MENLO PARK, Calif. -- Global demand for ethanol is predicted to increase annually by 9.3 percent over the next 5 years. The U.S. is the largest consumer, using 50 percent of the world's supply, largely due to mandated production levels specified by legislation.

Today, SRIC Consulting (SRIC) published its 2009 Ethanol report, which studies the most recent market and regulatory developments to clarify the position and direction of this quickly changing industry.

In the U.S., practically all ethanol is made by the fermentation of corn, but by 2015, the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007 is requiring sizable quantities of ethanol to be derived from cellulosic sources. The enthusiasm for ethanol in the U.S. has led to a doubling of production capacity from 2007 to 2009, which overwhelmed demand and resulted in an idling of about 20 percent of the 2009 capacity.

Lead author and Senior Consultant Eric Linak commented, "In early 2008, U.S. ethanol producers were squeezed by escalating corn prices and overcapacity as the industry overbuilt. In late 2008, most producers were at breakeven levels or worse as ethanol prices fell significantly in tandem with crude oil. Now the industry has the additional challenge of commercializing cellulosic ethanol technology."

In Europe, ethanol consumption is likely to double in the next five years and rise in Brazil, as consumers continue to purchase flexible fuel cars capable of operating on pure ethanol and mixtures of ethanol and gasoline. In China, consumption will grow only moderately, as the government has discouraged capacity buildup for fear that increased production will cause food prices to rise. In general, concerns over ethanol causing food prices to rise have subsided in the last year as corn prices fell significantly.

SRI Consulting's 2009 Ethanol report provides current and comprehensive information on the global ethanol industry, including trends, supply and demand, and analysis of the competitive environment.

SRI Consulting is the world's leading business research service for the global chemical industry. This report was developed by the Chemical Economics Handbook (CEH) group, which provides evaluation of supply/demand relationships and analysis of the industry competitive environment for over 300 chemical products and product groups. SRI Consulting's headquarters are located in Menlo Park, Calif.

SOURCE: SRI Consulting via Business Wire.