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Market Overview

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The global transportation grade bioethanol market, valued at $64.01 billion in 2021, is projected to grow at a compound annual growth rate (CAGR) of 5.4% and reach $106.78 billion by 2031.

Bioethanol serves as a major alternative to gasoline in road transport vehicles. Energy or fuel crops such as sugarcane, corn, and wheat are the primary sources of sugar required for bioethanol production. However, current research and development activities are focused on utilizing municipal solid waste for bioethanol fuel production. Bioethanol is replacing lead as an octane enhancer in petrol. The International Energy Agency reports that the transport sector relies heavily on fossil fuels, leading to 37% of CO2 emissions from end-use. By using bioethanol, some of these emissions can be reduced as the fuel crops absorb CO2 during their growth.

The transportation grade bioethanol market is expected to experience robust growth due to the adoption of bioethanol fuel blends mandated by many countries. These mandates aim to reduce greenhouse gas (GHG) emissions and improve vehicle fuel efficiency. For example, the Canadian Clean Fuel Standard requires liquid fuel suppliers to gradually decrease the carbon content of their fuels, resulting in a 13% reduction in CO2 emissions from liquid fuels used in Canada by 2030. Additionally, India plans to achieve a 20% ethanol blend in petrol by 2025. In Europe, the Renewable Energy Directive 2009/28/EC (RED), the Fuel Quality Directive (2009/30), and the Biofuels Directive (2003/30) support the consumption of bioethanol, influencing the global market size. Moreover, according to the Organisation Internationale des Constructeurs d’Automobiles (OICA), global automotive production increased by 3% in 2021 compared to 2020, further driving the demand for liquid biofuels, including bioethanol and biodiesel.

Bioethanol is derived from biological materials such as vegetable oils, corn, and sugarcane, and it is primarily used as a substitute for depleting fossil fuels. However, in some countries, the biofuel market is still in its early stages and requires government support through tax incentives and other measures. As biofuel raw materials come from agriculture, it is crucial to provide adequate incentives for farmers to cultivate biofuel crops while ensuring food security. Various countries and regions, including the U.S., Brazil, the Philippines, China, and the European Union (EU), have implemented biofuel policies that regulate crop production and the conversion of biomass into transportation-grade biofuels.

Research and development efforts are focused on developing new technologies to address rising concerns regarding carbon emissions and environmental sustainability. For example, researchers are exploring enhanced bioethanol synthesis using lignocellulosic materials, which involves pre-treating biomass, extracting fermentable sugars, and distillation.

Furthermore, the transportation grade bioethanol market has the potential to significantly reduce global dependence on fossil fuels and contribute to greenhouse gas emission reduction.

The shift towards green, eco-friendly, and sustainable technologies creates substantial sales and financing opportunities, driven by the global focus on achieving net-zero carbon emissions. This transition is particularly noticeable in North America, Europe, and select Asian countries.

The COVID-19 pandemic has adversely affected people’s lives worldwide. Government restrictions and reduced mobility have led to decreased fuel requirements. Consequently, corn-based fuel production has been impacted, with several ethanol plants reducing or suspending their operations globally. This downturn has negatively affected companies operating in the bioethanol and biodiesel market. For example, CropEnergies, a subsidiary of German sugar producer Suedzucker, reported a 46% year-on-year decrease in operating profit during the first quarter of 2020-2021. However, as lockdown measures ease, companies are gradually recovering.

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Market Segmentation

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The market is segmented based on various factors, including raw material, fuel blend, end use, and region.

Segmentation by End Use
Passenger Vehicles
Light Commercial Vehicles
Medium and High Commercial Vehicles
Aviation

Segmentation by Raw Material
Sugarcane
Corn
Wheat
Others

Segmentation by Fuel Blend
E5
E10
E15 to E75
E85 to E100

Segmentation by Region
North America – U.S., Canada, and Mexico
Europe – Germany, France, Italy, Spain, and Rest-of-Europe
China
U.K.
Asia-Pacific and Japan – Japan, India, Thailand, Australia, and Rest-of-Asia-Pacific
Rest-of-the-World

The passenger vehicles segment is expected to dominate the transportation grade bioethanol market in the end-use sector. In 2021, this segment accounted for the highest value and volume in the overall market, and it is projected to maintain its dominance until 2031. This growth can be attributed to the increasing demand resulting from blending mandates and passenger vehicle sales. The utilization of bioethanol fuel is anticipated to rise globally, further bolstering the position of the passenger vehicle segment.

