Global Ethanol Market Outlook, 2029

Global Ethanol Market Outlook, 2029

Ethanol is predominantly produced through the fermentation of sugars found in plant materials. The most common feedstocks include corn, sugarcane, and various grains. The production process involves breaking down the sugars into ethanol and carbon dioxide through the action of yeast or bacteria. After fermentation, the ethanol is typically distilled to achieve the desired concentration. Ethanol can also be produced through advanced methods, such as cellulosic ethanol production, where non-food plant parts like stalks and leaves are used. This promotes a more sustainable approach as it utilizes agricultural waste and by-products. The ethanol industry has emerged as a key player in the global pursuit of sustainable energy solutions. Ethanol, a renewable biofuel derived primarily from plant materials, is gaining traction as a cleaner alternative to traditional fossil fuels. The ethanol industry has become a significant contributor to the global economy. The production and distribution of ethanol create jobs in agriculture, manufacturing, and transportation. Countries with strong agricultural sectors, such as the United States and Brazil, have seen substantial economic benefits from ethanol production. Furthermore, ethanol serves as a valuable export commodity, with countries engaging in international trade to meet domestic demand and take advantage of market opportunities. This economic interdependence helps foster global collaboration in the pursuit of sustainable energy solutions. One of the primary drivers behind the growth of the ethanol industry is its potential to reduce greenhouse gas emissions. When compared to traditional gasoline, ethanol has a lower carbon footprint, as the plants used to produce ethanol absorb carbon dioxide during their growth. This carbon-neutral cycle contributes to mitigating climate change and aligns with global efforts to transition to cleaner energy sources. However, it's essential to consider the full life cycle of ethanol production, including land use changes and the energy required for cultivation and processing. Sustainable practices and advancements in technology are crucial to ensuring that the overall environmental impact remains positive.

According to the research report, “Global Ethanol Market Outlook, 2029” published by Bonafide Research, the market is anticipated to cross USD 139 Billion by 2029, increasing from USD 104.56 Billion in 2023. The market is expected to grow with 5.05% CAGR by 2024-29. Governments around the world play a crucial role in fostering the growth of the ethanol industry. Many countries have implemented policies and incentives to promote the production and consumption of biofuels, including ethanol. These measures often include subsidies, tax credits, and mandates that require a certain percentage of biofuels in transportation fuels. Such policies create a favorable environment for ethanol producers, encouraging investment and innovation in the sector. The quest for energy security is another significant factor contributing to the growth of the ethanol market. As nations seek to reduce dependence on imported oil and ensure a stable energy supply, ethanol emerges as a reliable alternative. Ethanol can be produced domestically from locally sourced biomass, reducing reliance on foreign oil and enhancing energy security. Advancements in technology have played a pivotal role in boosting ethanol production efficiency and lowering costs. Innovations in fermentation processes, enzymatic conversion, and biorefinery technologies have led to increased ethanol yields and improved overall production sustainability. These technological breakthroughs have made ethanol more economically viable, contributing to its widespread adoption. Furthermnore, the growing global demand for renewable energy sources has led to an increased interest in ethanol as a clean and sustainable fuel. Industries are increasingly incorporating ethanol into their operations, and consumers are choosing biofuels for their vehicles. Ethanol-blended fuels, such as E10 and E85, are becoming more prevalent in the transportation sector, further propelling the growth of the ethanol industry.

Market Driverss
• Renewable Energy Policies and Regulations: Governments worldwide are implementing stringent environmental regulations and renewable energy policies to combat climate change. Many countries have set targets for increasing the share of renewable energy in their energy mix. Ethanol, as a biofuel, aligns with these goals and enjoys support through various mandates, incentives, and subsidies. These policies create a strong demand for ethanol, driving its production and consumption globally.
• Increasing Demand for Sustainable Transportation: The transportation sector is a significant contributor to greenhouse gas emissions. As the world seeks more sustainable alternatives, ethanol gains traction as a cleaner fuel option. Ethanol-blended fuels, such as E10 and E85, are increasingly being used in automobiles, contributing to reduced emissions. The rising awareness among consumers about the environmental impact of conventional fuels is fueling the demand for ethanol in the transportation sector.

