Bioethanol Market Size, Share & Industry Analysis, By Feedstock (Starch based, Sugar based, and Others), By Application (Transportation Fuel, Power Generation, Cosmetic, Pharmaceutical, and Others), and Regional Forecast, 2024-2032

The global bioethanol market size was valued at USD 75.96 billion in 2023. The market is projected to grow from USD 80.47 billion in 2024 to USD 121.93 billion by 2032, growing at a CAGR of 5.33% during the forecast period.

Bioethanol, also called ethanol, is a renewable energy feedstock made by fermenting and distilling the sugar and starch components of organic matter such as sugarcane, potatoes, and crops such as maize. Depending on the agricultural structures of the producing country, it might also be made from cassava flour, milk, grain, rice, bananas, grapes, or even dates. Bioethanol has multiple uses, such as making transportation more sustainable in ethanol-gasoline fuel blends for vehicles. Additionally, it serves as a clean alternative to traditional cooking techniques, helping to reduce indoor pollution. Beyond its use in energy, it has applications in the medical, cosmetic, and food and beverage industries as well.

The COVID-19 pandemic significantly impacted the global bioethanol market, leading to both challenges and opportunities. During the early stages of the pandemic, demand for bioethanol, particularly as a fuel additive, witnessed a sharp decline due to reduced transportation activity and economic slowdowns. Many production facilities faced shutdowns or operations reductions due to government regulations and labor shortages. Bioethanol prices experienced price volatility due to supply and demand imbalances. Prices initially dropped due to reduced demand but later faced upward pressure as supply chains struggled to recover. Moreover, economic uncertainty led to reduced investment in new projects as companies focused on navigating the immediate challenges by the pandemic.

Bioethanol Market Trends

Growth of Advanced Bioethanol Technologies Driving Demand for Bioethanol

Advanced technologies, such as cellulose-based ethanol and algae-based ethanol, represent a significant opportunity for the market. These technologies use non-food biomass and waste materials, addressing concerns related to food competition and improving the environmental sustainability of ethanol production. Cellulosic ethanol is produced from non-food biomass, such as agricultural residues, wood chips, and dedicated energy crops. This approach reduces competition with food crops and leverages waste materials, making the production process more sustainable. For instance, The U.S. Department of Energy (DOE) reports that cellulosic ethanol has the potential to produce up to 100 billion gallons of fuel annually in the U.S., using agricultural residues and other non-food feedstocks. Improvements in enzyme technology and fermentation processes have significantly decreased production costs, making cellulosic ethanol more economically viable and boosting market potential.

Moreover, advances in enzyme technology and fermentation processes are making cellulosic ethanol production more efficient and cost-effective. According to the National Renewable Energy Laboratory (NREL), advancements in enzyme technology have reduced the cost of producing cellulosic ethanol by over 50% in the past decade, from around USD 3.50 per gallon to under USD 1.75 per gallon.

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Bioethanol Market Growth Factors

Rising Demand for Clean and Renewable Energy to Augment Market Growth

The growing global concern over climate change and the need to reduce dependence on fossil fuels has led to an increased demand for clean and renewable energy feedstocks. According to the International Energy Agency (IEA), the global energy sector needs to cut emissions by about 70% by 2050 to meet climate goals. The adoption of ethanol as a cleaner fuel contributes to this reduction. Bioethanol, a renewable fuel that can reduce greenhouse gas emissions compared to conventional fossil fuels, is well-positioned to meet this demand. It can reduce carbon dioxide emissions by up to 40% compared to gasoline, depending on production methods and feedstock used. This environmental benefit aligns with global efforts to mitigate climate change.

Significant investments are being made in advanced technologies, such as cellulosic ethanol, which uses non-food biomass and has even lower carbon emissions. Moreover, major global corporations, particularly in the automotive and energy sectors, are increasingly committing to sustainability goals that include the use of biofuels. For instance, car manufacturers are developing vehicles compatible with higher ethanol blends.

In 2024, LanzaTech, known for its gas fermentation technology, partnered with ArcelorMittal, a major steel manufacturer, to develop a new facility for producing cellulosic ethanol from industrial waste gases. This investment aims to use LanzaTech’s technology to convert carbon monoxide from steel production into ethanol, addressing both waste and emissions issues. The partnership has secured funding of over USD 100 million, which will be used to build and scale up this new production facility. The project is expected to produce significant quantities of cellulosic ethanol, demonstrating the potential of integrating industrial waste with advanced technology.

Additionally, companies are investing in research and development to improve production efficiency and reduce costs. Innovations in enzyme technology and fermentation processes are expected to enhance the bioethanol market growth rate prospects.

Improved Government Policies and Regulations to Reduce Dependence on Fossil Fuel Consumption Spurs Product Adoption

Government policies and regulations play a crucial role in driving the global bioethanol market. Many countries have set ambitious targets for reducing greenhouse gas emissions and increasing the use of renewable energy feedstocks. Bioethanol, being a renewable fuel derived from biomass, fits well with these strategies.

