2022 ethanol market global forecast
The global ethanol market was valued at $80 billion in the year 2020. It is projected to grow further to $96.1 billion at a compound annual growth rate (CAGR) of 3.2% by the year 2026. In the particular context of the US market, it produced 13.9 billion gallons of ethanol in 2020. This was a decrease of 11.7% from the 2019 levels. There were a number of factors that contributed to this decrease in ethanol production in America.
This includes diminished demand for gasoline, thanks to the stringent regulations which were put in place at the outbreak of the COVID-19 pandemic, small refinery exceptions, and lower exports thanks to Trump-era protectionist trade policies.
Despite all this, the US ethanol sector made a profit in 2022, and as of April 2021, production had recovered to around 90% of the pre-pandemic levels. However, very recently, the US Energy Information Administration (EIA) reduced its forecast for ethanol production in the country for both 2022 and 2023. It did not change its outlook for fuel ethanol blending for 2022 which remained at 920,000 barrels per day. Basically, the EIA predicts that ethanol production will average 1.01 million barrels per day in 2022 and 1 million barrels in 2023. In 2021, ethanol production in America averaged 980,000.
What was the impact of the COVID-19 pandemic on the global ethanol market?
Essentially, the outbreak of the COVID-19 pandemic resulted in virtually all governments in the world putting in place stringent lockdown regulations that ended up causing the disruption of the production, import, and export of fuel ethanol globally. Also, the pandemic gave rise to the disruption of product demand and created a supply chain crunch that placed many constraints to the businesses in the sector. As we speak, most countries have already lifted or are in the process of lifting the COVID-19 regulations. This offers an improved outlook of the global ethanol industry for 2022 and the years to come.
What are the key factors driving the ethanol market?
As it was earlier noted, North America and in particular, the United States dominates the fuel ethanol industry, being both the biggest producer and consumer of this biofuel. According to data obtained from BP, fuel ethanol accounts for 83% of all the biofuel produced in North America. While South and Central America come a close second at 72%. The key factor that has driven the global ethanol market in the past couple of years and is bound to do so in the coming years is the US government’s encouraging initiatives.
He has directed the Environmental Protection Agency (EPA) to issue an emergency waiver on the Clean Air Act. This will allow the sale of gasoline containing no more than 15% ethanol from June 1st to September 15th, 2022. It is important to note that this is a 5% increase from the usual blend of gasoline sold in the United States. This change will decrease gasoline prices in America by around 10 cents per gallon at the 2,300 gas stations nationwide that are equipped to pump this blend. While this is a short-term measure, many in the industry are viewing it as a step in the right direction. This heightened demand for fuel ethanol blending in gasoline is also being witnessed in other countries around the world and especially in Asian states. For example, both China and India have recently announced their plans to increase the consumption of fuel ethanol in gasoline in the foreseeable future.
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