Did you know that corn is not only one of the world’s most consumed foods, but also the raw material for one of today’s most promising biofuels?   

On 24 April, we celebrate Corn Day, and nothing could be more appropriate than to use this occasion to highlight one of its most important derivatives on the global energy scene: corn ethanol.   

We invite you to delve into the subject and learn everything you need to know about this fuel: from its production, energy efficiency and environmental impact to its economic and geopolitical importance.  

Corn Ethanol: What Is It and Why Does It Matter?  

Corn ethanol is a type of renewable biofuel made from corn starch. It is widely used as a gasoline additive or substitute, particularly in the United States, the world’s largest producer. Its use has increased in response to climate change, high oil prices and the search for cleaner energy alternatives.   

As well as being an environmentally friendly option, corn ethanol stimulates local economies, boosts the agricultural sector and offers a real opportunity to reduce greenhouse gas emissions. But, as we shall see, it is not without its critics and challenges.  

The history of ethanol: From ancient to modern biofuels 

The use of alcohol as a fuel is nothing new. It has been used as an energy source since the 19th century, but it has gained more prominence in recent decades, especially after the oil crises of the 1970s and 1980s.  

In the United States, large-scale production of corn ethanol began to consolidate in the 2000s, driven by government incentives and environmental policies. It is now considered one of the country’s most important sources of renewable energy. 

Differences between corn and sugarcane ethanol  

Although Brazil is a world reference in sugarcane ethanol production, the United States is the leader in corn ethanol. The basic difference lies in the raw material and the conversion process: sugarcane is more energy efficient, but corn has higher productivity per hectare in certain regions and a larger agricultural infrastructure in the US.    

Both types have advantages and disadvantages, and the choice is often determined by geographical, economic and political factors.  

The Production Process: From Crop to Tank  

The production of corn ethanol involves three main stages: 

1. Corn milling: the grain is crushed to release the starch.  
2. Fermentation: the starch is converted into sugar and then into alcohol using yeast.   
3. Distillation and dehydration: to obtain high-purity ethanol that can be blended with petrol or used directly.    

Production waste, such as DDGs (dried distillers grains), is reused in animal feed, making the process more sustainable. 

Technologies involved: 2G ethanol and enzymatic engineering 

With advances in biotechnology, the industry has invested heavily in second-generation (2G) ethanol, which uses agricultural waste such as cobs and straw. These technologies still face challenges of cost and scale, but they point to a more efficient future with less environmental impact.   

In addition, new enzymes and genetically modified micro-organisms have increased the productivity of traditional fermentation processes. 

Environmental impact of corn ethanol 

The environmental debate about corn ethanol is intense. On the one hand, it is an alternative to oil that reduces CO2 emissions. On the other hand, it requires intensive use of water, fertilisers and pesticides, which can have a negative impact on soil and water resources.   

However, sustainable agricultural practices such as no-till farming and crop rotation have been adopted to mitigate these impacts. 

Energy efficiency: Energy Expended vs. Energy Generated 

The energy efficiency of corn ethanol is still under investigation. Although it is not as efficient as sugarcane ethanol, improvements in varieties, cultivation techniques and industrial processes have significantly increased its energy yield over the past 20 years.  

It is currently estimated that for every unit of fossil energy used in corn ethanol production, approximately 1.5 to 2.5 units of renewable energy are obtained.

The Role of the United States in Corn Ethanol Production  

The United States is by far the world’s largest producer of corn ethanol, accounting for more than 50% of global production. With vast agricultural areas in the Midwest – particularly the states of Iowa, Illinois, Nebraska and Minnesota – the country has created a truly integrated chain of ethanol production, transportation and consumption.  

In addition, legislation such as the Renewable Fuel Standard (RFS) requires that increasing volumes of biofuels be incorporated into the American energy matrix, further boosting production.   

Brazil and ethanol: A case in point 

In Brazil, ethanol has historically been associated with sugar cane. In recent years, however, corn ethanol production has become increasingly important, particularly in the mid-western regions, especially in states such as Mato Grosso, Goiás and Mato Grosso do Sul.    

This has been possible thanks to the so-called off-season, when corn is grown after the soybean harvest, using existing infrastructure and adding value to the grain. The result is a biofuel that complements sugarcane production, diversifies the matrix and boosts the local economy. 

Other producing countries: An expanding scenario 

In addition to the US and Brazil, countries such as Argentina, China, Canada and India are investing in corn ethanol production. In China, for example, the government has encouraged the use of ethanol to reduce urban pollution.   

Each country adopts specific strategies based on its agricultural availability, energy policies and environmental commitments. The trend is that the global production map will continue to expand as technology advances and pressure for clean energy increases. 

Public policies: The invisible engine of the sector 

The success of corn ethanol is directly linked to strong public policy. In the United States, agricultural subsidies, tax incentives and mandatory blending mandates (such as E10 and E15) have been key to building the market.   

In Brazil, RenovaBio sets decarbonisation targets for fuel distributors and values biofuels with better environmental performance, such as corn ethanol produced through co-generation.   

In addition, the recent approval of the “Fuel for the Future” law (Law No. 14.993/2024) has given corn ethanol even greater national prominence. The new legislation sets targets for expanding the use of biofuels and promotes programmes aimed at sustainable mobility and decarbonisation of the energy matrix. This paves the way for new investments, enhances national production and strengthens Brazil as a leader in the energy transition – with corn ethanol playing a strategic role in this journey.  

Without these policies, corn ethanol would struggle to compete with cheaper – but polluting – fossil fuels.  

Global demand: Growth and new markets 

Demand for corn ethanol is growing rapidly, driven by   

• Climate change concerns  
• Growing fleet of flex-fuel vehicles 
• Gradual substitution of petrol in emerging markets 
• Interest from Asian and African countries  

According to the International Energy Agency (IEA), biofuel consumption could double by 2030, with corn ethanol playing a leading role, particularly in markets such as Mexico, Indonesia and Vietnam.

In the field and in the marketplace, corn requires strategic vision 

Talking about corn ethanol opens the door to a broader discussion about innovation, sustainability and growth opportunities for agribusiness. However, as the sector evolves and becomes more global, new challenges are emerging – particularly those related to price volatility, unstable weather and currency fluctuations. 

In this scenario, financial risk management becomes essential for producers, cooperatives, industries and investors. As a globally traded agricultural commodity, corn is subject to constant fluctuations that can affect profit margins, budgets and investment decisions.    

As a result, more and more market participants are using financial derivatives to lock in prices, protect revenues and gain financial predictability – even in uncertain scenarios.   

If you want to better understand which financial instruments make the most sense for your business, Hedgepoint Global Markets can help. By combining market intelligence, customised hedging products and financial education, Hedgepoint can help you turn risk into opportunity. 

Want to know how to protect your business from financial risk? Learn more about Hedgepoint Global Markets, stay ahead of the market and contact us to find out how we can help. 

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