Ethanol is a biofuel produced by fermentation of sugars that are found in grains like corn and sugarcane. It provides a clean, high-octane and renewable fuel for gasoline blended vehicles. The increasing global demand for renewable transportation fuels along with various government support measures have propelled the adoption of advanced biofuel policies like low carbon fuel standards that mandate use of ethanol blends like E10 and E15, thereby driving the growth of the ethanol market.
The global ethanol market is estimated to be valued at US$ 114.02 Bn 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.
Market key trends:
One of the key drivers of the ethanol market is the growing adoption of low carbon fuel standards and advanced biofuel policies across various countries. Many countries have established comprehensive fuel quality standards and programs to reduce dependence on fossil fuels and lower greenhouse gas emissions from the transportation sector. For instance, the Low Carbon Fuel Standard implemented in states like California mandates reducing the carbon intensity of transportation fuels by 10% by 2020. Similarly, the Renewable Fuel Standard in the US requires blending biofuels like ethanol in gasoline. Such policies have led prominent ethanol producers to increase investments and capacity expansion to cater to growing demand for corn and sugarcane-based ethanol. Rising focus on developing advanced biofuels from non-food feedstocks will further support the ethanol market over the forecast period.
Strength: Ethanol offers high octane energy and can replace toxic fuel additives. It is renewable fuel made from grains and cellulose materials.
Weakness: Ethanol fuel production competes with food crops for agricultural land and other resources limiting its production. Transportation and distribution of ethanol blends also add to costs.
Opportunity: Government policies and initiatives are promoting ethanol fuel blends to reduce dependence on fossil fuels and GHG emissions benefitting the market. Cellulosic ethanol from non-food sources provides new opportunities.
Threats: Fluctuating corn and grain prices impact ethanol production economics. Alternative renewable fuels like biodiesel pose competition. Technological improvements in electric vehicles also threaten long-term demand.
The global ethanol market is expected to witness high growth over the forecast period supported by various government initiatives and policies promoting cleaner burning renewable fuels. The global ethanol market is estimated to be valued at US$ 114.02 Bn in 2023 and is expected to exhibit a CAGR of 3.9% over the forecast period 2023 to 2030.
The United States currently dominates the market share owing to the mandatory blending rules and production subsidies aiding domestic ethanol production and consumption. Other major markets include Brazil and Europe witnessing steady growth.
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. These leading players are focusing on capacity expansions, new technologies and feedstock diversification including cellulosic ethanol to gain competitive edge.