The year 1985 marked the end of the first decade of the national program to use sugarcane-derived ethanol as an import substitute for gasoline. Rival estimates of the cost of Brazilian fuel ethanol varied widely, from $35 to $90/barrel of gasoline replaced. Assessing the economic impact of the various subsidies available to alcohol producers was difficult but indicated a minimum unsubsidized price of $45/barrel on the same gasoline replacement basis.20 Assuming that gasoline was mostly manufac­tured from imported petroleum, the overall cost comparison between gasoline and nationally produced ethanol was close to achieving a balance, clearly so if the import surcharge then levied on imported oil was taken into consideration (table 5.8).

TABLE 5.8

Production Costs for Sugar-Derived Ethanol in Brazil by 1985

Cost

Ethanol

$10-12 per ton 65 liters per ton $0.09-0.11 per liter $0.264-0.295 per liter

1.2 liter ethanol per liter gasoline 1.0 liter ethanol per liter gasoline $50-65 per barrel gasoline replaced $42^7 per barrel gasoline replaced Gasoline $29 per barrel $2 per barrel $6 per barrel $10 per barrel $47 per barrel $41 per barrel

TABLE 5.9 Production Costs for Corn-Derived Ethanol in the United States by the Mid-1990s Production cost Production cost Production cost Manufacturing input ($ per liter)a ($ per liter)a (% of total) Dry corn milling Net corn costs 0.120 0.45 51.1 Other operating costs 0.105 0.40 44.7 Annualized capital costs 0.010 0.04 4.3 Total 0.235 0.89 wet corn milling Net corn costs 0.097 0.37 41.3 Other operating costs 0.103 0.39 43.8 Annualized capital costs 0.085 0.32 36.2 Total 0.285 1.08 Source: Data from Elander and Putsche.21 a Average values calculated from the quoted range of values (in 1993 dollars)

TABLE 5.10 Production Costs for Cellulosic Ethanol in the United States by the Mid-1990s Manufacturing input Capital, labor and related (cents per liter) Energy (cents per liter) Production cost (cents per liter) Production cost (% of total) Base casea Feedstock 45.97 39.0 Other raw materials 9.78 8.3 Pretreatment 13.75 6.55 20.30 17.2 Cellulase 1.55 1.67 3.22 2.7 preparation SSF 13.83 3.34 17.17 14.6 Pentose conversion 3.22 0.99 4.21 3.6 Distillation 2.74 5.10 7.84 6.7 Power cycle 28.61 -26.96 1.65 1.4 Other 7.34 0.36 7.70 6.5 Total 117.84 Advanced technology b Feedstock 35.84 71.3 Other raw materials 0.95 1.9 Pretreatment 3.22 5.63 8.85 17.6 Fermentation 1.95 1.00 2.95 5.9 Distillation 1.79 2.83 4.62 9.2 Power cycle 14.06 -22.03 -7.97 -15.8 Other 4.74 0.32 5.06 10.1 Total 50.30 Source: Data from Lynd.22 a 658,000 dry tons/year, 60.1 million gallons/year, installed capital $150.3 million b 2,738,000 dry tons/year, 249.9 million gallons/year, installed capital $268.4 million

of the pentose[49] sugars (and all of the much smaller amount of hexoses) to generate more than 67 million liters (1.8 million gallons) of ethanol/year. The final production cost of 95% aqueous alcohol was equivalent to 480/l ($1.82/gallon) after allowance for financial costs and assuming a small net income from CO2 as a coproduct (table 5.11). An essential parameter was that of the extent to which the cells could be recycled: single-batch use of the cells increased the production cost to 640/l ($2.42/gallon). The single largest contributor to the production cost was, however, the financial burden of repaying the investment in the plant, that is, more than 37% of the total annual production cost outlay (table 5.11).

TABLE 5.11 Cost Estimates for Ethanol Production from Pentose Stream from Willow Annual capacity/output Annual cost Manufacturing input (tonne/year) ($ x 103) Cost (% of total) Wood hydrolysate 13877 439 13.1 Ammonia (25%) 370 101 3.0 Phosphoric acid (80%) 179 90 2.7 Magnesium oxide 4.8 1 0.03 Sodium sulfite 252 142 4.2 Calcium oxide 1750 236 7.1 Sulfuric acid (37%) 214 18 0.5 Electricity 80 2.4 Steam 12885 226 6.8 Distillation 391 11.7 Maintenance 73 2.2 Labor 300 9.0 Annual capital costs 1247 37.3 Working capital 8 0.2 Coproduct credit for CO2 5883 8 -0.2 Total 3344 Ethanol (m3/year) 6906 Ethanol production cost 0.48 ($/liter) Source: Data from von Sivers et al.26

of transportation fuels as the market for fuel ethanol imposes competitive pricing; the second point is a natural conclusion from the vast efforts invested in developing recombinant producing organism and bioprocesses (chapters 3 and 4, respectively).

