Fuel Grade Ethanol
Ethanol is used globally as a fuel and fuel additive and serves as an alternative to gasoline. Ethanol’s adoption has become widespread, as it is inexpensive to produce and can be produced in certain geographies using locally-available feedstocks such as corn and sugar cane.
According to the Renewable Fuels Association (RFA), in 2011, there were more than 200 ethanol plants in the United States producing nearly 14 billion gallons of ethanol, and ethanol exports hit a record 1.2 billion gallons. Virtually all ethanol produced today utilizes edible sugar and starch sources, including corn in the United States and sugarcane in Brazil. According to the RFA, United States’ corn ethanol production increased from 3.9 billion gallons in 2005 to nearly 14 billion gallons in 2011, which represented a compound annual growth rate of almost 25%. Outside of North America, fuel-grade ethanol consumption was approximately 10 billion gallons in 2011.
As the demand for ethanol continues to grow, it is believed that production will increasingly shift away from food-based feedstocks to non-food-based resources. For example, natural gas can be converted into ethanol and provides an attractive alternative to gasoline, as it is low-cost and clean burning.
Historical Ethanol Production in Key Global Markets
Source: Renewable Fuels Association
Various countries have adopted measures to increase the amount of ethanol that is blended into the existing fuel supply. In 2005, the U.S. Energy Policy Act created the Renewable Fuel Standard (RFS), which established the first renewable fuel volume mandate in the United States. In 2007, the U.S. Energy Independence and Security Act (EISA) amended the RFS into the Renewable Fuel Standard 2 (RFS2). The RFS2 requires the blending of renewable fuels at increasing volumes, culminating in the production of 36 billion gallons of renewable fuels by 2022.
RFS II Ethanol Production
Source: Energy Independance and Security Act of 2007
Many countries outside the United States have adopted blending programs in order to encourage the adoption of ethanol into their gasoline supply.
Worldwide Ethanol Mandates
Ethanol Blend Targets
||5% in Queensland; 4% in New South Wales
||RFS of 5%
||9 provinces require 10% to date; 15% overall biofuels target by 2020
||8%; plans to increase to 10%
||10% by 2020
||Current 5% and moving to 10%; overall biofuels target of 20% by 2017
||3% expected to increase to 10% in 2012
||36 billion gallons of biofuels by 2022
Source: OECD-FAO, Biofuels Digest (July 2011)
Ethanol is also used in several industrial applications across various end-markets including personal care, pharmaceuticals, coatings and food products. We estimate that the global demand for industrial ethanol was approximately 1.6 billion gallons in 2011. China accounts for more than half of the demand for industrial ethanol. Other major markets are the United States, Europe, and Brazil.
Coskata’s platform technology can enable the production of ethanol for dehydration to ethylene. Today, ethylene is primarily produced from steam-cracking fossil-fuel feedstocks including ethane, propane and naphtha. Ethylene is the simplest hydrocarbon and is also one of the most widely-produced petrochemicals in the world. Global production and consumption of ethylene in 2010 were both approximately 121 million metric tons, representing sales of approximately $140 billion based on average 2010 market prices. According to a report published by SRI Consulting in July 2011, global demand for ethylene is forecast to grow at 3.4% over the next five years.
Ethylene is used as a raw material in the production of polymers such as polyethylene, polyethylene terephthalate, polyvinyl chloride, and polystyrene. These polymers are used in a wide variety of industrial and consumer markets such as the packaging, transportation, electrical/electronic, textile, and construction industries.