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Description | Overview | HistoryEthanol producing countries | Indian ethanol market | Major trading centers

Ethanol is a chemical compound that is made up of three basic elements i.e. carbon, hydrogen and oxygen having the empirical formula C2H6O. This mild intoxicating agent has no color and taste but definitely a distinctive smell and is flammable also. Ethanol, also known by the names ethyl alcohol or grain alcohol, is used primarily as a significant ingredient in alcoholic beverages and as a fuel. Ethanol is also considered as a clean-burning added feature to gasoline. To produce this chemical, either sugar from the various agricultural crops are fermented or it is produced chemically with the help of ethylene.


Ethanol is chemically an important compound as the range of uses that it provides is quite wide. Also, the chemical has got some unique physical properties that makes it even more viable constituent in various other uses. Ethanol is an easily soluble component, and when mixed with water, it reduces the surface tension of water. The main demand of ethanol arises from the transport sector as the chemical provides an efficient fuel when mixed with petrol. This use of ethanol has been discovered quite recently and all the countries in the world have started mandating the use of ethanol mixed petrol in all types vehicles including rockets. Also, ethanol has been used in the fermented and distilled alcoholic beverages since a long time that include whiskies, brandies, rum, vodka and beers. Chemicals like nail polish, vinegar, agricultural chemicals etc are also made by using ethanol.

The world production in ethanol summed up to 10770 million gallons in 2004. The leading producing country in the list was Brazil contributing approximately 37% in the world production. The country is followed by United States of America and China at the 2nd and 3rd place respectively. With the introduction of new technology, and the discovery of many more uses of ethanol, the production is required to rise as it has been rising since the past years. World consumption figures are estimated to cross the 25 million tons mark in 2006. The consumption has also been increasing gradually with time and would grow @ 2 or 3% making the global ethanol market worth over $16 billion by 2005. The main ethanol consuming countries are

  • Brazil
  • USA
  • India
  • European Union
  • Japan
  • Mexico
  • China
  • Korea
  • Thailand

Regarding the world trade in the context of ethanol, the major player is European Union as it is the major exporter of the chemical compound. World estimated trade figures for the year 2006 is calculated to be around 2.5 million tons with the leading countries in the ethanol exporters list are

  • European Union

  • United States

  • Brazil

  • China

  • Thailand

  • France

  • South Africa

  • United Kingdom


The history of ethanol dates back to the prehistoric times when it was used as an intoxicating ingredient in alcoholic beverages. The question that how did ethanol originate is yet to find its answer but the archeological findings as old as around 9000 years that were found in northern China suggest that even the people in the last part of Stone Age used to consume ethanol as alcohol. But it is clear that the people then didn’t know about the existence of ethanol in their alcohol.

Islamic alchemists first recognized the compound in a relatively pure form as they found out the process of distillation. They wrote and published several writings on the distillation of wine and extracting ethanol and also about the mixture of ethanol and water. But ethanol in its absolute form was never obtained until in 1796 when Johann Tobias Lowitz filtered the already distilled ethanol with the help of charcoal. After the pure form of ethanol was invented, the research work on the chemical got speed and in the beginning of 1800s, Antoine Lavoisier discovered that ethanol is a compound of carbon, hydrogen and oxygen. Its chemical formula was determined in 1808 and structural formula in 1858 making it one of the first ever compounds to have their chemical structures determined. Henry Hennel in Great Britain discovered the method of obtaining ethanol synthetically in 1826.

In the 19th century, ethanol grew popular and became one of the major lighting fuels in the world. It was vastly used and that is why, it looked appropriate to impose taxes on it to raise funds during the civil war in America. With time the other uses of ethanol were also discovered and the main use proved out to be as a fuel. In 1906, Henry Ford termed ethanol as the fuel of the future.

Ethanol producing countries

Production of ethanol involves a complicated and a systematic procedure. As mentioned earlier, ethanol can be produced by two ways either biologically or chemically
  1. Fermentation - The traditional and the most commonly used method of preparing ethanol is the biological method in which the sugars of various agricultural crops like sugarcane, corn, wheat, barley, cassava, rice, grains, sugarcane, sweet sorghum, sugar beet, rye are fermented with yeast. The process of growing yeast to produce alcohol is called brewing. This process is capable of producing only small amounts of ethanol.
  2. Ethylene hydration – This is the second method of producing ethanol in which ethylene is hydrated with the help of an acid catalyst usually phosphoric acid. Charcoal is also an important component that helps in the hydration process and extracting ethanol.

The result of either of the above two processes is ethanol – water mixture that must be purified before use. The processes of fractional distillation is performed to concentrate the ethanol content and then drying of ethanol is done with the help of lime, salt, molecular sieve etc which brings it to its purest form.

The world production of ethanol in 2004 was summed up to 10770 million gallons. The largest ethanol producer country is Brazil followed by United States of America and China. The list depicting the largest ethanol producers of the world with their production figures are

  • Brazil (3989 million gallons)

  • USA (3535 million gallons)

  • China (964 million gallons)

  • India (462 million gallons)

  • France (219 million gallons)

  • Russia (198 million gallons)

  • South Africa (110 million gallons)

  • United Kingdom (106 million gallons)

  • Saudi Arabia (79 million gallons)

  • Spain (79 million gallons)

Production of ethanol in India

India is the fourth largest producer of ethanol in the world and the second largest producer in Asia after China. The country produces around 460 million gallons of ethanol annually contributing approximately 4% to the world total production. Though India produces such large quantities of ethanol, still it has the capacity to produce even larger quantities of around 713 million gallons per year. That is why it can be said that the utilization rate in the country is usually low. There are only 10 ethanol plants that exist in India and 20 more ethanol plants are proposed to be constructed in the near future to cope up with the increasing demand. Most of the plants are located in the states of

  • Uttar Pradesh
  • Maharashtra
  • Tamil Nadu
Indian ethanol  market

In India, ethanol is not traded in the commodity exchanges like the other commodities even though the country is a significant player in the world market. India has got potential of becoming one of major player in the world ethanol market as it has ample capacity to produce the chemical compound almost double of its current produce. But due to a lower utilization rate, India has to constrain its production level. The current production of the chemical in the country hovers around 460 million gallons annually, the maximum contribution being done by Uttar Pradesh as it has got the highest number of ethanol plants in the country among the 10 existing plants. The production of ethanol in the country has been increasing and is estimated to increase further in the future.

Likewise, the consumption of ethanol has also been increasing in the past and it is believed that the consumption figures would cross the 22-lakh tons mark in 2006. The use of ethanol in petrol has proved to be advantageous as it enables a good combustion and that is why, the use of petrol with 5% ethanol content (E5) has been made compulsory by the government. Also the consumption of the petrol with a raised ethanol content of 10% (E10) is still under thought. The ethanol that is required for the preparation of E5 blend petrol is around 98 million gallons annually. The country also exports some quantities of ethanol and stands at the 6th place in the list of leading exporting countries. The estimated figures for the Indian ethanol exports for the year 2006 are around 70000 tons.

Major trading centers of ethanol

The major trading center where ethanol is traded is Chicago Board of Trade (CBOT)

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