Coal-based ethanol is on the rise, while bioethanol faces numerous challenges
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Coal-based ethanol is on the rise; the main production method for ethanol in China is coal-based ethanol synthesis. In the past two years, coal-based ethanol has seen rapid development, with the production process involving the use of coal-derived syngas as a raw material, followed by methanol and dimethyl ether carbonylation and hydrogenation to produce ethanol. With the support of **policies and growing market demand, the coal-to-ethanol industry has developed rapidly; numerous coal-to-ethanol projects have been implemented in China, leading to a continuous expansion of the market scale. To date, 14 coal-to-ethanol production plants have been built across the country, of which 9 are in actual operation and producing products. The four plants with the largest production capacity are Anhui Carbonxin, Shaanxi Yushen, Henan Liyuan, and Shandong Hengxin. The ethanol plant in Shandong Hengxin, which came online in 2025, has a designed capacity of 500,000 tons per year (the same applies to annual production capacities). According to incomplete statistics, there are further coal-to-ethanol projects with a total production capacity of 7.4 million tons planned to come online in the future. Zhu Jiajun said that if all these planned projects are brought online, the production capacity of coal-based ethanol will exceed 10 million tons. According to industry forecasts, the production capacity of coal-based ethanol is set to exceed 6 million tons in the next three years alone, which could crowd out the current chemical market for ethanol derived from grain and anhydrous ethanol, worth 5 million tons, as well as the fuel ethanol market generated by local refineries, which amounts to 700,000 tons. At present, the production capacity of ethanol made from coal has reached over 3 million tons, and in just 2 years it has captured 11% of the ethanol market share. In the first two months of this year, the nationwide sales volume of bioethanol dropped from 795,400 tons to 637,600 tons, a decrease of 19.83%, and bioethanol continues to lose market share. It is foreseeable that competition in the bioethanol market will intensify in the future, with more companies being eliminated.
Biological ethanol faces numerous challenges. Looking at the downstream consumption in the ethanol industry, the demand for fuel ethanol accounts for 40%, giving it a crucial role within this industry. Since our country opened up the market for fuel ethanol, bioethanol has continuously faced threats such as high raw material prices, a shrinking oil products market, and competition from ethanol produced from coal. As the number of new energy vehicles increases, sales of ethanol-blended gasoline are on a downward trend year by year. In 2024, China’s production and sales of new energy vehicles approached 13 million units, representing a year-on-year increase of 35% ； Sales accounted for 40.9% of total sales, an increase of 9.3 percentage points year-on-year. In the first two months of this year, sales of new energy vehicles increased by 48% on a year-on-year basis, and it is expected that by 2025, these vehicles will account for over 50% of total sales. According to institutional forecasts, by 2030, refined oil consumption is expected to decline by 13%–21% compared to 2024, and sales of ethanol-blended gasoline will also show a downward trend. Fuel ethanol is precisely an important downstream application of coal-based ethanol. Zhu Jiajun said that currently, coal-based ethanol has taken over 50% of the market share in domestic refining held previously by bioethanol; in Shandong’s domestic refining market, coal-based ethanol accounts for over 70% of the total. This is indeed the case; data from a large biofuel ethanol producer show that from January to February, sales of fuel ethanol by this company in a certain province dropped by over 6% on a year-on-year basis. The continuous loss of market share has intensified competition among fuel ethanol producers, leading to increasingly fierce market battles; some companies even compete by selling at prices below their costs, rendering the price alliances established in the past virtually ineffective. Industry experts say that from the perspectives of environmental management, costs, and food security, bioethanol will no longer be the best choice for ethanol-based gasoline. Looking ahead, the development of the bioethanol industry has reached a crossroads; the production of ethanol from coal effectively addresses the issues of insufficient capacity for grain-based fuel ethanol and high prices of industrial anhydrous ethanol. However, as competition in the market intensifies, both bioethanol and coal-based ethanol need to find new ways to survive. The industrialization of non-grain ethanol and its further development downstream have become key directions for the industry’s growth, in order to increase the value of the supply chain and make the most efficient use of resources.