Why is coal-to-ethanol profitable, and what does the future market look like?

Figure 2. Price trend chart of ethanol, corn, and cassava Auxiliary material costs are approximately RMB 6,000 per ton; for Guangxi Haiying’s molasses-based production, raw and auxiliary material costs reach RMB 6,600 per ton—such high auxiliary material costs constitute one of the primary reasons for current losses in the biological fermentation process. The United States is a world leader in cellulosic ethanol production technology, investing heavily in policy support, funding, and R&D for cellulosic ethanol. Starting in 2013, the U.S. began constructing three large-scale cellulosic ethanol plants, each with an annual production capacity exceeding 70,000 tons. The largest facility was built by DuPont in Iowa in 2015, using agricultural straw and other lignocellulosic feedstocks to produce up to 90,000 tons annually. Unfortunately, however, this plant has failed to achieve its projected economic targets since commissioning, and most such facilities currently remain idle. Although China possesses abundant straw resources, its cellulosic ethanol industry started relatively late and still faces numerous technical bottlenecks—especially regarding core enzymes and engineered microbial strains, which remain largely imported. In terms of industrialization progress, six large-scale cellulosic fuel ethanol projects have been completed or are under planning in China, yet nearly all are currently idle. According to literature reports, cellulosic feedstock-based bioethanol… Table 3. Economic estimation of ethanol production via biological fermentation using different feedstocks | Item | Unit Price (RMB/ton) | Consumption (per ton ethanol) | Cost (RMB/ton ethanol) | Item | Unit Price (RMB/ton) | Consumption (per ton ethanol) | Cost (RMB/ton ethanol) | Item | Unit Price (RMB/ton) | Consumption (per ton ethanol) | Cost (RMB/ton ethanol) | Item | Unit Price (RMB/ton) | Consumption (per ton ethanol) | Cost (RMB/ton ethanol) | |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| | Corn | 2,300 | 3.02 | 6,946 | Cassava chips | 2,200 | 3.3 | 7,260 | Molasses | 1,600 | 4.54 | 7,264 | Straw | 365 | 6 | 2,190 | | Caustic soda | 3,800 | 0.01 | 38 | Caustic soda | 3,800 | 0.007 | 26.6 | Ammonium sulfate | 1 | 4.5 | 4.5 | Reagents | — | — | 1,600 | | α-amylase | 26 | 0.49 | 12.74 | α-amylase | 26 | 0.45 | 11.7 | Phosphoric acid | 6.5 | 0.8 | 5.2 | Cellulase | — | — | 1,000 | | Yeast | 20 | 0.2 | 4 | Water | 2.3 | 10.28 | 23.6 | Yeast | 20 | 0.08 | 1.6 | Subtotal | — | — | 4,790 | | Glucoamylase | 14 | 3.92 | 54.9 | Yeast | 20 | 0.39 | 7.8 | Sulfuric acid | 200 | 0.012 | 2.4 | Utilities | — | — | — | | Subtotal | — | — | 7,055.6 | Glucoamylase | 14 | 2.2 | 30.8 | Subtotal | — | — | 7,277.7 | Electricity | 0.6 | 800 | 480 | | Utilities | — | — | — | Subtotal | — | — | 7,360.5 | Utilities | — | — | — | Fresh water | 2.3 | 12.8 | 29.4 |

Soybean Special Report: The Dual Impact of U.S. Biofuels on Soybean Meal (Part I)

1. Every leap forward in the U.S. biofuels industry has closely coincided with upgrades to the Renewable Fuel Standard (RFS); policy is the core engine driving industry development. 2. From ethanol to biodiesel, and onward to renewable diesel and Sustainable Aviation Fuel (SAF), policy priorities have progressively shifted toward advanced biofuels, prompting a structural shift in feedstocks toward vegetable oils—including soybean oil. Data Source: USDA, Dadi Futures Research Institute 01 In-depth Analysis of the Fuel Ethanol Industry Fuel Ethanol Market The U.S. fuel ethanol market is one of the world’s largest and most mature biofuel markets. Since 2000, U.S. fuel ethanol production has experienced explosive growth, primarily driven by the mandatory requirements of the Renewable Fuel Standard (RFS). During the 2020–2024 cycle, output has exhibited high-level volatility. The vast majority of U.S. fuel ethanol is blended with gasoline to produce E10 (containing 10% ethanol) or higher-ethanol blends. Consequently, its consumption is highly correlated with total gasoline consumption. Over 95% of ethanol consumption is for transportation fuel; only minor amounts are used as industrial solvents, beverage alcohol, or chemical feedstocks—segments that collectively exert negligible influence on the overall market. The U.S. fuel ethanol market operates in a self-sufficient, slightly surplus trade pattern. It is the world’s largest exporter of fuel ethanol, with major export destinations including Canada, Brazil, the European Union, and Southeast Asia. Imports are extremely limited, coming mainly from Canada (using wheat and other grains as feedstock). Imports serve localized demand near the U.S.–Canada border. Data Source: USDA, Dadi Futures Research Institute Fuel Ethanol Feedstock Structure: Corn Corn dominates feedstock composition: over 90% of ethanol capacity relies on corn, forming a tightly integrated “corn–ethanol–DDGS” value chain. This deeply links the ethanol market to agricultural markets—particularly the corn market. Corn accounts for over 70% of ethanol production costs; rising corn prices directly erode producers’ profit margins. Backed by globally leading corn output, roughly 30% of U.S. corn production is dedicated exclusively to industrial-scale fuel ethanol production—forming the industry’s solid foundation. Corn consumption correlates directly and positively with ethanol output. Typically, producing approximately 2.8 gallons of ethanol consumes one bushel (about 56 pounds) of corn. Thus, growth in ethanol output directly increases corn grinding volumes. This massive scale of consumption makes the ethanol industry the single largest end-user of corn, profoundly influencing corn price formation and trade flows. By-product: DDGS—the co-product of corn-based ethanol production—enters the animal feed market. Data Source: USDA, Dadi Futures Research Institute Fuel Ethanol Capacity and Operating Rates The U.S. ethanol industry has undergone four distinct phases: initial rapid growth → aggressive expansion → stable maturity → saturated maturity. Early-stage overproduction was fueled by policy incentives; later, persistent overcapacity led to declining average operating rates. Industry growth has plateaued, with minimal room for further expansion. Operating rates >100% (2002–2007, 2011, 2014–2017): This is not a data error—it reflects actual industry conditions.

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