Filed under: Biodiesel, Ethanol
Consultant declares biodiesel has worse economics than ethanol
Speaking at the Power-Gen conference in Las Vegas, managing consultant Michele Rubino has been reported as posing the question, "which makes more sense: ethanol or biodiesel?" Rubino, who works at Navigant Consulting, didn't hesitate to say that it was ethanol that made more sense and that "biodiesel has worse economics."
His conclusion was based on the fact that biodiesel is currently more expensive than petroleum diesel and represents a smaller potential market in comparison to ethanol. Currently raw soy oil costs about $2 wholesale per gallon leading to the final biodiesel price being much higher than the regular diesel price of around $1.80. The U.S. Federal government subsidises biodiesel production up to $1 per gallon.
Analysis: If economics were the only factor, we probably wouldn't have ethanol or biodiesel at all because petroleum fuels are still so cheap. But is economics the only factor? Haven't we learnt that we discount the value of a clean and healthy environment at our peril? Did Rubino factor in the massive health and environmental benefits of using biodiesel instead of petroleum diesel? In today's climate, presenting a purely economic argument against a biofuel is a naive and one dimensional point-of-view.
Related:
[Source: CNet News]
Reader Comments (Page 1 of 1)
Sam Abuelsamid 8:27PM (3/10/2007)
Dane, you're absolutely right, that from a purely economic standpoint with today's technology, no biofuel makes much sense. The important thing is the environmental impact and even there, current corn ethanol and soy biodiesel production is of questionable benefit, because of the relatively low yields, and the food vs fuel debate. As we move forward with cellulosic ethanol and algae biodiesel and other technologies, the equation should change dramatically in favor of biofuels.
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Jack S. 9:02PM (3/10/2007)
Where's he finding diesel for $1.80? I can't remember the last time I've seen it below $2.
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Rob 10:33PM (3/10/2007)
$1.80 diesel? In my town it's more than premium gas! This weekend a conference on biofuels was held in Oregon and it was stated that Biodiesel has a net energy return of 320% (if I remember correctly), nearly 3 times better than that of Ethanol.
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Andrew 1:15AM (3/11/2007)
1.80 per gallon is *wholesale* price for diesel. Add taxes and markup and you end up with retail price.
The economics of biofuels are lousy. Ethanol now sells for about 2.20 per gallon and gas for about 1.70 per gallon (again wholesale). Factoring in ethanol's lower energy content you find it costs about 2X more per mile.
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mike k. 9:20AM (3/12/2007)
You know i think your guys are throwing stones at this guys economic view of Ethonal vs. Biodiesel, too quickly. He does say that neither is as cheap as Oil, BUT thats an aside to his point. He's really saying given 2 green fuels Ethonal's economics hold up better for the consumer. I think thats a pretty good comparison. Now the question is, do you debate that Ethonal is less green than Biodiesel? If they are equal than how else can you compare them but through economic means. Then past that is the difference large enough for either Greenness or Economics that it can push the alternative to Oil in either direction?
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joe elkins 12:22PM (12/26/2007)
Maybe all of the above comments are true or partially true, but most of all, we can be free of
all the dirty tactics of oil embargoes and our dependence on foreign countries who hate us and do anything they can to disrupt our economy. Maybe ethanol will not be less or more, but it can be made with less polution and used with less polution
and just maybe it will create new jobs, even if only for a few of us and keep our money at home.
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