Bioethanol is a renewable fuel derived from organic matter, such as biomass and agricultural feedstocks. It is obtained from different types of cellulose, such as sugarcane, corn, and sugar beet. Bioethanol, often referred to as ethanol, has several advantages, including zero or low emissions during production and final use. It can be used as a motor fuel or as an additive in gasoline, making it a renewable energy source. The production process involves the fermentation of sugar, which results in the production of bioethanol fuel. As the focus on reducing greenhouse gas emissions and addressing climate change intensifies, the global bioethanol market has experienced significant expansion. The global bioethanol market has witnessed significant growth between 2016-2020 and it is further projected to grow at a CAGR of 3% in the long-term forecast period. The strong growth in the forecast period can be attributed to need for reducing greenhouse gas emissions. increasing concerns about climate change, and environmental sustainability

Global bioethanol installed capacity was estimated to be more than 1,16,000 kilo tons, and it is expected to witness strong growth in the forecast period. On an average 2,000 kilo tons of capacity addition is expected to come online each year between 2022-2032 owing to new government policies, regulations, and incentives promoting the use of biofuels. The bioethanol market was affected by the COVID-19 pandemic, leading to interruptions in the supply chain process and lower gasoline demand. However, the pharmaceutical grade ethanol witnessed strong growth during COVID-19 as consumers have become more conscious about hygiene, resulting in increased demand for medical-grade ethanol. 

Fuel application remains the largest single outlet for bioethanol, accounting for over 88% of the total bioethanol demand. Non-fuel applications represent the remaining share of the total demand. Blending ethanol with fuel help in reducing carbon emissions and promoting cleaner environment. On blending ethanol with fuel, emissions of carbon monoxide and particulate matter can be reduced. The global demand for bioethanol as Fuel & fuel additives is projected to witness strong growth in the forecast period driven by strict environmental regulations, government initiatives, and increasing consumer awareness about the importance of reducing carbon footprints.

One of the major challenges faced by the bioethanol industry is the growth of electric vehicles in the market, which is expected to significantly impact the demand for bioethanol in the future. The increasing sales of electric vehicles and their projected growth in the forecasted period indicate a shift in consumption towards less fossil fuel and bioethanol. This trend could adversely affect the growth of the bioethanol market.

The United States and Brazil have maintained their positions as the leading ethanol producers for several years, collectively contributing to over 70% of global production in 2021. Initially, Brazil held the title of the largest ethanol producer until 2004 but was subsequently surpassed by the United States in 2005. This shift marked a significant turning point in the global ethanol production landscape. The United States is estimated to be the largest ethanol producer in the world, with an installed capacity of over 52,000 kilo tons, representing nearly 50% of the global ethanol capacity. Over the past two decades, there has been a notable increase in ethanol production capacity within the country. Currently, the United States has around 220 authorized ethanol production facilities, which are expected to contribute to further growth in the forecasted period.

Recent Developments in Bioethanol Market- 

1) Kribhco (Krishak Bharti Co-op Ltd) has announced a new bioethanol project in Hazira, Surat, with an estimated cost of Rs 350 crores. The project will have a daily capacity of around 2.50 lakh liters. This initiative will enable farmers to cultivate raw materials like corn and starch on a large scale. The Government of India has also set a target of blending 20 percent ethanol in petrol by 2025, with only 10 percent ethanol blending achieved as of now.

2) In Japan, Nippon Paper, Sumitomo, and Green Earth have entered a partnership to manufacture commercial cellulosic bioethanol using woody biomass. The ethanol produced by this process will be classified as second-generation ethanol.

3) Shree Renuka Sugars has announced plans to expand the ethanol capacity of its Athani and Munoli plants from 520 kilo litters per day to 1,250 kilo litters per day.

4) POET, renowned as the world's leading biofuel producer, is set to resume operations at its bioprocessing plant in Cloverdale, Indiana. This decision comes as a part of the company's efforts to safeguard domestic markets for eco-friendly biofuels. With a commitment to enhancing its annual bioethanol output, POET plans to invest approximately $30 million in cutting-edge technologies. 

5) In 2022, Clariant announced the successful production of the first commercial cellulosic ethanol at its Sunliquid Production Plant in Podari, Romania. Following the plant's construction, the Podari site underwent a commissioning process and has now successfully commenced production. The company has secured an offtake agreement with global energy company Shell. This plant is expected to process approximately 50 kilo tons of cellulosic ethanol per year.

6) In early 2023, EID Parry, a subsidiary of the Murugappa group has announced its intention to invest ?87 crore in expanding the ethanol production capacity at its Nellikuppam facility in Tamil Nadu.This strategic move aims to seize the opportunity presented by the Ethanol Blending Programme (EBP) and capitalize on its potential. The company has plans to increase the current production capacity at the Nellikuppam facility in Cuddalore district. The expansion will enable the production of ethanol from syrup and B-heavy molasses, and the capacity will be enhanced from 75 kiloliters per day to 120 kiloliters per day.

7) Verbio Vereinigte BioEnergie AG, a leading biofuels supplier based in Germany, has announced its intentions to acquire South Bend Ethanol LLC, a company based in the United States. Additionally, Verbio plans to invest approximately $230 million in expanding its ethanol plant in Indiana. This expansion aims to enhance the production capacity of the plant and facilitate the production of renewable natural gas, further strengthening Verbio's commitment to sustainable energy solutions.