Insights into the Industry
Over the next few years, increased demands in the automotive and transportation industries to reduce carbon emissions from gasoline are projected to increase the use of ethanol as a bio-based additive.
The global fuel ethanol market was valued at USD 64.52 billion.
For the previous few years, the product’s main consumers have been North America, Europe, and Central and South America. China, India, and South Korea, for example, are major crude oil importers in the Asia Pacific region. The use of ethyl alcohol as a blending component may benefit these countries in terms of increasing energy security and vehicle economy.
In 2016, the United States had the greatest volume share of the global industry. Product demand is likely to be driven by technological advancements, the presence of key market players, and stringent limits on greenhouse gas emissions in the coming years.
In the United States, key players include Archer Daniels Midland Company, Pacific Ethanol, Inc., and Flint Hills Resources LP. Flint Hills Resources LP purchased Southwest Georgia Ethanol, LLC, an ethyl alcohol producing facility in Georgia, United States, in January 2015. The corporation wants to expand its footprint in the United States and meet expanding demand.
Pacific Ethanol, Inc. and Edeniq, Inc., a leading developer of ethyl alcohol processing technologies, signed a technology and licencing agreement in February 2017. This method allowed the company to use Edeniq’s Pathway and Cellunator technologies in Madera, California to produce cellulose-based ethyl alcohol.
In the United States, starch-based ethyl alcohol is widely used as a fuel additive. This product is made utilising dry milling technology with corn kernels as a feedstock. The country’s automakers approved the usage of E15 and E85 product blends regulated by the US Environmental Protection Agency in 2015. AUDI, FCA Group, and Ford Motor Company are among the major automakers that have approved the usage of E15 blend.
The raw material feedstock for ethanol production is renewable or biobased. The market is divided into three product areas depending on the feedstock type: starch-based, sugar-based, and cellulosic.
In 2016, the starch-based segment accounted for the greatest volume share of the global market. Furthermore, by 2025, it is expected to increase at a CAGR of 5.8 percent. Corn, wheat, barley, and cassava are used in the production of starch-based products. These goods have a high starch content and can help to significantly reduce greenhouse gas (GHG) emissions.
According to the United States Department of Energy, corn-based ethyl alcohol has reduced airborne emissions by approximately 20%. However, due to its high starch content and capacity to create ethyl alcohol with a high octane rating and good anti-knocking qualities, cassava as a suitable feedstock is likely to acquire relevance in emerging nations such as China and Thailand in the next years.
During the projection period, cellulosic or cellulose-based ethyl alcohol is expected to have substantial growth possibilities. Because it is made from bio waste such as wood chips, maize stover, wheat grass, and fruit peels, this segment is expected to develop the fastest during the projected period.
Insights into the Application
Ethanol fuel is widely used in the automotive and transportation industries. The conventional fuel vehicle segment was the industry’s largest application in 2016. This segment is expected to grow at a significant CAGR of 5.7 percent between 2017 and 2025 in terms of volume.
Gasoline with low ethanol mixes, such as E10 and E15, can be used in conventional automobiles. E10 is a mixture of 10% ethanol and 90% gasoline, while E15 is a mixture of 10.5 to 15% ethanol. Rising fuel economy regulations for conventional vehicles in nations such as the United States, China, India, and Brazil are likely to raise product use in the future.
During the forecast period, the flexible fuel vehicles (FFVs) segment is expected to increase at the quickest rate. These vehicles are powered by internal combustion engines that can run on gasoline as well as ethanol-gasoline blends higher than E10, such as E85, often known as flex fuel. E85 is a combination of ethanol and gasoline that contains between 51 and 83 percent ethanol.
The rapid manufacturing of FFVs in Brazil, the United States, and European Union countries is expected to increase the use of fuel ethanol in the next years. Cars built to run on E85 blend have been released by major automakers including as Dacia, Toyota Group, and Volvo. Space heating, steam generating, and power generation are some of the product’s other specialist applications.
The industry is likely to expand at a rapid pace, particularly in developing countries. Regulatory rules and mandates established on the use of gasoline ethanol in the automotive and transportation sectors in India, China, and Mexico are projected to increase long-term energy availability.
In 2016, North America held the greatest part of the entire market volume, accounting for 59.4 percent. Due to the presence of a well-established automotive industry and strong limits on particle emissions, this region is projected to be one of the fastest increasing customers of the product. This scenario is likely to play out in the United States.
Other North American countries, such as Canada and Mexico, have implemented numerous environmental regulations and programmes to boost industry growth. For example, Canada signed the Paris Agreement in 2016 and stated ambitious goals to reduce emissions by over 30% by the year 2030. This legislative scenario is expected to increase the use of low-carbon fuels and, as a result, have an impact on future ethyl alcohol consumption.
In 2016, Central and South America was the industry’s second-largest customer, followed by Europe. In the coming years, strong production of flexible fuel vehicles in Brazil and Argentina will likely stimulate demand for sugar-based ethanol fuel. Razen S.A., GranBio-API, and BP Biofuels are only a few of the market’s major participants.
During the projected period, Asia Pacific is expected to grow at the fastest rate. Over the next few years, an increase in foreign investment, combined with government policies promoting sustainable development, is likely to stimulate the usage of biofuels. This scenario is likely to play out in China, India, and certain Southeast Asian countries.
The market has a lot of fragmentation. The industry’s competitiveness is governed by product consumption and penetration in regional application sectors, the security of raw material feedstock, and a high degree of forward integration.
Some of the significant participants in the business include Archer Daniels Midland Company, Pacific Ethanol, Inc., Flint Hills Resources LP, E.I. du Pont de Nemours and Company, Cargill, Inc., Valero Energy Corporation, BP plc, and Razen S.A.