Russia Bioethanol Market Overview, 2029

Russian bioethanol industry has a long and complex history. It originates in the beginning of the 20th century. At first, bioethanol was used only for industrial purposes in the production of chemicals and pharmaceuticals. Due to the world's tendency toward renewable energy sources, the Russian government started to stimulate bioethanol use as a transportation fuel. In 2005, the enactment of Technical Regulations for Ethyl Alcohol and Ethyl Alcohol-Based Products took place, in which standards for bioethanol production and utilization were set. In 2011, there was the adoption of the State Program for the Development of the Production and Use of Biofuels, which established the targets for production and utilization of bioethanol and other biofuels. In 2020, production of around 300,000 tons of bioethanol in Russia was used mainly as biofuel for the transport sector. The industry was facing many problems that included a lack of investment, high production costs, and the lack of infrastructure for distribution and storage of bioethanol. The Russian government in the development of the industry has adopted a set of measures subsidies for the production and consumption of bioethanol, reduction of excise taxes on biofuels, and research and development promotion. On the other hand, a number of factors have affected the bioethanol industry in Russia. The government of Russia has adopted various steps to improve sustainability in the production of bioethanol. The government is working to address the challenge by providing incentives for the construction of new fueling stations and promoting the development of distribution networks.. In 2018, Russia became the first country in the world to approve the use of bioethanol in aviation fuel, and in 2020, the country launched its first bioethanol-powered train. The industry has contributed to the reduction of greenhouse gas emissions and improved energy security by reducing the country's dependence on imported fossil fuels. According to the research report "Russia Bio-Ethanol Market Overview, 2029," published by Bonafide Research, the Russia Bio-Ethanol market was valued at more than USD 1.92 Million in 2023. Bioethanol market in Russia has grown due to many reasons one of them was the government that has supported the industry. The government has put in place many policies that aim at driving the use of bioethanol and other biofuels. Some of the policies include providing producers with subsidies, exempting biofuel blends from taxation, and mandating the use of biofuels in specific industries. On the other hand, Russia has been an increase in the demand for renewable energy. With the growth in concern regarding the future of climatic changes and energy security, many players are in some way pressuring countries to switch from fossil fuels to more environmentally friendly alternatives. Bioethanol stands in a better place than other alternatives to fossil fuels as it can be used as a transport fuel; it is renewable, biodegradable, and produces low greenhouse gas emissions Russian bioethanol market has been driven by increasing collaboration between industry players. Over the last few years, producers of bioethanol, technology provides, and other stakeholders in the industry have been in a hurry to enter into partnerships and collaboration. Russia's regulatory policy – as part of their environmental regulations, some rules are aimed at emissions reduction and renewable fuel in the country. Some regulations likely to affect bioethanol production and consumption include the reduction of greenhouse gas emissions and the use of cleaner fuels.

The bio-ethanol market in Russia can be classified according to the nature of the feedstock used to produce the bio-ethanol, which includes four major types: starch based, sugar based, cellulose based, and others. Starch based bio-ethanol is one of the most used types of bio-ethanol in Russia. More than three-quarters of the bio-ethanol produced in Russia are starch based as Russia is a country with an abundant amount of starch-based crops, such as wheat, corn, and barley. For the promotion of starch based bio-ethanol, the Russian government is supporting this segment by introducing blending mandates and tax incentives. Sugar based bio-ethanol is another segment of the Russian bio-ethanol market, but it has a very small share, as compared to starch based bio-ethanol. Sugar cane and sugar beet are the feedstock used to produce sugar based bio-ethanol in Russia. The main factor which has slowed down the growth of this segment is high production cost and a shortage of feedstock. Cellulose based bio-ethanol is another upcoming segment in the Russian bio-ethanol market; it is produced from agricultural waste, wood chips, and energy crops, which are not used for food. Major promotions from the Russian government include funding in research and development and demonstration projects for cellulose based bio-ethanol. This segment is now in a development stage, and this segment is very promising, as it has abundant resource of feedstock. Other feedstock types for bio-ethanol production in Russia include potatoes, jerusalem artichoke, and other starch-containing crops. These feedstock types are produced on a smaller scale and are mainly used to produce and consume in the region where it is produced. Russia is one of the largest bio-ethanol producers and consumers in the world. Ambitious targets have been set in this country to increase the usage of biofuels, including bio-ethanol, in the transport sector. The Russian government has taken encouraging steps in the form of blending mandates and tax incentives to push the use of bio-ethanol forward. The Russian bio-ethanol market is categorized by end-use industry: automotive and transportation, alcoholic beverages, cosmetics, pharmaceuticals, and others. The automotive and transportation industry represents the largest share in the consumption of bio-ethanol in Russia and is driven by the government's blending mandates, alongside incentives for tax in biofuels. Alcoholic beverages also represent a substantial share in the consumption of bio-ethanol, especially in the making of vodka. Cosmetics and pharmaceutical industries use bio-ethanol for solvents and disinfectants, while other applications are considered in the \"other\" category, including chemical production and power generation. Owing to the firm commitment by the government to cut greenhouse gas emission and other measures set to enhance energy security, the automotive and transportation segment will lead the Russian bio-ethanol market. Alcoholic beverages are also going to gain upward movement due to the increasing demand for vodka, particularly premium and flavored products. The cosmetics and pharmaceuticals application segments should witness steady growth on the back of the rise in demand for natural and organic products. The others application segment should grow moderately, with increased demand for bio-based chemicals and power generation. In to these drivers, the Russian bio-ethanol market is also challenged by several factors, such as investment in production facilities and infrastructure, competition with fossil fuels, and the environmental impact of bio-ethanol production. The COVID-19 pandemic has seriously affected the world bio-ethanol market, with one of the largest producers and consumers of bio-ethanol in the world being Russia. The issue has considerably shaken the supply chain and demand for bio-ethanol in Russia. On its part, the Russian government undertook efforts to support the industry at such a challenging time. The pandemic has meant many bio-ethanol production facilities in Russia either closed down or experienced curtailed production due to a restriction caused by lockdowns and social distancing measures. The closure of borders and disruption of global trade has also impacted the supply of feedstocks and other inputs for bio-ethanol production. The pandemic has significantly reduced global transportation activity and, therefore, the demand for biofuels, including bio-ethanol. The government undertook the following steps towards providing support to the bio-ethanol industry: In April 2020, a temporary excise tax exemption was introduced by the government for producers of bio-ethanol, in order to provide support for the adverse economic situation during the pandemic. The government also provided financial support to bio-ethanol producers that were forced to temporarily shut down or reduce production due to the pandemic.

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Manmayi Raval

Research Consultant

Considered in this report • Historic year: 2018 • Base year: 2023 • Estimated year: 2024 • Forecast year: 2029 Aspects covered in this report • Bioethanol Outlook with its value and forecast along with its segments • Various drivers and challenges • On-going trends and developments • Top profiled companies • Strategic recommendation By Feedstock • Starch Based • Sugar Based • Cellulose Based • Others

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By End-Use Industry • Automotive and Transportation • Alcoholic Beverages • Cosmetics • Pharmaceuticals • Other By Blent • E5 • E10 • E15 TO E70 • E75 TO E85 • Others The approach of the report: This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources. Intended audience This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the bioethanol industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.