An innovation launched half a century ago is back in the spotlight for the ecosystem: bioethanol, which has been at the forefront of major public programmes since the 1970s (for example, Proálcool in Brazil in 1975), is now back on the radar of founders and investors thanks to new European targets and more rigorous traceability systems, while modular and local models are changing the economics of projects.
Why now?
In 2023, the EU raised its renewable energy target to 42.5% by 2030 (with an ambition to reach 45%), also promoting the use of renewable fuels in transport: a framework that guides demand, investment and industrial partnerships. At the same time, the European Union Database (UDB) is making supply chain traceability increasingly stringent: a burden, but also an advantage for those who are compliant-by-design.
The news
The novelty is not the molecule: it is the industrial model. Projects that bring transformation closer to the raw material (agricultural/forestry residues) are gaining ground, reducing logistics and time and opening up space for compact plants and local supply chains. For the ecosystem, this means faster windows to real PoCs and concrete B2B conversations.
What interests start-ups and investors today
- Customers in the chemical, energy (blends) and industrial (chemicals/solvents) sectors have different needs, timelines and specifications: more business-to-business conversations and fewer presentations.
- Short supply chains, nearby waste disposal and consistency over time are the number one asset: without the cost of lorries eating into margins.
- Compliance as a feature, data, certifications and traceability (UDB) become part of the product, not post-production.
From the 1970s to 2025: what has really changed
While Proálcool was created as a response to energy security concerns, today the focus has shifted to industrial applications (chemicals/solvents, materials) and flexible models: smaller sizes, closer to farms, and faster contracts. Finally, a startup-friendly environment.
Startups/scaleups to keep an eye on
- Agri-E (IT) – Italian early-stage company working on modular solutions linked to local supply chains (e.g. rice) to bring the plant closer to the point of delivery and engage in dialogue with industrial buyers at an earlier stage.
- LanzaTech (US/NZ) – Transforms process gas into ethanol: industrial production has begun in Ghent (Belgium) with ArcelorMittal as part of the Steelanol project, a strong sign of maturity in the CCU → ethanol sector.
- LanzaJet (US) – From ethanol to SAF (jet fuel): the Freedom Pines Fuels plant in Georgia is the world’s first commercial facility on this pathway (Alcohol-to-Jet), with ten-year offtake agreements. Opportunities for those who also see ethanol as a feedstock for aviation.
- Fibenol (EE) – Does not produce ethanol, but supplies lignocellulosic sugars and lignin from wood through an industrial biorefinery in Estonia (SWEETWOODS): enabler for bio-based fermentation and new European supply chains.
A project that did not work
- Clariant, Podari (RO) – After starting up in 2022, the cellulosic plant was closed in 2023 due to failure to meet economic/operational parameters. Moral: complex FOAKs require more capital, time and contracted supply; execution risk remains high.
(Note: in the US, various “cellulose” plants have pivoted or closed; the DuPont Nevada plant has been converted from VERBIO to RNG. This is a sign that the winning models are those with immediately accessible supply chains and markets.)
In Italy
In our country, decentralised experiments are growing: compact solutions close to collection points, with early dialogue with potential buyers. Agri-E (early-stage start-up; limited public information) is also moving in this direction, exploring models close to the field to reduce logistical complexity and immediately establish conversations with industrial buyers.
What to watch for in the coming months
- More territorial proof of concepts with cooperatives/consortia to test actual contributions (4–8 weeks).
- Cross-sector partnerships (agriculture, chemicals, utilities) beyond fuels alone: ethanol as a building block.
- More market-driven pitch: letters of interest and logistics plans >process slides.
Conclusions In the 1970s, bioethanol was an energy policy response; in 2025, it returns as a business opportunity for start-ups that know how to work with the right territory, compliance and buyers. Old idea, new market.
Note to reader: the author is CEO of Beeco and works with investment funds active in agritech, which may have supported or will support some of the startups mentioned in the future.
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