Market Trends of Bioethanol Industry
Increasing Usage in the Automotive and Transportation Sector
- The most extensive bioethanol applications are fuel and fuel additives in the automotive and transportation industries. It is used alongside conventional petrol to fuel petrol engines in road vehicles. It can also produce ETBE (ethyl-tertiary-butyl-ether), an octane booster used in many types of petrol.
- Blending bioethanol with conventional fuels improves its renewability. E10 energy is so named because it contains 10% ethanol. Bioethanol is a low-carbon fuel that may help to decarbonize the transport industry.
- In the United States, tax incentives have been provided to gasoline marketers for using bio-ethanol as an octane enhancer and gas extender over the past three decades. This has driven boosted the usage of bio-ethanol in this sector.
- Biofuel producers in the United States received a boost from the latest legislation, which encompasses funding and critical tax credits for producing low-carbon fuels. Funding of USD 500 million was allocated for biofuel infrastructure improvements by installing storage tanks and related equipment for ethanol-biodiesel blends.
- In 2022, according to OICA data, the overall production of automobiles increased by 6% compared to 2021. The global automotive production in 2022 was around 85.02 million units.
- The Asia-Oceania and Americas regions recorded automotive production of 50.02 million and 17.75 million units in 2022, registering an increase of nearly 7% and 10%, respectively, compared to 2020. However, Europe recorded a production of 16.21 million units in 2022, a decrease of 1% from the production achieved in 2021.
- Furthermore, in 2021, the United States Department of Energy announced to provide USD 64.7 million in funds for research and development projects dedicated to producing low-cost biofuels as fossil-fuel replacements for heavy-duty transportation like airplanes to bolster America's commitment to reaching net-zero emissions by 2050.
- With various economies announcing their plans to increase bio-ethanol consumption in fuels, the demand for bio-ethanol will likely surge during the forecast period.
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North America Region to Dominate the Market
- The North American region is dominating the bioethanol market share. The United States is the largest producer of bioethanol globally, followed by Brazil, China, India, and Canada. It is also the largest consumer of bioethanol.
- In recent years, bioethanol production has increased due to higher renewable fuel standard (RFS) targets and growth in domestic motor gasoline consumption, almost all of which is now blended with 10% ethanol by volume.
- In 2022, the overall production of automobiles in North America was around 14.79 million units compared to 13.46 million units in 2021.
- Around 93% of the country's 263 million registered automobiles may operate on E15. Furthermore, around 22 million flex-fuel vehicles (FFVs) in the United States can run on ethanol blends up to E85.
- The Canadian Clean Fuel Standard requires liquid fuel (gasoline, diesel, and home heating oil) suppliers to gradually reduce the carbon intensity of the fuels they produce and sell for use in Canada over time, resulting in a reduction in the carbon intensity of liquid fuels used in Canada of approximately 13% (below 2016 levels) by 2030.
- Some initiatives include the Canadian government's recent USD 1.5 billion investment in a Low-carbon and Zero-Emissions Fuels Fund, which may enhance support for local production and adoption of low-carbon fuels like hydrogen and biofuels.
- Due to all the factors mentioned above, the demand in the market studied is expected to increase in the North American region.
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