February 28, 2024
U.S. Ethanol Market

U.S. Ethanol Market Is Expected To Be Flourished By Growing Demand Of Green Biofuel

U.S. Ethanol is a biofuel produced by fermentation, mostly from carbohydrates in corn and cellulosic biomass. It can be used as a biofuel in cars that run on gasoline as well as being a component in many gasoline blends or fuels, in addition to its industrial uses. Ethanol fuel is widely used in the United States as a biofuel and generates octane levels that are superior to gasoline alone in internal combustion engines. Flexible fuel vehicles can accommodate fuel blends from pure gasoline to up to 85% ethanol.

The global U.S. Ethanol Market is estimated to be valued at US$ 32.07 Bn in 2023 and is expected to exhibit a CAGR of 8.4% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Dynamics:

Growing Demand of Green Biofuel: Rising environmental concerns coupled with growing demand for eco-friendly fuel have increased the use of biofuels such as ethanol which produces lower greenhouse gas emissions as compared to traditional fossil fuels. Ethanol produces around 35% lower carbon emissions than conventional gasoline. Moreover, growing initiatives by governments worldwide to reduce dependence on crude oil imports have further boosted the demand for ethanol as a gasoline additive or extender. For instance, the Renewable Fuel Standard (RFS) program in the U.S. mandates the use of biofuels like ethanol for transportation fuel, which is expected to drive the U.S. ethanol market over the forecast period.

Ethanol as a Gasoline Extender: Ethanol blends lower octane demand, resulting in improved engine performance and increased fuel efficiency. Ethanol’s high-octane nature allows increased compression ratios that boost efficiency in gasoline engines. As an oxygenate, ethanol addition results in more complete fuel combustion, which translates to improved engine performance. E10 and E15 blends are widely accepted in vehicles older than 2001. Growing demand for higher ethanol blends is expected to act as a driver for the U.S. ethanol market

Segment Analysis

The U.S. ethanol market is segmented based on raw material and application. Corn dominates the raw material segment of the market and holds around 95% market share. Corn is a cheap source of glucose and easy to ferment to produce bioethanol. Fuel use dominates the application segment and accounts for around 90% of ethanol consumption. Ethanol blended in gasoline helps reduce emissions and dependence on foreign oil imports.

PEST Analysis

Political: The Renewable Fuel Standard program mandates blending of biofuels like ethanol in transportation fuel. Various incentives and subsidies are provided by state governments to promote ethanol production and use.
Economic: High petroleum prices and cost competitiveness of ethanol against gasoline drives its increasing demand. Corn farmers also benefit from the boost in corn demand for ethanol production.
Social: Ethanol is promoted as it helps reduce vehicle emissions and fight climate change. However, some criticize use of corn for fuel over food.
Technological: Advancements in cellulosic technologies can help produce ethanol from non-food crop feedstocks and reduce dependence on corn.

Key Takeaways

The Global U.S. Ethanol Market Demand  is expected to witness high growth.

Regional analysis: Midwest region currently dominates the U.S. ethanol market owing to the high availability of corn for production.

Key players operating in the U.S. ethanol market are Boehringer Ingelheim, Zoetis, MSD Animal Health (Merck Animal Health), Elanco Animal Health, Ceva Santé Animale. Major ethanol producers are expanding and establishing new plants as well as acquiring existing ethanol production facilities to scale up production and expand presence across states. For instance, in 2023, POET plans to commence operations of its new ethanol plant in Michigan with a capacity of 110 million gallons annually.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it