Ethanol Market Size, Share & COVID-19 Impact Analysis, By Type (Synthetic and Biobased), By Application (Fuel, Industrial Solvent, Food & Beverages, Chemicals, and Others), and Regional Forecast, 2023-2030

The global ethanol market size was valued at USD 87.71 billion in 2022 and is projected to grow from USD 92.48 billion in 2023 to USD 135.07 billion by 2030, exhibiting a CAGR of 5.6% during the forecast period. North America dominated the ethanol market with a market share of 47.19% in 2022.

Ethanol, also known as ethyl alcohol, is a colorless chemical compound with a pleasant taste and odor. Naturally, it is made by the fermentation of sugar and starch-based biological materials and cellulosic feedstock, including wood, sugarcane, barley, corn, and wheat. Synthetically, the product is synthesized from coal, natural gas, and ethylene. The increasing product advancement to make it more sustainable, coupled with the rising product demand from beverages, fuel and fuel additives, and solvents, is expected to boost market growth. The rising government regulations to produce eco-friendly products and high product demand from disinfectant applications are predicted to surge the market during the forecast period.

COVID-19 IMPACT

Disruption in Production and Consumption Due to COVID-19 Pandemic Hampered Market Growth

The spread of the COVID-19 pandemic created a negative impact on this market. This is due to government controls imposed in the event of the pandemic, which limited the movement of both people and goods. According to the Renewable Fuels Association, the cumulative decline in production from March to November 2020 was estimated to be 2.0 billion gallons (BG). This indicated a decline of 50% in production when compared with 2019. As a result, the yield of co-products, such as distiller grains, which are used in livestock feed, decreased proportionally. Additionally, the pandemic impacted oil prices and corn prices owing to their decreased production.

Furthermore, the pandemic resulted in a significant decrease in gasoline usage due to low demand, and ethyl alcohol as a fuel experienced difficulties. However, the consumption of beverages, disinfectants, and personal care goods was at all-time high volumes, thereby increasing the product adoption as alcohol in these applications. Furthermore, governments in several countries are enacting supportive regulations and attempting to get their economies back on track. As a result, the product demand is expected to stabilize in the coming years.

Ethanol Market Trends

Rising Demand for Bio-ethanol over Chemical-based Products is a Prominent Trend

Conventionally, ethyl alcohol is manufactured from raw materials that are petroleum-based, the production of which is associated with a significant level of carbon emissions. Further, the manufacturing of products from crude oil-based raw materials is associated with carbon emissions, which makes it difficult to comply with environmental regulations prescribed by governments of different countries and international organizations. This has prompted the product manufacturers to focus on research & development and manufacturing from renewable raw materials obtained from plant sources. Therefore, rising environmental awareness is pushing the production of bio-based products and presenting lucrative opportunities for ethanol market growth.

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Ethanol Market Growth Factors

Increasing Demand from Various End-use Applications to Boost Market Growth

Ethyl alcohol is becoming more common as an oxygenate additive for regular gasoline, replacing Methyl T-butyl ether (MTBE), which has been linked to significant groundwater and soil pollution. It can be used to manufacture biodiesel and power fuel cells. Furthermore, as a solvent, the product finds its use in making a tincture of iodine and cough syrups, which is further utilized in the food & beverage and pharmaceutical industries. These benefits have led various end-users to utilize products in their goods.

For instance, in April 2019, Braskem introduced its first sugarcane ethanol-based partially renewable solvent, HE-70S. This product uses bio-based carbon as a raw material, is part of the oxygenated solvents group and is a new choice in the Braskem chemical product portfolio.

Hence, the increasing demand for ethanol from various end-use applications is projected to boost market growth over the forecast period.

RESTRAINING FACTORS

Surging Awareness of Hazardous Impacts Caused by Alcohol to Hamper Market Growth

Ethyl alcohol is highly utilized to make alcoholic drinks, which include wine, beer, and hard drinks. The growing awareness among people pertaining to health-hazardous impacts caused by drinking alcohol will influence the overall product demand. The consumption of alcohol can cause a variety of chronic diseases and conditions, including mental disorders, cancer, digestive illnesses, and cardiovascular diseases. These impacts have led various organizations to run campaigns, such as ‘Don't Know? Don't Drink’ and Alcohol and Health ‘Glassbody’ campaigns to stop the consumption of alcohol. Moreover, an increase in prices is restricting its adoption in various applications. 

