- Social: Use of ethanol fuel reduces vehicle emissions and improves local air quality. It also promotes rural economy.
- Technological: Continued innovation to improve crop yields and develop advanced ethanol production technologies from cellulosic feedstocks can further reduce costs and drive commercialization.
Key Takeaways
The global ethanol market is estimated to reach a value of US$ 114.02 Billion by 2024. The global ethanol market is estimated to be valued at US$ 114.02 billion in 2023 and is expected to exhibit a CAGR of 3.9% over the forecast period 2023 to 2030.
Regional analysis shows that the North America dominates with a share of over 50% due to large scale corn-based ethanol production and Government blending mandates in US and Canada. Brazil is the second largest producer led by sugarcane-based fuel ethanol.
Key players operating in the ethanol market are Archer Daniels Midland Company (ADM),Valero Energy Corporation,Green Plains Inc.,Flint Hills Resources LP,POET LLC. Archer Daniels Midland Company (ADM) is the leading ethanol producer globally with an annual capacity of over 2.2 billion gallons across 21 dry mill and wet mill plants located in US. Valero Energy Corporation operates 11 biofuel production facilities in US, Canada and UK with consolidated annual ethanol production capacity of around 1.6 billion gallons.
