Market Overview

Today, the world faces the challenge of “more energy, less emissions,” which requires decarbonization through emission reduction efforts, while at the same time facing an ever-increasing demand for energy due to populational and economic growth in emerging countries.
In conjunction with the development of the energy security issue triggered by the Russian invasion of Ukraine, the importance of carbon-neutral fuels, represented by biofuels and synthetic fuels, has increased in recent years. 
Emerging economies such as Brazil, India, and Indonesia are promoting biofuels in particular as part of national policy and as a solution to several challenges at once, such as promoting of agriculture, responding to rapidly growing fuel demand, improving trade balances, and decarbonization. In Europe and the United States, in addition to expanding the penetration of next-generation biofuels with high emission reduction efficiencies, demonstration projects for synthetic fuels and green hydrogen have been launched and pilot production is underway.
As the BEV transition slows, automakers (OEMs) have shifted from “zero tailpipe emissions” to a more realistic goal of well-to-wheel based decarbonization. They are targeting Scope3 emissions reductions through engine development that emphasizes adaptation with carbon-neutral fuels or being combined with electric powertrains.

Noteworthy Topics

Global Bioethanol Market Trends

In 2023, global automotive bioethanol consumption in volume was 109,647 million liters, with the average blending rate of bioethanol to gasoline 7.1%. 

In the United States, a volume consumer, E10 is the mainstream with an average blending rate of 10.0%. In California, a stricter Low Carbon Fuel Standard (LCFS) has led to three times the consumption of E85 (gasoline blended with 85% ethanol) than in 2019, with higher emission reduction efficiency.
In India, abundant sugarcane production and strong policy support have led to three times the consumption of bioethanol than in 2019, with the average blending rates exceeding 10%. Growing demand for bioethanol and extreme weather conditions have tightened sugarcane supplies, benefiting Brazil.
Brazil has offset the reduction in sugarcane ethanol production with corn ethanol production. The average blending rate in the country has been maintained at 45.9%.

Future Outlook

As carbon neutral fuels are increasingly adopted in the automotive sector, we have forecast global automotive bioethanol consumption through 2035 and the average blending rate of bioethanol into gasoline based on two assumptions, an aggressive assumption and a conservative assumption.
The aggressive forecast assumes that the blending rate of bioethanol into gasoline will increase as planned by individual governments, that demand for ethanol as a carbon neutral fuel will increase as needed to achieve emissions reductions, that the production costs for next-generation bioethanol that does not compete with food will decrease, and that the transition to electric vehicles will slow. On the other hand, the conservative forecast assumes that countries will not meet their bioethanol blending targets, that demand for ethanol as a carbon neutral fuel will decline due to stricter emissions regulations and an accelerated transition to EVs, and that growing concerns about bioethanol material supply and production costs for next-generation bioethanol will remain high.

India is targeting E20 nationwide by April 2025, while Brazil is considering mandating E30 by 2030. Europe and the United States are looking to expand the penetration of next-generation ethanol. According to the aggressive forecast, global ethanol consumption is expected to reach 158.5 billion liters in 2030 with an average blend rate of 9.5%, which is projected to increase to 177.5 billion liters in 2035, up 61.9% from 2023, with an average blend rate of 10.5%.
In the conservative forecast, global ethanol consumption is expected to reach 120.3 billion liters with an average blend rate of 7.2% in 2030, which is projected to increase to 128.5 billion liters in 2035, up 17.2% from 2023, with an average blend rate of 7.6%.

Research Outline