What are the costs to produce ethanol?
Another interesting tidbit picked up at REFF was what the requisite input costs are in the production of ethanol in the US. The pie chart above shows that the largest cost of input by far is the feedstock, corn at 66%. The cellulosic approach definitely makes sense as it attacks this major cost of production – one has to wonder if nations like Brazil, where 40% of their transport fuels are ethanol, experience a similar input cost percentage using sugar cane as the feedstock?
The next large cost is natural gas used in the distilling process. The natural gas and feedstock costs account for 84% of the production cost for ethanol! Unbelievable. Changing the equation of production costs will definitely have an impact on the future of the fuel. Corn prices have doubled as the demand for ethanol has increased. Natural gas prices have doubled in the past 6 years. Unless these trends moderate or the production methodology changes to break from the dependance on natural gas and corn, ethanol will become ever more expensive to produce.