Ethanol Market Segmentation Analysis

By Type Analysis

Synthetic Segment Accounted for the Larger Share Due to its Cost Effectiveness

Based on type, the market is segmented into synthetic and biobased.

The synthetic segment held the largest ethanol market share in 2022 and is anticipated to retain its position during the forecast period. The method of manufacturing synthetic products using petroleum-based raw materials is well established and keeps the production cost lower compared to renewable products.

Biobased products have emerged as an alternative to synthetic products. They are anticipated to witness a significant rise in their demand in the near future owing to the rising need for sustainable products to avoid pollution and combat increasing carbon footprint.

By Application Analysis

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Fuel Segment to Dominate the Market owing to Increasing Product Demand from Transportation Sector

Based on the application, the market is segmented into fuel, industrial solvent, food & beverages, chemicals, and others.

The fuel segment is expected to hold the highest market share during the forecast period. The rapid growth in the automotive industry, coupled with the increasing demand for fuel from the transportation sector and electricity generation, would surge the adoption of the product in this application segment.

The industrial solvent segment is anticipated to witness significant growth in the market. The growing adoption of solvents in pharmaceuticals and paints & coatings is expected to boost the demand for the product.

The chemicals segment is predicted to witness significant growth. This growth is due to the increasing product adoption as an intermediate and precursor in the production of chemicals.

The increasing adoption of this product as an intoxicating ingredient in many alcoholic beverages, including distilled spirits, wine, and beer, will drive the food & beverages segment during the forecast timeline. Ethyl alcohol is highly effective and can kill bacteria and microbes on the surface of counters. The rising spread of coronavirus and other bacterial diseases has surged the demand for this product to manufacture disinfectants, thereby providing more growth opportunities in hand sanitizers.

REGIONAL INSIGHTS

This market is analyzed across North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

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The market size in North America stood at USD 41.39 billion in 2022. 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. In this region, the U.S. is anticipated to hold the highest market share. The growth is attributed to the increasing demand for bio-based products for the production of alcohol.

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Latin America is the second-leading region in the market, in which Brazil is a leading country. The growth is due to the increasing demand for bio-ethanol as an alternative to fossil fuel-based petroleum in the automotive industry. According to the Rapid Transitions Alliance Organization, Brazil has the world's largest fleet of cars that run on ethyl alcohol made from sugarcane as an alternative to petroleum-based fossil fuels. Hence, the supportive government initiatives and increasing the manufacturing of bio-products will fuel the market growth in Latin America.

Asia Pacific is the fastest-growing region in the market. This is due to the increasing demand for the product from industrial solvents. Additionally, the availability of key fuel producers in China will further drive the market growth in this region.

The rapid growth in the automotive industry will boost demand in Europe. The Middle East & Africa is anticipated to display significant growth owing to the rising adoption of this product in personal care and beverage applications. Moreover, the increasing demand for distiller grains from the food & beverage industry will propel the market growth in this region.

List of Key Companies in Ethanol Market

Capacity Expansion of Production Plants is the Key Strategic Initiative Implemented by Companies

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.

LIST OF KEY COMPANIES PROFILED:

• Cargill Inc. (U.S.)


• Archer Daniels Midland Company (U.S.)


• British Petroleum (U.K.)


• Grain Processing Corporation (U.S.)


• Shree Renuka Sugars Ltd (India)


• Ace Ethanol LLC (U.S.)


• Advanced Bio Energy LLC (U.S.)


• Kanoria Chemicals & Industries Ltd. (India)


• MGP Ingredients (U.S.)


• Flint Hills Resources (U.S.)


• Marquis Energy (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• 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.


• 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.


• August 2020: Pacific Ethanol expanded its production of ethanol for the hand sanitizer market. The company will produce 25 million gallons of hand sanitizer per year at its Pekin, Illinois plant. Hence, this development will help the company to expand its product portfolio.


• June 2019: Attis Industries completed the acquisition of a 100 million gallons per year grain malting facility and corn ethyl alcohol plant in Fulton, New York, from Sunoco, worth USD 20 million in cash. With this development, the company will create its site into a Green Tech campus.

REPORT COVERAGE

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The market research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, sources, applications, and products. Also, it provides quantitative data in terms of volume and value, research methodology for market data, insights into market trends and highlights vital ethanol industry developments. In addition to the factors mentioned above, the report encompasses various factors that have contributed to the growth of the market 

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