Biofuel Manufacturing Industry Overview

Excerpt from Biofuel Manufacturing Report

Companies in this industry produce ethyl alcohol, known as ethanol, and biodiesel fuel. Major biofuel producers include US-based Green Plains Renewable Energy and Pacific Ethanol; Cosan and Copersucar (headquartered in Brazil); and Abengoa (Spain); as well as units of traditional fuel makers like Valero and Chevron and crop processors like Archer Daniels Midland and Bunge Limited (all based in the US).

Competitive Landscape

Demand is driven by federal legislation and regulations that establish a government-mandated market for biofuels. The profitability of biofuel production facilities depends on prices of gasoline and diesel, which fluctuate based on world petroleum demand and domestic refinery use. Economies of scale in ethanol production are limited due to the transportation costs associated with gathering feedstocks (corn and other biomasses) and transporting the ethanol to blending sites. Small companies can compete effectively by developing business relations with distributors and by delivering consistently. The industry is concentrated: the largest 50 companies generate more than 75 percent of revenue.

Products, Operations & Technology

Ethanol makes up more than 90 percent of current US biofuels production of about 15 billion gallons per year, meaning that about 14 billion gallons of ethanol are produced annually. About 1 billion gallons of biodiesel were produced in 2011. US ethanol production grew by more than 50 percent between 2008 and 2011; during the same period biodiesel production grew by about 40 percent.