Renewable Energy

The Economics of Ethanol

Renewable Energy

Alternative Energy Investment Shares

US Ethanol Production & Imports

Ethanol Reality Check

Ethanol

Ethanol - Basic FactsU.S. - Corn Brazil - Sugarcane

Energy balance* 1.3 8.3

Average cost $0.30 per liter $0.22 per liter

Production – 2006 4.6 billion liters

Exports – 2006 3 billion liters

Exports – 2025 200 billion liters

Tax credits $0.51 per gallon

Tariff (ad valorem)(secondary)(per liter)

2.5%$0.54 per gallon$0.1427 per liter

20%--

*ratio of energy output to energy input claimed by renewable fuels advocates

Ethanol – Ad Valorem Tariffs

Country

Ad Valorem Tariff*

Specific Tariff Equivalent

U.S. 2.5% 3.6 cents

Canada 16% 19 cents

Brazil 20% 25 cents

E.U. 54% 65 cents

Japan 113% 135 cents

*Source: Renewable Fuels Association, June 30, 2005; assumes a wholesale ethanol price of $1.20 per gallon.

Ethanol – Inputs per 1000 litersInput Quantity Kcal x

1000Cost ($)

Corn 2,690 kg 2,522 284.25

Transport 2,690 kg 322 21.40

Water 40,000 l 90 21.16

Stainless Steel 3 kg 12 10.60

Steel 4 kg 12 10.60

Cement 8 kg 8 10.60

Steam 2,546,000 kcal 2,546 21.16

Electricity 392 Kwh 1,011 27.44

95% => 99.5% 9 kcal/L 9 40.00

Sewage effluent 20 kg BOD 69 6.00

Total inputs 6,597 $453.21

Total output 5,130

Energy Balance

0.778

*Source: Pimental, D., and Tad Patzek, “Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower,” Natural Resources Research, March 2005

Ethanol vs. Other Renewables

Renewable Fuel

Energy Balance

Units Cost per 1000 units

Corn Ethanol 0.778 Liters $453.21

Switchgrass Ethanol

0.688 Liters $537.00

Wood cellulose Ethanol

0.636 Liters $575.00

Soybean biodiesel

0.758 Kg $1,212.16

Sunflower biodiesel

0.459 Kg $1,662.48*Source: Pimental, D., and Tad Patzek, “Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower,” Natural Resources Research, March 2005