Ethanol Market Size, Share & Industry Analysis, By Type (Synthetic Ethanol and Bioethanol), By Raw Material (1st Generation Feedstock, 2nd Generation Feedstock, and Others), By Application (Transportation, Energy, Chemical, and Others), and Regional Forecast, 2024-2032

The global ethanol market size was valued at USD 77.12 billion in 2023. The market is projected to grow from USD 71.79 billion in 2024 to USD 110.71 billion by 2032 at a CAGR of 4.6% during the forecast period. North America dominated the ethanol market with a market share of 43.05% in 2023.

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 and is widely used as a fuel additive to enhance octane levels and reduce vehicle emissions. Synthetically, the product is synthesized from coal, natural gas, and ethylene.

The market has been growing steadily owing to the global shift toward cleaner and renewable energy sources and the rising demand for fuel ethanol alternatives. Furthermore, technological advancements such as innovations in distillation and fermentation technologies to make ethyl alcohol more efficient along with rapid developments in cellulosic ethanol made from plant residues rather than food crops will pose significant growth opportunities for more sustainable production method of ethyl alcohol in the near future. Some of the major companies in this market include, Archer Daniels Midland Company, Alto Ingredients, POET LLC, Valero Energy Corporation and Cargill.

Global Ethanol Market Key Takeaways

Market Size & Forecast:

• 2023 Market Size: USD 77.12 billion
• 2024 Market Size: USD 71.79 billion
• 2032 Forecast Market Size: USD 110.71 billion
• CAGR: 4.6% from 2024–2032

Market Share:

• North America dominated the ethanol market with a 43.05% share in 2023, driven by strong demand for biofuels, favorable government policies such as the Renewable Fuel Standard (RFS), and technological advancements in production, particularly in the U.S.
• By Type, synthetic ethanol held the largest share in 2023 due to its cost-effectiveness and mature manufacturing processes using petroleum-based raw materials.

Key Country Highlights:

• United States: Leads North America’s market with corn-based ethanol production backed by robust agricultural infrastructure and blending mandates under the RFS.
• Brazil: A global leader in sugarcane-based ethanol production, driven by its Proálcool program and increasing corn-based ethanol output.
• India: Targets 20% ethanol blending by 2025, with rising production from sugarcane and other feedstocks to reduce oil imports and combat pollution.
• China: Scaling up ethanol production to lower crude oil dependency and reduce emissions, supporting demand in industrial solvents and fuels.
• Germany: Drives ethanol use in Europe through biofuel blending initiatives under RED II, aligned with the EU’s net-zero emissions targets.
• Middle East & Africa: Witnesses rising demand for ethanol in beverages and personal care, along with growing distillers’ grains usage in the food industry.

ETHANOL MARKET TRENDS

Rising Demand for Bioethanol 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, product manufacturing from crude oil-based raw materials leads to carbon emissions, which makes it difficult to comply with environmental regulations formulated by international organizations and the governments of different countries. This has led product manufacturers to focus on research & development and manufacturing from renewable raw materials obtained from plant sources. The soaring environmental awareness is bolstering the manufacturing of bio-based products and presenting lucrative opportunities for ethanol market growth.

MARKET DYNAMICS

MARKET DRIVERS

Increasing Demand from Various End-user Industries 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 ethyl alcohol-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 ethyl alcohol from various end-use applications is projected to boost market growth over the forecast period.

MARKET RESTRAINTS

Growing 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. Such initiatives may restrain the market growth during the forecast period.

MARKET OPPORTUNITIES

Rising Demand for Biofuels And Renewable Energy to Act As Opportunity

The market presents several growth opportunities due to a combination of increasing demand for cleaner energy, regulatory push for renewable fuels, and technological advancements. As governments, industries, and consumers prioritize sustainability and lower carbon emissions, ethyl alcohol—being a renewable, bio-based fuel—has the potential to expand in various sectors beyond traditional transportation fuel.

The governments across the globe are mandating the adoption of renewable fuels, including ethyl alcohol, to meet carbon emissions targets. For instance, countries such as Brazil’s ethanol-driven energy policy is a leading example of government intervention and the U.S. have ethanol blending mandates (E10, E15). Additionally, the U.S. Renewable Fuel Standard (RFS) and Brazil's Proálcool program encourage higher ethanol blends (e.g., E85) and increased use of biofuels in transportation. As a result, ethyl alcohol producers stand to benefit from the growing demand for renewable fuels mandated by these policies.

