Biomass - Energy Policy Analysis: A Conceptual Framework - page 166

The cost of producing ethanol varies with the cost of the feedstock used and the scale of pro-
duction. Approximately 85 percent of ethanol production capacity in the United States relies on
corn feedstock. The cost of producing ethanol from corn is estimated to be about $1.10 per gallon.
Although there is currently no commercial production of ethanol from cellulosic feedstocks such
as agricultural wastes, grasses, and wood, the estimated production cost using these feedstocks is
$1.15 to $1.43 per gallon (Oregon Department of Energy 2007).
Because a gallon of ethanol contains less energy than a gallon of gasoline, the production cost
of ethanol must be multiplied by a factor of 1.5 to make an energy-cost comparison with gasoline.
This means that if ethanol costs $1.10 per gallon to produce, then the effective cost per gallon to
equal the energy contained in a gallon of gasoline is $1.65. The federal motor fuel excise tax on
gasohol, a blended fuel of 10 percent ethanol and 90 percent gasoline, is 5.4 cents less per gallon
than the tax on straight gasoline. In other words, the federal subsidy is fifty-four cents per gal-
lon of ethanol when ethanol is blended with gasoline. The subsidy makes ethanol-blended fuel
competitive in the marketplace and stimulates growth of an ethanol production and distribution
infrastructure (Oregon Department of Energy 2007).
A major hurdle facing commercial biodiesel production is the cost of producing the fuel. Veg-
etable oil seed procurement, transport, storage, and oil extraction accounts for at least 75 percent
of the cost of producing biodiesel. The cost varies depending on the feedstock used. For example,
based on the market price for industrial rapeseed grown in Washington and Idaho, the estimated
cost of producing biodiesel is $2.56 per gallon of rapeseed methyl ester. Recent estimates put
the cost of production in the range of $1.30 per gallon (using waste grease feedstock) to $2.00 or
more per gallon using soybean oil (Oregon Department of Energy 2007).
The market cost to consumers for biomass energy consumed in calendar year 2009 was es-
timated at a bit over $5 billion, and a little over $6.9 billion in 2008, not including fuel ethanol
or biodiesel (USEIA 2011a, Table 3.5). Federal subsidies and tax expenditures for biomass and
biofuels were estimated at $7.76 billion for FY2010 (USEIA 2011b, xiii), including about $114
million for biomass municipal solid waste and landfill gas used to generate electricity (USEIA
2011b, xviii). The rest was for ethanol production to be blended with liquid fuels.
National Security Costs of Utilizing Biomass
As a domestic resource, no nation-state or other organization is able to control supplies or de-
termine price of biomass energy supplies. Access to it is not dependent upon the actions of any
government other than our own. Growing fuels at home reduces the need to import fossil fuels
from other nations, reducing our expenses and exposure to disruptions of supply (UCS 2010).
Moreover, the diversity of sources of biomass energy, and the variety of technologies available
to use it, make it unlikely the United States would ever become dependent on one source or one
technology for its exploitation.
Beneficial biopower or biofuels production results in no net emissions of uncontrolled atmo-
spheric emissions or greenhouse gases. Consequently, utilizing beneficial biomass technologies
will not produce climate change or a rise in sea level. Biomass technologies do not produce
substantial amounts of toxic waste that must be isolated from the human environment for millen-
nia. Utilization of biomass reduces organic waste streams to the environment, reducing demand
for landfill space. The utilization of biomass energy does not produce materials or targets useful
to terrorists. Consequently, the national security costs of utilizing biomass technologies are nil.
Like solar power and wind, as compared to other conventional energy technologies, utilization
of biomass can be conceptualized as having net national security benefits.