Market Challenges
• Competition for Feedstock Resources: The production of ethanol relies heavily on agricultural feedstocks such as corn, sugarcane, and other crops. One of the major challenges for the ethanol industry is the competition for these feedstock resources. As the demand for biofuels increases, concerns arise about the potential impact on food production, land use, and food prices. Striking a balance between biofuel production and food security remains a significant challenge for the industry.
• Volatility in Raw Material Prices: The ethanol industry is sensitive to fluctuations in the prices of raw materials, particularly feedstocks like corn and sugarcane. Variability in weather conditions, geopolitical factors, and global commodity market dynamics can lead to price volatility, affecting the overall profitability of ethanol production. Managing these price fluctuations and ensuring a stable supply chain are ongoing challenges for ethanol producers.

Market Trends
• Advanced Biofuel Technologies: Ongoing advancements in biofuel technologies are driving the trend toward advanced and second-generation biofuels. These fuels, often produced from non-food feedstocks like agricultural residues, algae, or waste materials, offer enhanced sustainability and address some of the concerns associated with first-generation biofuels. The development and commercialization of these advanced technologies are expected to shape the future of the global ethanol market.
• Global Expansion of Ethanol Markets: The ethanol market is witnessing expansion beyond traditional strongholds like the United States and Brazil. Countries in Asia, Europe, and Africa are increasingly adopting ethanol as a part of their renewable energy strategies. The global expansion is driven by a combination of factors, including the desire to reduce carbon emissions, enhance energy security, and create new economic opportunities. This trend is fostering international collaboration and partnerships in the ethanol industry.

Covid-19 Impacts

The pandemic led to disruptions in global supply chains, affecting the ethanol industry's raw material supply and distribution networks. Lockdowns, restrictions on movement, and labor shortages disrupted the transportation of feedstocks, impacting ethanol production. This led to delays, increased costs, and uncertainties in the supply chain. With widespread lockdowns, travel restrictions, and a slowdown in economic activities, the demand for transportation fuels, including ethanol-blended fuels, significantly decreased. Reduced commuting, grounded flights, and decreased industrial activities resulted in a decline in overall fuel consumption. This drop in demand directly affected the ethanol market, as a significant portion of ethanol is used as a blending component in gasoline. The decreased demand for fuel, coupled with disruptions in supply chains, contributed to a decline in ethanol prices. As demand plummeted and production costs remained relatively stable, oversupply became a concern. Ethanol producers faced pressure on their profit margins, and some facilities temporarily shut down or reduced production to cope with the economic challenges. Some ethanol producers adapted to the changing market conditions by shifting their production focus. Some facilities pivoted to the production of sanitizers and disinfectants, leveraging ethanol's antiseptic properties. This move allowed certain ethanol producers to meet the heightened demand for hygiene products during the pandemic. Governments implemented various measures in response to the economic challenges posed by the pandemic. Some provided financial support and relief packages to ethanol producers to mitigate the economic impact. Additionally, regulatory adjustments, such as temporary waivers on biofuel blending requirements, were introduced in some regions to address the decreased demand for transportation fuels. As economies began to recover, there was a gradual rebound in fuel demand. However, the pace of recovery varied across regions and was contingent on vaccination rates, public health measures, and economic reopening. The ethanol industry demonstrated resilience by adapting to changing market conditions and implementing measures to ensure the safety of workers and maintain operational continuity.

Based on source, natural or bioethanol is the predominant type of ethanol used in various applications, including fuel blending, industrial processes, and beverages.

