The n-Butanol Market was valued at USD 3.89 billion in 2016 and is projected to reach USD 5.58 billion by 2022, at a CAGR of 5.9% during the forecast period, as per a report by MarketsandMarkets.
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Why increasing use of n-Butanol as bio-fuel can be a sustainable opportunity?
n-Butanol has tremendous demand as bio-fuel. Currently, ethanol and bio-diesel are the preferred bio-fuels. In the next 5 to 10 years, bio-based n-Butanol would most likely be the preferred fuel owing to its properties such as high energy content, less hydrophilic nature, more energy per volume, low volatility, higher compatibility with existing base of vehicles and oil infrastructure, environment friendly by-product (H2), and low corrosive nature. Some of the major manufacturers of bio-based n-Butanol are Green Biologics, Inc. (US), Eastman Renewable Materials, LLC (US), and others. Aforementioned properties of n-Butanol make it a better substitute for fossil fuel and a second-generation fuel. On the other hand, the bio-based n-Butanol is yet to be commercialized, owing to several issues such as low production yield, fuel gauge reading inaccuracy, greenhouse gas emissions due to low octane number, and higher viscosity than ethanol. However, these issues are expected to mitigate, in the near future, with continues R&D and advancement in the bio-based n-Butanol production process.
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Why low economy of scale for small capacity plants pose a major challenge? In the n-Butanol market, many small producers are present who have low economy of scale. Typically, a company that achieves economies of scale, lowers the average cost per unit through increased production since fixed costs are shared over an improved number of goods. A best operating point is always present in the industry, where a firm can minimize its cost of production. However, small-capacity plants cannot minimize the cost after a certain level due to diseconomies of scale. In case of n-Butanol, profit margins are reducing due to competitive feedstock prices and this emphasizes on the need for further reducing the operating cost. The players with huge capacities have increased their capacity utilization to achieve economies of scale, further decreasing the cost of production. However, small players find it difficult due to various economic and technological constraints. This has reduced the economic viability of operating small capacity plants.