MARKET CHALLENGES

Impact on Food Prices and Food Security to Hamper Market Growth 

One of the most contentious issues surrounding ethyl alcohol production is its impact on food prices and food security. The product is primarily produced from crops such as corn, wheat, and sugarcane, which could otherwise be used for food production. As the product demand increases, the diversion of these crops to biofuel production can lead to higher food prices, especially in regions where these crops are staples. This creates a dilemma, as the benefits of product production for energy security and sustainability must be weighed against the potential negative impact on global food supply and affordability.

Price volatility due to fluctuations in the feedstocks, particularly corn and sugarcane, and the availability of government subsidies further leads to instability in certain regions. The expansion of product production can also result in conflicts over land use. Large-scale biofuel production requires vast tracts of agricultural land, which may otherwise be used for growing food or maintaining natural ecosystems.

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IMPACT OF COVID-19

The spread of the COVID-19 pandemic created a negative impact on this market. This is due to imposition of government restrictions, which limited the movement of both people and goods. According to the Renewable Fuels Association, the cumulative decline in production from March 2020 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 and corn prices owing to their decreased production.

SEGMENTATION ANALYSIS

By Type

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

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

The synthetic segment held the largest ethanol market share in 2023 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.

The bioethanol segment held the second-largest market share in 2023. Biobased products have emerged as an alternative to synthetic products. They are anticipated to witness a significant rise in demand in the near future owing to the rising need for sustainable products to avoid pollution and combat increasing carbon footprint.

By Raw Material

1^st generation Feedstock Segment to Dominate the Market Owing to Their Simple Production Process

Based on raw material, the market is segmented into 1st generation feedstock, 2nd generation feedstock, and others.

The 1^st generation feedstock segment is expected to lead and grow positively during the forecast period. It is produced from food crops such as sugarcane, corn, wheat, and sugar beets, using simple fermentation processes. Its consumption is widely increasing as a biofuel for blending with gasoline, reducing greenhouse gas emissions and dependency on fossil fuels. The growth of first-generation ethyl alcohol is driven by established production infrastructure, government mandates for ethyl alcohol-blended fuels, and high energy yields from crops such as sugarcane.

The rising demand for sustainable biofuels, supportive policies promoting advanced biofuels, and technological advancements in production methods will bolster the growth of 2^nd generation feedstock segment. Second-generation feedstock is the second leading segment in the market.  Second-generation ethyl alcohol is also known as cellulosic ethyl alcohol, and is derived from non-food biomass such as agricultural residues (corn stover, wheat straw), forestry waste, and energy crops such as switchgrass. It is used in chemical industries and as a renewable fuel, with lower environmental impact than first-generation product.

Additionally, the others segment include 3^rd generation (algae) and 4^th generation feedstocks (genetically engineered crops and carbon capture technologies). The demand for algae-based ethanol is rising due to its high yield potential and minimal competition with arable land.

On the other hand, 4^th generation aims to achieve carbon-neutral or carbon-negative product by directly utilizing atmospheric CO₂ or modifying organisms for higher efficiency. The segment growth is driven by the need for ultra-sustainable solutions and investments in cutting-edge research.

By Application

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Transportation Segment to Hold Majority Share Owing to Government Supporting Policies

Based on application, the market is segmented into transportation, energy, chemical, and others.

Transportation segment to holds the leading share in the market. The growth is attributed to the rising product demand in transportation, mainly fueled by government policies such as Renewable Fuel Standards (RFS) in the U.S., EU directives, and blending mandates in emerging economies such as India and Brazil. Furthermore, rising environmental awareness and the need to curb air pollution will further drive the demand for ethyl alcohol-blended fuels.

Energy segment is the second leading application in the market. The product demand in energy production is driven by global efforts to transition to renewable energy sources and reduce greenhouse gas emissions from fossil fuels. Policies such as the Renewable Energy Directive in the EU and the Renewable Fuel Standard in the U.S. support increased product consumption in energy production, bolstered by rising consumer and governmental demand for cleaner energy alternatives.

In the chemical industry, the product is widely used as a feedstock for producing various chemicals, including ethylene, acetic acid, and ethyl acetate, which are essential for manufacturing plastics, solvents, paints, and pharmaceuticals. The global demand for eco-friendly alternatives to petrochemical-based products, along with government incentives for green chemicals and bio-based products, will increase the product use substantially in chemicals during the forecast period.

The other segment includes food & beverages and cosmetic & personal care industries. The growing rapid infrastructure development coupled with technological innovation will boost up these industries, thereby will influence the market growth.

ETHANOL MARKET REGIONAL OUTLOOK

Based on region, the market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

North America

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The market size in North America stood at USD 33.20 billion in 2023 and holds the leading position in the overall market. The market in the region has experienced steady growth, driven by the robust demand for biofuels, favorable government policies, and technological advancements in production and consumption pattern. Ethyl alcohol is a key component of the Renewable Fuel Standard (RFS), which mandates blending renewable fuels into the national fuel supply, ensuring a consistent demand.

