Economics of Bioethanol Production: Navigating Costs and Competitiveness

The production cost of bioethanol is a dynamic variable influenced by the diverse sources of biomass. To underscore this, let’s consider that gasoline production costs are approximately 0.25 Euro/L. This accentuates the crucial role of governmental tax rebates in bridging the price gap between biofuels and fossil fuels.

The economic landscape driving the production and consumption of biofuels is intricately linked to the global oil prices, a dynamic scenario where increasing oil prices bolster the case for biofuels. The table below illustrates examples of bioethanol derived from various feedstocks, comparing their production costs. Notably, Brazilian sugarcane stands out as one of the most cost-effective first-generation bioethanol feedstocks.

For bioethanol to stand economically competitive against fossil fuels, production costs should ideally not exceed ~0.2€/litre in comparison to gasoline. These figures, while informative, are approximations due to the fluctuating costs of raw materials. For instance, U.S. corn ethanol production costs are based on $4 per bushel of corn (32 lbs of starch and 2.8 gallons of ethanol).

The cost of sugarcane, a major first-generation feedstock, hit a historic high in 2010, with current ethanol production costs estimated at around $0.35 per liter. Lignocellulosic biomass costs vary significantly depending on the feedstock, with waste wood and paper costs subject to locality and transport expenses. Expectations are that lignocellulosic-to-ethanol production costs will decrease in the future as technological advancements enhance overall conversion processes.

Biomass feedstock costs constitute a substantial portion of the expenses in bioethanol production. First-generation feedstocks typically represent 50-80% of total costs, whereas in lignocellulose bioethanol processes, feedstock costs constitute only ~40% of the total expenses. The total value of second-generation bioethanol in the U.S. is anticipated to surge from 380 million euros in 2010 to over 13,000 million euros by 2020.

Fuel ethanol prices are the result of negotiations between buyers and sellers, and these prices are not publicly disclosed. Historical price data can be obtained from various sources, including,,,,,, and

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