The Swedish authors (from Lund University) have continued to explore cost models for ethanol from lignocellulosic substrates:

• SSF bioprocesses offer improved economics over standard separate hydro­lysis and fermentation because of higher ethanol yields and reduced capital costs; with softwood biomass sources, there are also significant advantages if either process could be operated with higher levels of insoluble material and if recycling the stillage after distillation (“backsetting”), in principle reducing the production cost to $0.42/l, or $1.59/gallon (table 5.12).29

• Operating steam pretreatment of softwoods in two steps (at lower and higher temperatures) to maximize the recovery of hemicellulose sugars and cellulosic glucose, respectively, has a higher overall ethanol yield and reduced requirement of enzymes but is more capital-intensive and has a higher energy demand; the net result is no reduction in the production cost of ethanol (table 5.13); further improvement to the process, including a higher insoluble solids content for the second step, might reduce the pro­duction cost by 5-6%.30

The National Renewable Energy Laboratory, in association with consultant engi­neers, presented an outline cost model for the industrial-scale production of bioetha­nol (2000 tonnes/day consumption of feedstock, 52 million gallons of ethanol/year) from a hardwood yellow poplar biomass source.31 Operating costs were calculated to be approximately 620/gallon of ethanol (table 5.14). Discounted cash flow analysis assuming a discount rate of 10% indicated a minimum selling price of $1.44/gallon for a capital investment of $234 million. On the technical level, the key features of the envisaged process were

• Acid pretreatment of the biomass substrate (19% of the installed equip­ment cost)

• On-site generation of cellulase

• SSF of the pretreated substrate with a Zymomonas mobilis capable of utiliz­ing only glucose and xylose

• Wastewater treatment via anaerobic digestion to methane

• Utilization of three available waste fuel streams (methane, residual lignin solids, and a concentrated syrup from evaporation of the stillage) in a fluid­ized bed combustor, burner, and turbogenerator (33% of the installed equip­ment cost)

Although the complete array of technology in the model was unproven on a large scale, much of the process could be accurately described as “near term” or “based on the current status of research that is complete or nearly so.”31 The computed mini­mum selling price for ethanol was 20% higher than that of corn-derived ethanol, with a more than twofold greater investment cost ($4.50/gallon as compared with approximately $2/gallon).

TABLE 5.12

Cost Estimates for Ethanol Production from Softwood Using Different Bioprocess Technologies

Manufacturing input	liter)	gallon)	liter)	($ per gallon)	liter)	gallon)	liter)	($ per gallon)
Woodc	0.16	0.61	0.19	0.73	0.16	0.61	0.19	0.70
Enzymes	0.08	0.31	0.06	0.21	0.08	0.31	0.06	0.21
Yeast	0.06	0.22	0.00	0.00	0.04	0.14	0.00	0.00
Other operating costs	0.04	0.16	0.05	0.19	0.03	0.13	0.04	0.16
Labor, maintenance, insurance	0.07	0.26	0.01	0.37	0.06	0.24	0.09	0.32
Capital costs	0.16	0.62	0.25	0.93	0.14	0.53	0.20	0.76
Coproduct credits’3	0.01	0.03	0.01	0.03	0.06	0.22	0.07	0.27
Total	0.57	2.14	0.64	2.41	0.46	1.74	0.50	1.87

SSP base SSP base SHFb base SHFb base SSP 8% SSP 8% SHFb 8% case ($ per case ($ per case ($ per case solids ($ per solids ($ per solids ($ per SHFb 8% solids

Source: Data from Wingren et al.29

a Simultaneous saccharification and fermentation, 63 billion liters per year (base case) b Separate hydrolysis and fermentation, 55 billon liters per year (base case)

c 195,600 tonne raw material per year, operated continuously (8000 hours per year), notionally located in northern Sweden d C02 and solid fuel

TABLE 5.13

Cost Estimates for Ethanol Production from Softwood Using Different Pretreatment Options

	Steam	Steam	Steam	Steam
Manufacturing input	pretreatment one-stepa ($ per liter)	pretreatment one-stepa ($ per gallon)	pretreatment two-stepb ($ per liter)	pretreatment two-stepb ($ per gallon)
Woodc	0.19	0.71	0.18	0.69
Chemicals	0.11	0.43	0.11	0.42
Utilities	0.03	0.01	0.03	0.01
Other operating costs	0.09	0.33	0.09	0.33
Capital costs	0.21	0.78	0.21	0.79
Coproduct creditsd	0.07	0.27	0.06	0.24
Total	0.55	2.08	0.55	2.09

Source: Data from Wingren et al.30

a 215oC, residence time 5 min, SO2 added to 2% of the water content of the wood; 47 billion liters etha­nol per year capacity

b 190oC, residence time 2 min, then 210oC for 5 min; SO2 added to 2% of the water content of the wood;

49 billion liters ethanol per year capacity c 200,000 tonnes per year; plant operating time 8000 hours per year d CO2 and solid fuel

Operating Costs for Yellow Poplar Sawdust-Ethanol in the United States

TABLE 5.14 Input Production cost (cents per gallon)3 Production cost (% of total) Feedstocka 37.0 60.0 Chemicals 8.0 13.0 Nutrients 6.2 10.1 Fossil fuels 0.9 1.5 Water 0.9 1.5 Utility chemicals 1.2 1.9 Solid waste disposal 1.2 1.9 Fixed costs 13.5 21.9 Electricity creditb 7.2 -11.7 Total 61.7

Source: Data from Wooley et al.31 a Poplar sawdust at $25 per tonne b Excess electricity sold to grid at 4 cents per kWh

TABLE 5.15

Estimated Production Costs for Bioethanol in 2003