Fuel Ethanol Market Report 2026

The fuel ethanol market size has grown strongly in recent years. It will grow from $106.73 billion in 2025 to $114.33 billion in 2026 at a compound annual growth rate (CAGR) of 7.1%. The growth in the historic period can be attributed to government biofuel policies, expansion of corn and sugarcane cultivation, rising gasoline consumption, growth of fermentation technologies, availability of agricultural feedstocks.

The fuel ethanol market size is expected to see strong growth in the next few years. It will grow to $147.71 billion in 2030 at a compound annual growth rate (CAGR) of 6.6%. The growth in the forecast period can be attributed to increasing decarbonization targets, rising investments in second-generation biofuels, expansion of ethanol export markets, growing demand for renewable fuels, increasing focus on waste-to-fuel technologies. Major trends in the forecast period include increasing adoption of ethanol blending mandates, rising production of bio-based fuels, growing use of cellulosic ethanol, expansion of flexible fuel vehicle infrastructure, enhanced focus on energy security.

The expansion of the oil and gas industry is expected to propel the growth of the fuel ethanol market going forward. The oil and gas industry is a sector encompassing the exploration, extraction, refining, transportation, and marketing of petroleum products. Fuel ethanol has been utilized in the oil and gas industry primarily as a biofuel as it offers reduced greenhouse gas emissions, enhanced octane levels, improving combustion efficiency and reducing carbon monoxide and particulate emissions, and contribute to improved engine performance. For instance, in November 2023, according to the US Energy Information Administration, a US-based federal statistical system for gathering, processing, and disseminating energy data, there is an increase in U.S. crude oil output to 12.4 million b/d in 2023 from the record high of 11.7 million b/d in 2022. Therefore, the expansion of the oil and gas industry is driving the growth of the fuel ethanol market.

Major companies active in the fuel ethanol market are emphasizing the creation of advanced solutions, such as hybrid ethanol-powered vehicles, to boost fuel efficiency, cut carbon emissions, and support the transition to cleaner mobility. A hybrid ethanol-powered vehicle (e-HEV) is a hybrid system that can operate on various ethanol-gasoline mixtures (including E20, E85, or even pure ethanol, depending on configuration) while integrating an electric drivetrain. For example, in August 2023, Toyota Kirloskar Motor, an automobile manufacturer based in India, introduced a prototype of the world’s first BS 6 (Stage II) electrified flex-fuel vehicle, developed using the well-known Innova Hycross platform. This vehicle merges a flex-fuel engine capable of running on higher ethanol blends with a strong-hybrid electric powertrain that uses a relatively small battery (approximately 1.3-1.5 kWh compared to the 40-60 kWh typically found in battery-electric vehicles), allowing a substantial amount of driving in electric mode. This improves fuel efficiency and lowers emissions without relying heavily on large battery packs. This innovation highlights how the fuel ethanol industry is progressing beyond basic ethanol-petrol blends toward advanced hybrid mobility technologies that combine renewable biofuels with electrification.

In September 2024, Gevo, a US-based biofuel company that specializes in the creation of bioethanol, acquired Red Trail Energy for an undisclosed amount. The acquisition is expected to enhance Gevo’s ethanol production capabilities while expanding carbon capture and sequestration efforts. Red Trail Energy is a US-based refining, chemicals, polymers, and biofuels company that operates ethanol plants.

Major companies operating in the fuel ethanol market are Valero Energy Corporation, Aemetis, Inc., British Petroleum Company plc, Cargill, Incorporated, Archer Daniels Midland Company, Delta-T Corporation, Raízen S.A., Green Plains Inc., Renewable Energy Group, Inc., Flint Hills Resources, LP, CropEnergies AG, Abengoa Bioenergy S.A., Aventine Renewable Energy Holdings, Inc., Big River Resources LLC, Red Trail Energy LLC, Marquis Energy LLC, ICM, Inc., POET, LLC, Pacific Ethanol, Inc., BlueFire Renewables, LLC, Advanced BioEnergy LLC, White Energy, Inc., The Andersons Ethanol Group LLC, Glacial Lakes Energy LLC.

North America was the largest region in the fuel ethanol market in 2025. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the fuel ethanol market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the fuel ethanol market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The fuel ethanol market consists of sales of gasoline, flex fuel, and ethanol blended petrol. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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