Natural ethanol is derived from renewable resources such as corn, sugarcane, or other biomass. As opposed to fossil fuels, which are finite and contribute to environmental issues, bioethanol represents a more sustainable and environmentally friendly option. The cultivation of crops for ethanol production also supports rural economies. One of the main advantages of natural ethanol is its lower carbon footprint compared to traditional fossil fuels. Bioethanol is considered a cleaner-burning fuel, as its combustion produces fewer greenhouse gas emissions. This characteristic aligns with global efforts to reduce carbon emissions and mitigate climate change. Natural ethanol, particularly in the form of ethanol blends with gasoline (such as E10 or E85), can be easily integrated into existing infrastructure and vehicle fleets. This compatibility allows for a gradual transition to renewable fuels without requiring extensive modifications to transportation systems. The natural ethanol production process allows for the utilization of a diverse range of feedstocks, including corn, sugarcane, sorghum, and cellulosic materials. This flexibility in feedstock selection provides resilience to changes in market conditions and helps address concerns related to resource availability and land use. Easy availability of corn and maize and development of efficient technologies across the globe have boosted the segment growth. Grain-based ethanol is majorly manufactured using the dry milling process and 1 bushel of corn can produce 2.86 gallons of denatured ethanol. Corn production is expected to slow down globally as manufacturers tackle problems associated with yields and saturation in demand. Sugar mills are now becoming one of the major avenues of ethanol production globally. Ethanol from molasses is being accepted globally and emerging countries are leading the race. The disinfectant and coalescing properties are driving the demand. The adoption of low-carbon fuel standards will propel the adoption of molasses feedstock for the synthesis of ethanol. The major problem associated with the sugar and molasses feedstock is the limitations concerning production. Sugarcane is a seasonal crop and it cannot be used continuously for the production.

The growth of starch-based feedstocks in the ethanol market is driven by their widespread availability, cost-effectiveness, and versatility in production, making them a key choice for ethanol production.

Chief among these factors is the widespread availability, cost-effectiveness, and versatility inherent in starch-based feedstocks, rendering them a highly attractive choice for ethanol production. Starch-based feedstocks, led by corn, have witnessed significant growth due to their abundant and consistent availability. Corn, in particular, is extensively cultivated globally, especially in regions like the United States, where it has become a primary feedstock for ethanol production. The vast scale of corn cultivation ensures a stable and substantial supply, a critical factor for sustaining the ethanol industry's demand. Moreover, the existing infrastructure and well-established processes for converting starches into ethanol further contribute to the appeal of starch-based feedstocks, making them a cost-effective option for producers. The versatility of starch-based feedstocks in ethanol production processes is another pivotal factor in their favor. These feedstocks offer efficient fermentation pathways, enabling the extraction of fermentable sugars essential for ethanol production. The well-defined and economically viable methods for converting starches into ethanol have streamlined production processes, making them more efficient and scalable. This efficiency is particularly significant as it aligns with the economic considerations of ethanol producers. Furthermore, the use of starch-based feedstocks allows for the generation of valuable co-products, such as distillers' grains, which find application as high-protein animal feed. This adds an additional layer of economic value to the overall ethanol production process, enhancing the cost-effectiveness and sustainability of utilizing starch-based feedstocks.

The growth of the automotive and transportation end-user segment in the ethanol market is primarily fueled by increasing global initiatives to reduce greenhouse gas emissions, where ethanol's role as a cleaner-burning and renewable fuel aligns with the sector's sustainability goals.