For instance, in the U.S., the Renewable Fuel Standard (RFS) mandates the blending of renewable fuels, including bioethanol, with gasoline. The Environmental Protection Agency (EPA) has set targets for biofuel usage through 2025 and is supporting market growth in U.S. states. According to the Renewable Fuels Association (RFA), U.S. bioethanol production reached approximately 15 billion gallons in 2023, supported by favorable policies and demand for lower-carbon fuels.

The European Union has also established renewable energy targets under the Renewable Energy Directive (RED II), which includes increasing the use of biofuels. The RED II aims for a 32% share of renewable energy in the EU's total energy consumption by 2030. Moreover, the recent updates to the EU's RED II include stricter sustainability criteria for biofuels, which are expected to drive further adoption of advanced industry technologies.

In Latin America, Brazil has been a pioneer in bio-ethanol production with its Proalcool Program, which started in the 1970s. The country continues to support ethanol production and use through blending mandates and incentives, reinforcing its position as a leading global producer.

Overall, government policies and regulations are fundamental to propelling the bio-ethanol market by setting blending mandates, supporting renewable energy targets, and providing economic incentives. These measures create a favorable environment for the growth and adoption of bio-ethanol as a key component of global renewable energy strategies.

RESTRAINING FACTORS

Feedstock Availability and Competition with Food Production Hampering Market Growth

Bioethanol production relies on agricultural feedstocks such as corn, sugarcane, and other crops. The competition between using these crops for fuel versus food raises several concerns, including potential increases in food prices and challenges in ensuring a stable supply of feedstock.

According to the World Bank, fluctuations in biofuel production can significantly affect global food prices. For example, the surge in corn ethanol production in the U.S. has been linked to rising corn prices, which can impact global food markets. Brazil, a leading producer of ethanol from sugarcane, faces challenges related to feedstock availability due to fluctuations in sugarcane yields and competition with sugar production. The Brazilian government is exploring ways to balance ethanol production with raw material supply.

Moreover, a report from the International Food Policy Research Institute (IFPRI) indicated that increases in ethanol production have led to higher corn prices, which in turn affect food products that use corn as a primary ingredient. The corn prices have experienced significant fluctuations over the past few years, with notable increases during periods of high ethanol production. For instance, corn prices spiked by approximately 20% in 2023 compared to previous years, driven by increased ethanol production.

Bioethanol Market Segmentation Analysis

By Feedstock Analysis

Starch-based Segment Dominates the Market due to the High Availability of Corn across Major Countries

Based on feedstock, the market is divided into starch based, sugar based, and others.

Starch based ethanol is produced from crops that are rich in starch, such as corn (maize), wheat, and barley. In the global bioethanol market, starch-based ethanol, particularly from corn, dominates due to the high availability of corn and established infrastructure. The U.S. has a well-developed infrastructure for corn-based ethanol production, including production facilities, distribution networks, and blending infrastructure, making it a dominant feedstock. Supportive policies, such as the Renewable Fuel Standard (RFS) in the U.S., drive the demand for corn-based ethanol by setting specific targets for ethanol blending in gasoline, ensuring a stable market.

Sugar based ethanol is derived from sugar crops, such as sugarcane and sugar beets. The primary feedstock for sugar-based ethanol is sugarcane, especially in Brazil. Sugarcane has a high sugar content, which makes it highly efficient for ethanol production. The high yield of ethanol per ton of feedstock contributes to its cost-effectiveness. Brazil has a long-standing policy supporting ethanol production from sugarcane, including tax incentives and blending mandates. Brazil produced over 30 billion liters of ethanol in 2023, with the majority coming from sugarcane. This highlights the significant role of sugarcane-based ethanol in the global market.

By Application Analysis

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Transportation Fuel Leads due to Wide-scale Adoption for Fuel Additive

Based on application, the market is classified into transportation fuel, power generation, cosmetic, pharmaceutical, and others.

The transportation fuel segment holds the largest bioethanol market share of the market, as bio-ethanol is widely used as a fuel additive to reduce vehicle emissions and enhance fuel octane. The primary driving factor in the segment is the global push toward reducing greenhouse gas emissions and achieving greater energy security. Policies such as the Renewable Fuel Standard in the U.S. and the Renewable Energy Directive in Europe are driving this adoption.

In the power generation segment, the increasing focus on renewable energy feedstocks and the need to reduce carbon footprints in power production are key market drivers. Bioethanol can be used in cogeneration plants to produce electricity and heat, supporting the transition from fossil fuels. This segment, while smaller compared to transportation, is growing as part of broader renewable energy initiatives.

