Global Fuel Ethanol Industry

Source: http://www.wallstreetdaily.com

By Makarand Gawade, Staff Writer

Evolution of Fuel Ethanol Industry

The ethanol industry has come a long way from its first usage of ethanol to power an engine in 1826 and subsequent usage as a lighting fuel in the 1850s. Ethanol blended gasoline was first used in the 1920s as octane booster and this fuel was in high demand during World War II because of fuel shortages. In the last three decades Ethanol industry has become one of the prominent industries in the space of renewable energy, with an incredible growth of 3,700% in the last three decades.

The ethanol production in the world has increased from 985M gallons to 24.5B gallons in the last thirty years. The crucial growth drivers for this industry are sharp rise in crude oil prices, rising greenhouse gas emissions, increased awareness about the detrimental effects of usage of fossil fuels on the environment, and government encouragement through incentives to produce fuel ethanol.

Why this industry is important

RenewableFuel Ethanol is a renewable fuel, which means it is produced from renewable sources. Ethanol can be produced from sugar based feedstocks such as sugar cane, sweet sorghum; starch based feed stocks such as corn, sorghum, and wheat; cellulosic feedstocks such as crop residue and wood residue. Ethanol is one of the very few clean-burning liquid fuels available to replace gasoline used in automobiles. Usage of ethanol blended gasoline is facilitating reduction of greenhouse gas emissions, and making the air we breathe much cleaner. Ethanol reduces greenhouse gas emissions by approximately 35% – 40% when compared with gasoline. Ethanol also requires far less fossil fuel inputs than required for gasoline refining. Producing 20 barrels of ethanol requires just 1 barrel of crude oil that reinforces the importance of ethanol as a clean fuel.

Global Ethanol Production
2014 Worldwide Fuel Ethanol Production

This industry is facilitating many countries around the world to reduce their dependence on imported crude oil. To give an example, Ethanol is blended in more than 97% of US gasoline today, and in 2012, the US fuel ethanol industry aided US to reduce its expenditure on imported oil by a whopping US$44B. This demonstrates the magnitude with which this industry can influence any country’s energy policies.

Technologies are rapidly evolving that allow ethanol producing nations to replace even larger volumes of oil. Ethanol blends such as E5 (Colombia, India, and Peru), E10 (USA), E20 (UK), E30, and E50 are gaining popularity as consumers seek affordable alternatives to imported oil. Also flex fuel vehicles (FFVs) are increasingly gaining traction, and Brazil is the pioneer in FFVs. The global ethanol industry has emerged as an economic engine for communities across geographies. In the US alone, this industry supported over 80,000 direct jobs and over 220,000 indirect jobs across diverse sectors of the economy.

Dominant players

Source: www.theenergycollective.com
Source: www.theenergycollective.com

US and Brazil are the dominant forces in the global fuel ethanol industry with a production of more than 80% of global ethanol. The US is mainly a corn based ethanol producer, while Brazil is sugarcane based. In South America besides Brazil, countries such as Argentina, Colombia, Paraguay, and Peru are taking important strides towards increasing production of fuel ethanol. All these countries have already mandated ethanol blending and provided incentives for ethanol production. In Asia, China, India, and Thailand are leading the pack for ethanol production; however, political factors, and lack of proper incentives and mandates are impeding further growth of ethanol production. The African continent is still lagging in fuel ethanol production, in comparison with other parts of the world, and only a few countries such as South Africa, Swaziland, Mozambique, and Uganda have fuel ethanol production facilities.

 US Fuel Ethanol Production                              

US Ethanol Production
Source: Renewable Fuel Association

 

 

 

 

 

 

 

 

 

Typical Ethanol Plant: 

Plant pic
Source: Praj Industries Ltd.

Future of the industry

The future of global ethanol looks promising. Sugar cane and corn will continue to be primary feedstock upon which the industry will grow. This industry will be a cornerstone to help oil importing nations across the world, for transitioning away from a fossil fuel economy. The major governing factor in the global fuel ethanol space is the quantity of agricultural produce required to create substantial amount of ethanol. I believe the second generation feedstocks – cellulosic feedstock – will play a crucial role in the progress of this industry in coming years.

In sum, through such articles on renewable energy industry every week, we at Das Tor, wish to give T-birds a snapshot of diverse clean technologies. These articles would also help you to prepare for job interviews in such industries. So peeps, don’t forget to follow us on Das Tor every week to become familiar with multifarious dimensions of this incredibly important space. Please contact Mak at makarand.gawade@global.t-bird.edu.  

References
https://www.ag.ndsu.edu/energy/biofuels/energy-briefs/history-of-ethanol-production-and-policy
http://www.transparencymarketresearch.com/fuel-ethanol-market.html
http://chooseethanol.com/what-is-ethanol/entry/why-is-it-important/
http://westernfarmpress.com/management/40-interesting-facts-about-ethanol
http://ethanolrfa.org/pages/World-Fuel-Ethanol-Production
http://praj.net

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