In response to escalating concerns about climate change and environmental degradation, the automotive and transportation sector is under increasing pressure to transition to cleaner and more sustainable fuel alternatives. Ethanol, derived primarily from renewable feedstocks like corn, sugarcane, or biomass, has emerged as a compelling solution in this transformative landscape. The combustion of ethanol produces significantly lower levels of greenhouse gases compared to conventional fossil fuels, making it a pivotal component in the industry's strategy to mitigate its environmental impact. Governments and regulatory bodies, recognizing the urgency of addressing climate change, have instituted various policies and incentives to incentivize the adoption of biofuels, including ethanol, within the transportation sector. Mandates requiring a certain percentage of biofuels in transportation fuels, alongside subsidies and tax incentives, have propelled the demand for ethanol-blended fuels like E10 and E85. This regulatory support not only underscores the commitment to cleaner energy sources but also amplifies the role of ethanol in achieving broader sustainability objectives. Furthermore, the seamless integration of ethanol blends into existing internal combustion engines and fuel infrastructure has facilitated the adoption of ethanol in the automotive and transportation sector. This compatibility minimizes the need for extensive modifications or investments in new infrastructure, presenting a practical and cost-effective solution for the industry. Ethanol's versatility as a fuel component contributes to its widespread adoption, providing a transitional pathway for the automotive sector as it navigates towards more sustainable practices. Collaborative efforts between the ethanol industry and the automotive sector highlight a shared commitment to advancing environmentally conscious fuel solutions. Research and development initiatives focusing on optimizing engine performance and efficiency with ethanol blends further underscore the industry's dedication to maximizing the benefits of ethanol as a cleaner-burning fuel. As the global automotive and transportation sector continues to evolve in response to environmental imperatives, the growth trajectory of ethanol in this end-user segment remains robust. Ethanol's attributes aligning with sustainability goals, regulatory support, and compatibility with existing infrastructure collectively position it as a key player in the automotive industry's pursuit of greener and more environmentally friendly fuel alternatives.

The growth of the E10 fuel blend in the ethanol market is driven by its widespread adoption as a cleaner-burning and renewable alternative to conventional gasoline, meeting regulatory requirements for ethanol blending while maintaining compatibility with existing infrastructure and internal combustion engines.

The surge in the popularity of the E10 fuel blend within the ethanol market is fundamentally rooted in its status as a cleaner and renewable alternative to traditional gasoline. E10, a blend of 10% ethanol and 90% gasoline, has become a widely accepted and implemented solution to address environmental concerns associated with fossil fuels. Governments and regulatory bodies across the globe have recognized the environmental benefits of ethanol and have implemented mandates requiring a certain percentage of biofuels in transportation fuels, commonly achieved through E10 blending. This regulatory support serves as a primary driver for the growth of E10, positioning it as a key component in meeting sustainability goals and reducing the carbon footprint of the transportation sector. One of the critical advantages contributing to the widespread adoption of E10 is its compatibility with existing infrastructure and internal combustion engines. Unlike higher ethanol blends, such as E85, E10 can be seamlessly integrated into the current fuel distribution systems and does not require modifications to most conventional vehicles. This compatibility makes E10 an attractive option for both fuel producers and consumers, allowing for a smoother transition to cleaner-burning fuels without necessitating extensive changes to the existing fueling infrastructure. Moreover, the production and distribution of E10 are economically viable and well-established, further fueling its growth. The established processes for blending ethanol with gasoline make E10 a cost-effective option for fuel producers. Additionally, the ability to utilize existing pipelines, storage tanks, and fueling stations minimizes the need for substantial investments in new infrastructure, facilitating a more efficient and economical transition to ethanol-blended fuels. Consumer acceptance and awareness also play a pivotal role in the growth of E10. The familiarity of E10 with consumers, coupled with its proven track record of performance and reliability, contributes to its widespread use. Consumers benefit from the environmental advantages of E10 without experiencing the challenges associated with higher ethanol blends, such as E85.

North America is leading the global ethanol market in 2023 owing to the rapidly growing personal care industry, coupled with the increasing demand for disinfectants to avoid the spread of the coronavirus, will fuel the market growth.

