Renewable Energy The Economics of Ethanol

Renewable Energy

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US Ethanol Production & Imports

Ethanol Reality Check

Ethanol

Ethanol - Basic Facts U.S. - CornBrazil - Sugarcane Energy balance* Average cost$0.30 per liter$0.22 per liter Production – billion liters Exports – billion liters Exports – billion liters Tax credits$0.51 per gallon Tariff (ad valorem) (secondary) (per liter) 2.5% $0.54 per gallon $ per liter 20% - *ratio of energy output to energy input claimed by renewable fuels advocates

Ethanol – Ad Valorem Tariffs CountryAd Valorem Tariff*Specific Tariff Equivalent U.S.2.5%3.6 cents Canada16%19 cents Brazil20%25 cents E.U.54%65 cents Japan113%135 cents *Source: Renewable Fuels Association, June 30, 2005; assumes a wholesale ethanol price of $1.20 per gallon.

Ethanol – Inputs per 1000 liters InputQuantityKcal x 1000Cost ($) Corn2,690 kg2, Transport2,690 kg Water40,000 l Stainless Steel3 kg Steel4 kg Cement8 kg Steam2,546,000 kcal2, Electricity392 Kwh1, % => 99.5%9 kcal/L Sewage effluent20 kg BOD Total inputs6,597$ Total output5,130 Energy Balance0.778 *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 FuelEnergy BalanceUnitsCost per 1000 units Corn Ethanol0.778Liters$ Switchgrass Ethanol0.688Liters$ Wood cellulose Ethanol 0.636Liters$ Soybean biodiesel0.758Kg$1, Sunflower biodiesel0.459Kg$1, *Source: Pimental, D., and Tad Patzek, “Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower,” Natural Resources Research, March 2005