The Transportation Grade Bioethanol Market is expected to grow at a healthy growth rate, as many countries have mandated using bioethanol fuel blends to reduce greenhouse gas (GHG) emissions and increase vehicle fuel efficiency. For instance, the Canadian Clean Fuel Standard requires liquid fuel suppliers to gradually reduce the carbon content of fuels they produce and sell in Canada. This results in a reduction of CO2 emissions to approximately 13% of liquid fuels used in Canada by 2030. In addition, by 2025, India intends to have 20% ethanol blended into petrol. In Europe, the mandatory directives supporting bioethanol consumption are the Renewable Energy Directive 2009/28/EC (RED), the Fuel Quality Directive (2009/30), and the Biofuels Directive (2003/30). Therefore, these initiatives and directives are influencing the global bioethanol market size. Furthermore, according to the Organisation Internationale des Constructeurs d'Automobiles (OICA), global automotive production increased by 3% in 2021 compared to 2020, further complementing the liquid biofuels market, including the bioethanol and biodiesel market.
Market Lifecycle Stage
Bioethanol is derived from biological materials such as vegetable oils, corn, and sugarcane. They are mostly used as a substitute for fossil fuels, which are rapidly diminishing. However, in a few countries, the biofuel market is still in its early stages, necessitating government support in the form of lower taxes and other infant industry incentives. As raw materials for biofuels are derived from agriculture, providing adequate incentives for farmers to grow biofuel crops while maintaining food security is critical. Several countries and regions, including the U.S., Brazil, the Philippines, China, and the European Union (EU), have biofuel policies in place that influence everything from the production of biofuel crops on farms to their conversion into transportation-grade biofuels.
Increased research and development initiatives are undertaken to develop new technologies, which are growing in response to rising public concern and government restrictions on carbon emissions and environmental health protection. For instance, researchers are presently focused on enhanced bioethanol synthesis using lignocellulosic materials. This process involves pre-treating biomass to extract hemicellulose and cellulose, hydrolysis to extract fermentable 5- and 6-carbon sugars, separation of non-hydrolyzed cellulose and solid residues and distillation.
Moreover, the transportation grade bioethanol market has the potential to make a significant impact by decreasing global dependence on fossil fuels and contributing to the reduction of greenhouse gas emissions.
The shift to green, eco-friendly, sustainable technologies brings significant sales and financing opportunities with an increased worldwide focus on achieving net-zero carbon emissions. This shift was prominently experienced in regions such as North America, Europe, and some Asian countries.
Impact of COVID-19
The COVID-19 outbreak has wreaked havoc on people's lives all around the world. Fuel requirements have been reduced as governments urge people to stay home to combat the COVID-19 epidemic. The pandemic has reduced gasoline consumption and pushed corn-based fuel to the side-lines, while several ethanol plants have reduced or ceased production globally. This had a negative impact on the sales of the companies operating in the bioethanol and biodiesel market. For instance, the operating profit of CropEnergies, a unit of German sugar producer Suedzucker, fell by 46 percent year on year to $9.14 million (8.1 million euros) in the first quarter of 2020-2021. However, since the ease of lockdown, companies are steadily gaining traction.
Segmentation 1: by End Use
- Passenger Vehicles
- Light Commercial Vehicles
- Medium and High Commercial Vehicles
The transportation grade bioethanol market in the end-use sector segment is expected to be dominated by passenger vehicles.
Segmentation 2: by Raw Material
Sugarcane is expected to dominate the market over the forecast period (2022-2031). Sugarcane is one of the most widely grown agricultural crops globally.
Segmentation 3: by Fuel Blend
- E15 to E75
- E85 to E100
The transportation grade bioethanol market is estimated to be led by E10 in terms of the fuel blend.
Segmentation 4: by Region
- North America - U.S., Canada, and Mexico
- Europe - Germany, France, Italy, Spain, and Rest-of-Europe
- Asia-Pacific and Japan - Japan, India, Thailand, Australia, and Rest-of-Asia-Pacific
North America led the transportation grade bioethanol market in 2021 and is anticipated to uphold its dominance throughout the forecast period (2022-2031), owing to the presence of a significant players such as Archer-Daniels-Midland Company, POET LLC, BlueFire Renewables Inc., Aemetis, Inc, and among others.
Recent Developments in Transportation Grade Bioethanol Market
- In December 2021, Gujarat Alkalies and Chemicals Ltd. and GAIL India signed an agreement to set up a $135.2 million (?1,000-crore) bioethanol plant in Gujarat.
- In June 2021, Rayonier Advanced Materials Inc. entered into a long-term off-take (sales) agreement to purchase 2G bioethanol from a petrochemical company and planned to fund a large amount of its investment using low-cost green loans.
- In June 2021, ASN Fuels Pvt Ltd. announced to focus on finding new avenues to make ethanol from agricultural waste termed lingo-cellulosic biomass in partnership with IIT-Tirupati.
Demand – Drivers and Limitations
Following are the demand drivers for the transportation grade bioethanol market:
- Increased Consumer Awareness and Preference toward Sustainable Products
- Increased Investment in Transportation Grade Bioethanol Production
- Stringent Rules and Regulations Related to Carbon Emissions
- Growing Automotive Industry
The market is expected to face some limitations due to the following challenges:
- High Cost of Cellulosic Ethanol Compared to First Generation Bioethanol
- Complex Production Process
- Availability of Substitutes
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How Can This Report Add Value to an Organization?
Product/Innovation Strategy: The product segment helps the reader understand the raw materials used in manufacturing transportation grade bioethanol, including sugarcane, corn, wheat, and others. The study also provides a detailed analysis of different fuel blends used in the bioethanol market, including E5, E10, E15 to E75, and E85 to E100. Moreover, the study gives the reader a detailed understanding of the transportation grade bioethanol market by different end-use sectors (passenger vehicles, light commercial vehicles, medium and heavy commercial vehicles, and aviation). The transportation grade bioethanol is fuel for the future and has a high potential to grow in the upcoming future.
Growth/Marketing Strategy: The transportation grade bioethanol market has seen major development by key players operating in the market, such as business expansion, partnership, collaboration, acquisition, and joint venture. The favored strategy for the companies has been business expansion and acquisition to strengthen its position in the transportation grade bioethanol market. For instance, in June 2021, POET, LLC acquired the bioethanol assets of Flint Hills Resources, increasing the company's production capacity by 40%. The deal includes six bioprocessing plants in Iowa and Nebraska and two terminals in Texas and Georgia.
Competitive Strategy: Key players in the transportation grade bioethanol market analyzed and profiled in the study involve transportation grade bioethanol manufacturers and suppliers. Moreover, a detailed competitive benchmarking of the players operating in the global transportation grade bioethanol market has been done to help the reader understand how players stack against each other, presenting a clear market landscape. Additionally, comprehensive competitive strategies such as partnerships, agreements, and collaborations will aid the reader in understanding the untapped revenue pockets in the bioethanol market.
Analyst Thoughts -
According to Komal, Research Analyst, BIS Research, "Bioethanol is a better replacement for conventional fossil fuels as it is highly sustainable. The growing shift toward environment-friendly products and blending mandates from regulatory bodies such as the Renewable Energy Directive (EU RED) and the Environmental Protection Agency (EPA) to increase the percentage of bioethanol in fuels are key factors behind the market growth. Furthermore, the increase in the price of fossil fuels because of the Russia-Ukraine conflict has prompted considering ways to minimize reliance on fossil fuels and accelerate the green transition."
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