Sugarcane is expected to maintain its dominance in the market from 2022 to 2031. As one of the most widely grown agricultural crops worldwide, sugarcane plays a significant role in the production of transportation grade bioethanol. Sugarcane molasses, a byproduct of sugarcane processing, is utilized in the production of bioethanol.

In terms of fuel blend, E10 is estimated to lead the transportation grade bioethanol market. E10, which consists of 10% ethanol and 90% gasoline, is the most common blend. It held the largest market share in 2021 and is projected to continue leading during the forecast period (2022-2031). E10 does not require modifications to vehicle engines and is compatible with most gasoline-powered vehicles on the road today, driving its higher demand.

North America emerged as the leader in the transportation grade bioethanol market in 2021 and is expected to maintain its dominant position throughout the forecast period (2022-2031). This is primarily due to the presence of significant players such as Archer-Daniels-Midland Company, POET LLC, BlueFire Renewables Inc., Aemetis, Inc., among others. The transportation grade bioethanol market holds a prominent share in regions/countries including North America, China, Asia-Pacific and Japan, and Europe. The market’s growth is fueled by stringent government regulations on carbon emissions, technological advancements, and increased adoption of greener technologies, driving the demand for bioethanol in the forecast period (2022-2031).

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Competitive Landscape

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The selection of the profiled companies was based on inputs obtained from primary experts, as well as an analysis of company coverage, product portfolio, and market penetration.

Sugarcane is the primary source for the production of transportation-grade bioethanol. Sugarcane molasses, a by-product of sugarcane processing, is utilized in the production of bioethanol. The market for transportation-grade bioethanol is segmented based on raw materials, including sugarcane, corn, wheat, and others. Currently, sugarcane holds the dominant position in the market, accounting for approximately 60% of the market share.

Key companies profiled in this report include CropEnergies AG, Cristal Union, Archer-Daniels-Midland Company, Petrobras, Tereos S.A, Alcogroup S.A., Vivergo Fuels Limited, BlueFire Renewables Inc., Pannonia Bio Zrt., Aemetis, Inc., BP p.l.c., POET, LLC, Green Plains Inc., Valero Energy Corporation, Raizen S.A., GranBio, Vertex Bioenergy, Beta Renewables S.p.A., Tezkim, Almagest.

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Recent Industry Developments

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In December 2021, an agreement was signed between Gujarat Alkalies and Chemicals Ltd. and GAIL India to establish a bioethanol plant in Gujarat with an investment of $135.2 million (?1,000 crore).

In June 2021, Rayonier Advanced Materials Inc. entered into a long-term off-take agreement to procure 2G bioethanol from a petrochemical company. The funding for this project was planned to be predominantly sourced through low-cost green loans.

Also in June 2021, ASN Fuels Pvt Ltd. declared its focus on exploring new opportunities to produce ethanol from agricultural waste, specifically lingo-cellulosic biomass, in collaboration with IIT-Tirupati.

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Key Questions Answered

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What are the major factors and trends influencing the adoption and consumption of bioethanol fuel in the transportation sector?

What are some key initiatives undertaken by existing players to enhance their market position, and what strategies are new players adopting as they enter the market?

Which fuel blends, applications, and raw materials are leading in the market, and how will they evolve in the future?

What are the latest developments regarding the development of bioethanol in different countries, and what are the consumption patterns?

How has the COVID-19 pandemic affected the global transportation-grade bioethanol market?

What are the main barriers hindering the adoption of bioethanol in different regions and countries?

Are there any government regulations globally that impact the transportation-grade bioethanol market?

How has the Russia-Ukraine war influenced the global transportation-grade bioethanol market?