The EU market

Production

Ethanol produced in the EU is used in a variety of sectors.

In the past, the vast majority of EU ethanol production was used in the traditional sector i.e. for beverage and industrial applications.

Since 2006, this trend has reversed and today an increasing share of EU ethanol production is used in the European fuel sector. In 2009 about 70% of ethanol produced in Europe was used as a transport fuel for consumption on the European market. The remaining European ethanol production was used in the traditional sectors, as ethanol exports outside the EU are currently minimal.

Ethanol for fuel use

Europe's fuel ethanol sector was a slow starter. It took almost 10 years to grow production from 60 million litres in 1993 to 525 million litres in 2004. In the following two years (2005-2006), production soared by over 70%.

Production growth was more moderate in 2007 (13% more than in 2006) and increased by 56% in 2008, from 1.8 billion in 2007 to 2.8 billion. Fuel ethanol production grew again in 2009, reaching 3.7 billion litres, an increase of 32% from the previous year.

Compared to the U.S.A. and Brazil, and also to the European biodiesel sector, the EU fuel ethanol sector is rather small. As an indication: in 2008 the U.S.A. produced more ethanol in one month than the EU did in that entire year. But it is also worth noting that, whereas the U.S. biofuel market is dominated by ethanol, the EU biofuel market is predominantly a biodiesel market (75%).

In 2009 the top European countries producing fuel ethanol were, in descending order, France, Germany, Spain and Austria, followed by Sweden and Poland. The top 6 European countries for consuming fuel ethanol were Germany, France, Sweden, the UK, The Netherlands and Poland.

Ethanol for food and industrial uses

Compared to the use of ethanol for fuel, which has experienced consistent growth, the use of ethanol for food and industrial purposes has seen a rather more gradual growth in recent years. However this trend reversed in 2009 when there was a small decrease in amount of ethanol for food and industrial end uses.

Imports into the EU market

Ethanol is classified in the EU trade rulebook (called the Combined Nomenclature) depending on whether it is denatured or undenatured. Currently, ethanol is mostly traded in its undenatured form.

Ethanol is exported to the EU by a large number of third countries most of which benefit from preferential access to the EU market under various trade agreements or arrangements. These countries generally pay less import duty for their ethanol. Other countries, such as Brazil (which is the world's largest exporter) and the U.S.A., are expected to pay the full import duty.

2008 was a record year in terms of imports. Total imports of ethanol (fuel and non-fuel), including those imports of ethanol mixed with other chemicals, reached at least 1.9 billion litres in 2008, representing an increase of 400 million litres compared to 2007. From these imported 1.9 billion litres of ethanol between 1.4 and 1.5 billion litres came from Brazil alone and was destined for use in the European transport fuel market.

In 2009, imports of denatured and undenatured alcohol decreased marginally. There are many reasons that explain this decline - such as poor weather conditions decreasing crop production in Brazil and higher sugar prices that diverted a significant share of Brazilian sugarcane away from ethanol production.

Production capacity