In the region, the U.S. holds the leading share. Corn-based ethyl alcohol leads the market, supported by the country’s extensive agricultural infrastructure and high corn yields. The market also benefits from increasing consumer awareness of reducing greenhouse gas emissions and enhancing energy security.

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Latin America

In Latin America, Brazil is a leader in product manufacturing from sugarcane and a key exporter. The growth is attributed to the country’s Proálcool Program, which has made it a leader in ethyl alcohol, as a renewable energy source. The country is also making strides with corn-based ethyl alcohol, which has led to a rise in production and a reduced reliance on sugarcane. Moreover, the supportive government initiatives and increasing the manufacturing of bio-products will fuel the market growth significantly in Latin America.

Asia Pacific

Asia Pacific is growing at a substantial growth in the market. This is due to the increasing demand for the product from industrial solvents. The major countries in this region include China and India. India is boosting its ethyl alcohol manufacturing from sugarcane and other sources and its ethyl alcohol blending is expected to reach 20% by 2025. China is also scaling up ethyl alcohol manufacturing, particularly to reduce its reliance on imported crude oil and combat air pollution.

Europe

The rapid growth in the automotive industry will significantly drive the market in Europe. The major countries in this region include Germany, U.K., and France. The region’s market growth is shaped by the strong focus on environmental sustainability and its adherence to EU renewable energy directives. Ethyl alcohol is used primarily as a biofuel for blending with gasoline, driven by Germany's commitment to achieving net-zero emissions. Furthermore, the European Union’s Renewable Energy Directive (RED II) mandates the adoption of biofuels, including ethyl alcohol, to meet the region’s renewable energy targets.

Middle East & Africa

The Middle East & Africa is anticipated to depict significant growth owing to the rising adoption of the 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.

COMPETITIVE LANDSCAPE

KEY INDUSTRY PLAYERS

Capacity Expansion and Product Innovation are Key Strategic Initiatives to Strengthen Industry Foothold

Key producers operating in the market are Archer Daniels Midland Company, Alto Ingredients, POET LLC, and other companies such as Valero Energy Corporation and Cargill. These companies are involved in capacity improvement, product innovation, acquisitions, mergers, and collaborations in the market. For instance, Archer Daniels Midland (ADM) is a key player in the global market and manufactures ethyl alcohol primarily from corn. The company is involved in both the trading and production of ethanol-based fuels. On the other hand, POET LLC is another ethyl alcohol producer in the U.S. with over 28 biofuel plants across the Midwest and heavily focuses on innovation in biofuel manufacturing.          

LIST OF KEY ETHANOL COMPANIES PROFILED:

• Cremer Oleo GmbH Co.KG (Germany)
• Alto Ingredients (Ireland)
• AGRANA Beteiligungs-AG (Austria)
• Archer Daniels Midland Company (U.S.)
• Cardinal Ethanol LLC (U.S.)
• POET LLC (U.S.)
• Sekab (Sweden)
• Nordzucker (Germany)
• Green Plains Inc. (U.S.)
• Marquis Energy (U.S.)
• Tereos (France)

KEY INDUSTRY DEVELOPMENTS

• July 2024: CF Industries Holdings, Inc., a prominent global producer of hydrogen, nitrogen products, and ammonia, has partnered with POET LLC, a major producer of biofuel and sustainable bioproducts, to explore the use of low-carbon ammonia fertilizer in a pilot project aimed at decreasing the carbon intensity associated with corn production and ethanol. The demand for ethanol that meets lower carbon intensity standards is anticipated to rise substantially in order to comply with low-carbon fuel regulations.
• March 2024: Alto Ingredients, a leading producer and distributor of renewable fuels and essential ingredients, and one of the largest specialty alcohol producers in the U.S., announced that it has entered into an exclusive, non-binding letter of intent with Vault 44.01 (Vault). The two companies finalized definitive agreements for a carbon capture and storage (CCS) project at Alto’s Pekin campus in Pekin, Illinois. Under the terms of the letter of intent, Alto will install technology to capture carbon dioxide (CO2) emissions produced during the ethanol manufacturing process at its Pekin facility.
• December 2022: Cremer Oleo GmbH Co. KG with its mission to thrive in the ethanol business, set up a new team for the refining and distribution of industrial ethanol. The company is keen on tapping the new opportunities across the cosmetics and pharmaceutical industries.

REPORT COVERAGE

The report provides a detailed analysis of the market. It focuses on key aspects, such as leading companies, types, and end-use industries of the product. Besides this, it offers insights into the market and current industry trends and highlights key industry developments. In addition to the factors mentioned above, it encompasses several factors contributing to the market growth.

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