The demand for natural and organic products drives the use of bio-ethanol in cosmetics. Bioethanol is valued for its role as a solvent and preservative, aligning with consumer preferences for cleaner beauty products. While this segment is relatively niche, it is growing as the beauty industry shifts toward more sustainable ingredients.

In the pharmaceutical industry, it is used as a solvent and in drug formulations. The driving factors include the demand for high-purity solvents and increased research into bio-based chemicals. This segment is stable and growing steadily by the expansion of biopharmaceuticals and green chemistry initiatives.

REGIONAL INSIGHTS

The market has been studied geographically across five main regions: North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

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North America accounts for the largest market share as it is one of the largest producers and consumers of bioethanol, primarily due to its substantial agricultural base and advanced biofuel infrastructure. Stringent renewable fuel standards such as the Renewable Fuel Standard (RFS)), government incentives, and a strong focus on reducing greenhouse gas emissions are driving the market in this region. The availability of corn as a primary feedstock and ongoing advancements in production technology also contribute to the region’s dominance.

Europe is also a significant market for bioethanol, driven by aggressive renewable energy targets and environmental regulations. Germany, France, and the U.K. are at the forefront of bioethanol adoption. The European Union's Renewable Energy Directive (RED) and various national mandates push for higher bioethanol blending in fuels. Additionally, Europe's focus on reducing carbon emissions and promoting sustainable agriculture supports market growth.

Asia Pacific is emerging as a growing market for bioethanol, with China and India showing increasing interest as a rapid economic growth rate and a rising demand for cleaner fuels. The growth in this region is driven by the need to address air pollution, energy security concerns, and government incentives for biofuel production. However, the market is still developing compared to North America and Europe.

The Middle East & Africa have a relatively smaller market but are gradually exploring renewable energy feedstocks. Initiatives to diversify energy feedstocks and reduce dependency on fossil fuels are driving the market in the region. Some countries in the region are beginning to invest in bioethanol production and infrastructure as part of broader renewable energy strategies.

KEY INDUSTRY PLAYERS

Companies Emphasis on Collaborations and Partnerships to Gain Competitive Advantage

The global bioethanol market is highly competitive and fragmented. Key market players in the market compete with a broad spectrum of companies that manufacture, distribute, and market furnaces and related products. Companies are focusing on expansion to gain higher market shares. ADM has been among the major players in the market, leveraging its expertise and proprietary specialist technologies to operate across the manufacturing supply chain. The company has a strong presence in the North American market and is engaged in expanding its operations across the globe.

List of Top Bioethanol Companies:

• ADM (U.S.)


• Alto Ingredients Inc  (U.S.)


• POET LLC (U.S.)


• Valero Energy Corporation (U.S.)


• Green Plains Inc. (U.S.)


• Raízen (Brazil)


• United Petroleum Pty Ltd (Australia)


• Tereos (France)


• Guardian Energy (U.S.)


• The Andersons, Inc (U.S.)


• White Energy (U.S.)


• Südzucker AG (Germany)


• Cargill, Incorporated (U.S.)


• Abengoa Bioenergy (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• September 2024: LanzaTech and Lanzajet signed a new project with Australia’s Wagner Sustainable Fuels for evaluating the equipping of Wagner’s Brisbane SAF Refinery with the help of the CirculAir platform. LanzaTech and LanzaJet convert waste carbon and renewable power into sustainable aviation fuel (SAF).


• July 2024: TruAlt Bioenergy of India received an order of USD 47.36 million from leading oil marketing companies (OMCs), which includes Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL), and Mangalore Refineries and Ports. Under these orders, TruAlt Bioenergy would supply over 60 million liters of 1G bioethanol over three months from August to October 2024


• February 2024: Raizen and Wärtsilä signed an agreement to advance the decarbonization of the marine sector. Under the agreement, the companies would conduct technology tests using ethanol as a primary fuel in Wärtsilä Sustainable Fuels engine laboratories, along with Raizen and with ship designers and owners for the use of cellulosic ethanol as fuel.


• January 2024: POET and Summit Carbon Solutions (Summit) signed a partnership to collaborate to capture the value of the biogenic CO2 from the bioethanol production process. It would facilitate the capture, transportation, and permanent storage of approx. 4.7 million metric tons of CO2 every year from 17 POET bioprocessing plants. Thus, the partnership with Summit Carbon Solutions is aimed at ensuring the decarbonization to create new market opportunities for producers, rural economies, and American energy security.


• October 2021: ADM (Archer Daniels Midland) announced its plan to use more than half of its ethanol-production capacity to produce sustainable  as part of an agreement made with Gevo. Under this MoU, the company produced over 500 million gallons of sustainable aviation fuel. It also planned to install Gevo technology on dry mill ethanol plants in Columbus, Nebraska; Cedar Rapids, Iowa; and Decatur, Illinois.

REPORT COVERAGE

The global report provides a detailed analysis of the market. It focuses on key market aspects such as major market players, product types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key market developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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Report Scope & Segmentation