Global Ethanol Market Growth – Enabling Sustainable Decarbonization of Environment

The application range of ethanol is extensive and covers fuel ethanol towards which 73% of the global ethanol production is utilized, followed by beverage alcohol which occupies takes up 17% of the global ethanol production, and then by various industrial applications which are taken contributed by 10% of global ethanol production. Further, there have been an increasing degree of investments and eagerness towards R&D due to the unchecked depletion of fossil fuel reserves and stringent environmental legislation which necessitates identifying new alternative energy sources. To this end, it is important to note that one such promising alternative to nonrenewable fossil fuels are biofuels. In view of above ethanol has been deemed to be of great potential as an environmentally clean and sustainable transportation fuel to replace petroleum fuel.

ethanol market

Energy is fundamental to socio-economic development and instrumental in the achievement of various milestones in every walks of life.  Transport is integral to economic and social development that brings about newer opportunities and empowers economies around the world to be more competitive and plays an important role in poverty reductions and aid progression towards sustainable goals.  According to the World Bank transport accounts for approx. 64% world oil consumption, 27% of all energy utilization, 23% of CO2 emissions that are related to energy, among others. Air pollution that stems from motorized road transport has been linked to a broad range of health conditions, constituting cardiovascular and pulmonary diseases. Every year, about 185,000 deaths can be directly ascribed to pollution from automobiles. Furthermore, with the advent of rapid urbanization will come unprecedented rates of motorization which would lead to an estimated number of 2 billion vehicles on the road by 2050.

By Application, the fuel segment is anticipated to hold a significant market share which is expected to augment the growth of the global ethanol market

Considering the aforementioned scenario, the need for developing renewable sources has been felt more than ever.  One particular means of minimizing fossil fuel consumption is by utilizing biofuels that are derived from renewable resources. It is widely accepted that biofuels are an excellent alternative to traditional fossil fuels, mainly because they can be obtained from large available and renewable feedstock, as biomass, and their utilization aid in the emission of relatively lower levels or negligible levels of greenhouse gas and other pollutants.  In the transportation sector, bioethanol can be used as a substitute for gasoline since it was the ethanol in an automobile engine as a pioneering fuel. Earlier, during 1970, when there was an oil crisis, bioethanol was considered a potential fuel. Ethanol has a highly oxygenated molecule that has the potential to reduce the emission of dangerous gasses such as carbon monoxide and unburnt organic compounds. Apart from environmental advantages, bioethanol is an effective source of powerful employment generation.

The farming of sugarcane is a source of income for people living in rural areas. Bioethanol is an attractive substitute for the traditional transport fuel due to its high number of octane and elevated heat of vaporization. Moreover, its combination along with gasoline elevates the octane number without the aid of any undesirable constituents. As an example of a recent government initiative that underscores the degree of cognizance of ethanol as a potential transport fuel, India’s National Biofuel Policy, 2018 had forecasted a 20% national average ethanol-gasoline blend by 2030. Further the Government of India, to reduce vehicular emissions and thus minimize air pollution had reportedly proposed to further the blend mandate by 2025. Consequently, in December 2020, the Ministry of Road Transport and Highways published a Draft Automotive Industry Standard (AIS) with the purpose to introduce E-85 and E-100 vehicles in the regions that have ethanol surplus.

World Ethanol Projections (Consumption)

ethanol market

In bln L

Source: OECD-FAO Agricultural Outlook

By Source the natural segment is projected to hold a substantial market thereby propelling the growth of the global ethanol market

Out of all biofuels, bioethanol has received special attention, because it is the most widely used liquid biofuel for motor vehicles and for the production of “green” energy, and such a growing number of uses have been key determinants for the rapid biofuel market growth. Presently, the raw biomass materials that can be used for bioethanol production are divided into three categories, which are namely (a) oleaginous biomass that comprises sugar cane, sugar beet, potato, corn, etc., (b) lignino-cellulosic biomass that constitutes lignino-cellulosic waste, wood waste, etc. and (c) non-food crop biomass that consists marine algae biomass. The initial driving factors which are at the core driving the biofuel production is to mitigate the greenhouse gas as far as the developed economies are concerned and with regards to the less developed low and middle countries the preliminary driving forces were reducing energy scarcity, foreign energy dependence, earn foreign exchange achieved by exporting biofuels and generating employment to the local communities. In this regard certain estimates by the OECD-FAO AGRICULTURAL OUTLOOK 2020-2029 are relevant. For instance, the global sugarcane use in biofuel is expected to increase to approx. 25% in 2029 from 23% estimated for 2020.

This stems from the RenovaBio program of Brazil and its expansion that aims to minimize GHG emissions from transportation fuel by 2028. The fuel ethanol consumed in Brazil is either in the form of pure anhydrous ethanol fuel or in the form of a blend with gasoline. The lower taxes incentivize higher uses of ethanol which renders ethanol a more competitive alternative than fossil fuel. As far as the Asian nations are concerned, sugarcane molasses is the preferred feedstock in ethanol production as opposed to sugar cane because increasing sugar cane production has the potential to affect cereal production for food consumption due to the need for additional lands thus threaten food security. The APAC region is forecasted to account for 33% of the global growth in ethanol use. With regards to North America, the production of ethanol is forecasted to attain volumes of 65.5 Billion liters (bln L) which is an increase by approx. 6% by 2029 and the consumption of ethanol is projected to increase to 59.8 bln L by 2029 from 55.4 bln L. The world ethanol production is forecasted to attain a volume of 140 bln L by 2029.