World Energy Outlook 2006

$0.50/litre in the United States (based on soybean). There remains some scope
for reducing the unit cost of conventional biodiesel production by building
bigger plants. But technical breakthroughs on the standard transesterification
process, leading to substantial cost reductions in the future, are unlikely.
Production costs are projected to fall to just over $0.30/litre in the United
States and $0.40/litre in Europe in 2030 (Figure 14.9).
Figure 14.9: Production Costs of Biodiesel in the European Union
and the United States
2005
2030 Reference Scenario
2030 Alternative Policy Scenario
2005
2030 Reference Scenario
2030 Alternative Policy Scenario
United States
European Union
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
dollars (2005) per litre of diesel equivalent
Feedstock (net) Chemicals and energy
Capital
Operating and maintenance
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.
Ligno-Cellulosic Ethanol Production
With conventional grain-to-ethanol processes, only the starchy part of the
plant – which makes up a small percentage of the total mass – is used for the
production of fuel. A considerable amount of research is currently being
focused on new processes to extract fermentable sugar from the ligno-cellulosic
material contained in the waste seed husks and stalks by means of biological
enzymatic hydrolysis (IEA, 2004). In the case of corn, a much larger fraction
of the plant could be used to produce fuel, thereby substantially increasing its
408 World Energy Outlook 2006 - FOCUS ON KEY TOPICS