World Energy Outlook 2006

States, after production subsidies, so that it is competitive with gasoline at an
average crude oil price of between $65 and $70 per barrel. 9 In Europe, the
ethanol production cost, including all subsidies, is about $0.55/litre
($0.80/litre of gasoline equivalent). Average production costs are projected to
drop by around a third between 2005 and 2030 (Figure 14.8). Costs in Europe
and the United States would be significantly higher without crop and ethanol
subsidies.
Figure 14.8: Production Costs of Ethanol in Brazil, the European Union
and the United States
2005
2030 Reference Scenario
2030 Alternative Policy Scenario
2005
2030 Reference Scenario
2030 Alternative Policy Scenario
2005
2030 Reference Scenario
2030 Alternative Policy Scenario
9. As noted above, the price of ethanol has recently risen to well above its production cost because
of strong demand for the fuel as a blending component.
Chapter 14 - The Outlook for Biofuels
Brazil
United States
European Union
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
dollars (2005) per litre of gasoline equivalent
Feedstock (net) Chemicals and energy Operating and maintenance
Capital
Note: In contrast to Figure 14.7, the costs shown in this chart include current rates of subsidy to crops and
ethanol production.
Source: IEA analysis in conjunction with the Energy Economics Group of the Vienna University of Technology.
As with ethanol, the cost of producing biodiesel depends on the type of
feedstock and the conversion technology. Costs also vary by region and depend
on biomass yields, the cost of labour, land availability and access to capital. The
current cost of conventional biodiesel production is estimated at just over
$0.60 per litre of diesel equivalent in Europe (based on rapeseed) and about
407
14