Companies in this industry produce ethyl alcohol, known as ethanol, and biodiesel fuel. Major biofuel manufacturers include Abengoa (Spain), Cosan (Brazil), Green Plains (US), Novozymes (Denmark), and Poet (US), as well as units of oil and gas producers such as Chevron and Valero and crop processors such as Archer Daniels Midland and Bunge (all based in the US).
Worldwide, the biofuel market generates about $100 billion in revenue. The US, Brazil, Germany, France, and China are the largest biofuel manufacturers. Global production is expected to increase due to concerns about the environment and fossil fuel dependence. New government tax incentives and subsidies also are expected to boost the industry.
The US biofuel manufacturing industry includes about 200 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $41 billion.
Demand is driven by motor vehicle use and government requirements that ethanol be blended into gasoline. The profitability of biofuel production facilities depends on prices of gasoline and diesel, which fluctuate based on world petroleum demand and domestic refinery use. Economies of scale in ethanol production are limited due to the transportation costs associated with gathering feedstocks (corn and other biomasses) and transporting the ethanol to blending sites. Small companies can compete effectively by developing business relations with distributors and by delivering consistently. The US industry is concentrated: the 50 largest companies generate more than 75% of revenue.