The growth of the ethanol market in North America is primarily driven by robust government support and regulatory initiatives, including Renewable Fuel Standards (RFS) and blending mandates, fostering a favorable environment for ethanol production and consumption. North America has emerged as a significant growth center in the ethanol market, propelled by a strong foundation of government support and regulatory frameworks that incentivize the production and use of ethanol. The implementation of Renewable Fuel Standards (RFS) in both the United States and Canada stands out as a pivotal driver. These standards mandate a certain volume of renewable fuels, including ethanol, to be blended into transportation fuels. In the United States, the Renewable Fuel Standard program, established by the Environmental Protection Agency (EPA), sets annual blending targets, providing a clear and stable regulatory environment for ethanol producers. This commitment to blending mandates creates a reliable market for ethanol, encouraging investment and innovation in the industry. Furthermore, various state-level initiatives and incentives complement federal regulations, amplifying the overall support for ethanol. States such as Iowa, a significant ethanol-producing state, have implemented additional measures to promote the growth of the ethanol industry, including tax credits and infrastructure development support. This layered approach of federal and state support creates a comprehensive framework that nurtures the ethanol market's expansion. The transportation sector's increasing focus on reducing carbon emissions aligns with the clean-burning characteristics of ethanol, further boosting its demand. Ethanol-blended fuels, such as E10, have become commonplace in North America, with consumers and industries adopting these blends as a means of achieving environmental sustainability goals. The widespread acceptance and use of ethanol-blended fuels contribute to the overall growth of the ethanol market, driven by consumer preferences for cleaner and more sustainable energy options. Additionally, the agricultural abundance in North America, particularly in the United States, provides a steady and ample supply of feedstocks such as corn for ethanol production. This ensures a stable raw material base for the ethanol industry, contributing to the region's capacity for large-scale production.

Key producers operating in the market are Cargill Corporation, Ace Ethanol LLC, Grain Processing Corporation, and Shree Renuka Sugars Ltd. These companies are involved in capacity improvement, product innovation, acquisitions, mergers, and collaborations in the market. In February 2020, Shree Renuka Sugars Ltd. expanded its production capacity from 720 kiloliters per day to 970 kiloliters per day. Increased adoption of eco-friendly products is expected to provide new growth avenues for the market players. The recent developments in the global market have brought about changes in the value chain. Initially, manufacturers relied on 2 to 3 suppliers for the raw materials and there is a risk involved as contingency plans cannot always work out. Manufacturers are now looking at options to reduce the risk by acquiring stakes in raw material companies or by entering into forward agreements. Manufacturers are currently considering ways to lower the risk, such as buying stock in raw material businesses or signing forward contracts. Initially, manufacturers relied on two to three suppliers for raw materials, which poses a risk because contingency plans do not always work. Manufacturers are now looking into ways to reduce risk, such as acquiring stakes in raw material companies or entering into forward contracts.
• In May 2023, British Petroleum, a leading ethyl alcohol producer, plans to buy stakes in biofuel feedstock producers and invest directly in farming ventures to secure supplies as the global race for the low-carbon fuel speeds up. The company claimed to increase biofuel output three-fold by 2030 to 100,000 bpd, or roughly 4.5 million tons per year.
• In March 2023, Wilmar Group Company Shree Renuka Sugars Ltd. announced its plan to increase the production of ethanol by 25% next year as part of its initiative towards green energy.
• In February 2023, Kemin Industries introduced FermSAVER, a tea-extract product used in yeast fermentation for ethanol production, as part of its expanding Kemin Bio Solutions portfolio.
• In 2023, Jagatjit Industries, based in Punjab, India, announced a massive investment to set up a grain-based ethanol production plant. With profit goals at the core, they aim to expand by catering to the growing demand for green fuels.
• In 2023, Krishak Bharti Co-operative Ltd (KRIBHCO) invested around USD 11600 million to set up a grain-based ethanol production plant in the Indian states of Gujarat, Telangana and Andhra Pradesh with a production of 250 Kiloliter/ day.


Considered in this report
• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in this report
• Ethanol market Outlook with its value and forecast along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Sources
• Natural
• Synthetic

By Feedstock
• Starch Based
• Sugar Based
• Cellulose Based
• Others

By End Use
• Automotive and Transportation
• Alcoholic Beverages
• Cosmetics
• Pharmaceuticals
• Others

By Fuel Blend
• E5
• E10
• E15 TO E70
• E75 TO E85
• Others

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Ethanol industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.***Please Note: It will take 48 hours (2 Business days) for delivery of the report upon order confirmation.