Economic Considerations
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Current production economics of ethanol, ignoring the influence of incentives, are directly depended on capital costs and operating costs. Both capital and operating costs are also dependent on the feedstock(s) used in the process. In other words, the availability of the appropriate feedstock influences significantly product cost. In addition, the normal economies of scale apply, with the end result that the larger plants are significantly more economic than the smaller ones. Scale, allows for lowering capital costs per unit output and at the same time it facilitates the maximization of value outputs from a given feedstock input. In the case of corn for example, modern plants operate like bio-refineries that extract the maximum value of products and chemicals from a given crop such as ethanol, proteins, oils, and other. Therefore, only on exceptionally rare occasions it might make economic sense to produce ethanol for fuel purposes from a small-scale ethanol plant.
Ethanol as a fuel is usually blended with gasoline in proportions of 5-15%. Vehicle manufacturers have cooperated in the design and production of engines that can accept specific blends without problems. Widespread use in blends with gasoline has been promoted through financial and fiscal incentives from governments worldwide in the last few decades.
In summary form, the following Table 1 shows the range of estimated production economics for ethanol fuel.
Feedstock | Capital Costs | Feedstock Costs | Yield | Total cost $/l |
|
|
|
|
|
Corn1 or similar | $0.30-0.50 | $100-$150/t | 350-400 | $0.35-0.45 |
Waste sugars | Variable with sugar source | Range, depend on source | Varies with concentration | $0.25 –0.40 |
Cellulosic2 (hydrolysed to sugars or gasified followed by Fisher Tropsch) | $2+/l annual capacity, due to high up-front costs | $50-$100/t | 250-4003 | $0.35-0.60 |
1Starch content of corn is: 60-65% by weight
2No commercial experience as yet. It is widely accepted that capital costs are higher, but feedstock costs are lower.
3Hydrolysis of cellulose followed by fermentation –distillation would yield about 250-300l/t while the thermal degradation of biomass, followed by Fischer- Tropsch catalytic synthesis is claimed to increase yield to over 400 l/t
Further to the above comments on economics and the advantage of larger plants, it is important to note that according to a 2006 US Renewable Fuels Association report, there were over 111 refinery plants in operation in the US with capacity in the range from about 1.5m l/y (m l/y : million litres/year) to over 4 billion l/y (Archer Daniels Midland). The few small plants in place, less than 12 m l/y, were specialized facilities operating with waste products such as whey or waste beer. Corn based facilities are generally over 20 m l/y. The median plant, operating with corn as feedstock, has capacity of over 200 m l/y. There were also about 80 new plants under construction (2207) or in the planning stage with an average capacity of about 80 m l/y. (http://www.renewablefuelsassociation.com)
Modified: 03-31-2008
