Vietnam Bioethanol Market Outlook to 2030

Vietnam Bioethanol Market Overview

• In recent years, the Vietnam bioethanol market has experienced substantial growth, this is reflected by the global bioethanol market reaching a valuation of USD 83 billion in 2023 growing at a CAGR of 6.5% between 2023-2028 driven by the increasing demand for cleaner and sustainable fuel alternatives.
• The Vietnam bioethanol market is fragmented, with numerous small to medium-sized players operating alongside a few major companies including Petrovietnam Biofuel JSC, Central Biofuel JSC, Hoang Anh Gia Lai Group and Tung Lam Company Limited.
• Ho Chi Minh City, dominates the bioethanol market due to its robust industrial base, high population density, and advanced infrastructure driven by significant investments in renewable energy projects and a strong focus on sustainability.
• The bioethanol market in Vietnam is positively impacting the agricultural sector by creating a market for surplus agricultural produce, particularly cassava, used as a feedstock for bioethanol production.

Vietnam Bioethanol Market Segmentation

The Vietnam Bioethanol market is segmented by various factors like Feedstock, End-User, and Region.

By Feedstock Type: The Vietnam bioethanol market is segmented by feedstock into cassava, sugarcane, and others. In 2023, cassava was the dominant feedstock in the market. The abundance of cassava in Vietnam and its high starch content makes it an ideal feedstock for bioethanol production.

By End-User: The market is segmented by end-user into transportation, industrial, and others. The transportation sector dominated the market in 2023. The increasing adoption of bioethanol-blended fuels in vehicles, driven by government mandates and rising fuel prices, has boosted this segment.

By Region: The Vietnam bioethanol market is segmented by region into North, South, East, and West. The northern region dominated the market in 2023. The region's industrial activities and growing population drive the demand for bioethanol.

Vietnam Bioethanol Market Competitive Landscape

• Hoang Anh Gia Lai Group: In 2023, Agricultural firm Hoang Anh Gia Lai announced to conduct a private placement of 130 million shares at a price of VND10,000 each. The proceeds, totaling USD 53.3 million will be used to repay debts and provide working capital to its subsidiaries.
• Mekong Petrochemical JSC: In 2020, Mekong Petrol sold its 49% stake to SK Lubricant for USD 42.1 million. This investment marks SK Lubricant's first foray into overseas markets, aimed at expanding its business in the Southeast Asian region.

Vietnam Bioethanol Industry Analysis

Vietnam Bioethanol Market Growth Drivers

• Increasing Bioethanol Production Capacity: The Vietnam bioethanol market is experiencing significant growth driven by the expansion of production capacities. As of 2023, Vietnam operates seven ethanol plants with a combined annual capacity of 612 million liters. Four of these plants are specifically designed to utilize 1.05 million tons of cassava to produce 420 million liters of bioethanol each year, intended for gasohol blending.
• Rising Automotive Fuel Demand: The automotive industry in Vietnam is growing rapidly, Vietnam's car market recorded sales of nearly 135,000 vehicles in the first half of 2024. This increase in vehicle numbers drives the demand for bioethanol-blended fuels. As the automotive sector continues to expand, the consumption of bioethanol is rising continuedly contributing to the market's growth.
• Export Opportunities to Neighboring Countries: Vietnam's bioethanol market is also being driven by export opportunities to neighboring countries with significant demand from countries like Thailand and the Philippines. These export opportunities are bolstered by trade agreements and competitive pricing, positioning Vietnam as a key player in the regional bioethanol market.

Vietnam Bioethanol Market Challenges

• Feedstock Supply Variability: The availability and cost of feedstock, such as cassava and sugarcane, are subject to fluctuations. In 2024, adverse weather conditions led to substantial decrease in cassava yields, impacting bioethanol production levels. The variability in feedstock supply can lead to inconsistencies in bioethanol production and pricing.
• Limited Infrastructure: The infrastructure for bioethanol distribution and storage is still developing in Vietnam. In 2024, it was reported that only limited fuel stations in major cities were equipped to handle bioethanol-blended fuels. The lack of adequate infrastructure limits the widespread adoption and distribution of bioethanol, posing a challenge to market growth

Vietnam Bioethanol Market Government Initiatives

• National Energy Development: In the National Energy Development Master Plan for 2021-2030, Vietnam aims to scale up biofuel production to 0.28 million tonnes of oil equivalent (TOE) in 2030, with a target of reaching 13 million TOE by 2050.
• Renewable Energy Targets: Vietnam has set ambitious renewable energy targets as part of its national energy strategy. The Vietnamese government has issued decrees mandating the use of bioethanol blends in gasoline, increasing the blend ratio from 5% in 2018 to 10% in 2020, with plans to further increase it to 15% by 2025.

Vietnam Bioethanol Future Market Outlook

The Vietnam bioethanol market is poised for remarkable growth, driven by increasing adoption of bioethanol-blended fuels, technological advancements in bioethanol production, and expansion of bioethanol export markets.

Future Market Trends

• Increasing Adoption of Bioethanol-Blended Fuels: Over the next five years, the adoption of bioethanol-blended fuels in Vietnam is expected to rise significantly. By 2028, it is projected that bioethanol-blended fuels will account for one third of the total fuel consumption in the transportation sector. This trend will be driven by government mandates, environmental concerns, and the growing automotive industry.
• Technological Advancements in Bioethanol Production: Technological advancements in bioethanol production are anticipated to improve efficiency and reduce costs. By 2028, it is expected that new production technologies will increase bioethanol yield by making it more competitive with fossil fuels.