Ethanol is the most widely used biofuel globally. The bio ethanol market provides a renewable octane booster and oxygenate for gasoline, reducing tailpipe emissions and displacing fossil fuel. The bio ethanol market is dominated by the US (from corn) and Brazil (from sugarcane). Ethanol is typically blended at 10% (E10) in most gasoline; higher blends (E15, E85) are used in flex-fuel vehicles. As the world seeks to reduce gasoline consumption, the bio ethanol market is growing, supported by blending mandates and high-octane demand.

The broader bio fuels market includes this segment. A key factor is feedstock cost. Corn ethanol is produced by dry or wet milling: corn is ground, cooked, and fermented with enzymes and yeast. The bio ethanol market for "dry grind" (the most common) produces ethanol and distiller's grains (DDGS, a high-protein animal feed). The bio ethanol market for "wet" milling separates the corn into starch, germ, and fiber, producing a higher-value stream (corn oil, gluten feed). The bio ethanol market for "cellulosic" ethanol (from corn stover, wheat straw, wood chips) is less mature and more expensive.

Sugarcane ethanol (in Brazil) is more energy-efficient than corn ethanol. The bio ethanol market for "sugarcane" uses the sugar directly; the bagasse (fiber residue) is burned to generate heat and electricity (making the plant energy-self-sufficient and a net power exporter). The bio ethanol market for "flex-fuel" vehicles (FFVs) that can run on any blend up to E85 is widespread in Brazil. The bio ethanol market for "E100" (pure hydrous ethanol) is also used in Brazil.

The bio ethanol market is driven by the RFS in the US and blending mandates in other countries. The bio ethanol market for "octane" is important: ethanol has a research octane number (RON) of about 109, compared to 91-95 for gasoline. As engines become more efficient (higher compression, turbocharging), they require higher octane. The bio ethanol market for "high-octane" mid-level blends (E20, E30) is being studied. The bio ethanol market for "FFV" sales has been stagnant in the US but is growing in China and India.

The bio ethanol market is also affected by the "blend wall." Most gasoline is sold as E10; going beyond 10% ethanol requires approval for older vehicles (which may have fuel system compatibility issues). The bio ethanol market for "E15" (approved for cars 2001 and later) is growing slowly. The bio ethanol market for "E85" requires dedicated FFVs. The bio ethanol market for "flex-fuel" tuning is a niche aftermarket.

Looking ahead, the bio ethanol market will see the development of "corn oil" as a co-product for biodiesel/renewable diesel. The bio ethanol market for "carbon capture" at ethanol plants (capturing CO2 from fermentation) can produce low-carbon ethanol and even "carbon-negative" ethanol if the CO2 is sequestered. The bio ethanol market for "waste-based" feedstocks (like municipal solid waste) is being researched. As governments seek to decarbonize gasoline, the bio ethanol market will remain a major player.

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