U.S. Biggest User of Ethanol

SRIC Consulting published its 2009 Ethanol report, which studies the most recent market and regulatory developments to clarify the position and direction of this quickly changing industry, the group said. The report found that global demand for ethanol is predicted to increase annually by 9.3% over the next five years. The U.S. is the largest consumer, using 50% of the world’s supply, largely due to mandated production levels specified by legislation.

In the U.S., practically all ethanol is made by the fermentation of corn, but by 2015, the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 is requiring sizable quantities of ethanol to be derived from cellulosic sources. The report said that enthusiasm for ethanol in the U.S. has led to a doubling of production capacity from 2007 to 2009, which overwhelmed demand and resulted in an idling of about 20% of the 2009 capacity.

In Europe, ethanol consumption will double in the next five years and rise in Brazil, as consumers continue to purchase flexible fuel cars capable of operating on pure ethanol and mixtures of ethanol and gasoline. In China, consumption will grow only moderately, as the government has discouraged capacity buildup for fear that increased production will cause food prices to rise. In general, concerns over ethanol causing food prices to rise have subsided in the last year as corn prices fell significantly.