March 12 (Bloomberg) -- Ethanol made from inedible matter such as crop waste and household trash will match the price of corn-based ethanol by 2016, potentially spurring output of the motor fuel, according to data compiled by Bloomberg.
Cellulosic ethanol costs about 94 cents a liter to produce, about 40 percent more than ethanol from corn, Bloomberg New Energy Finance said today in a statement. That gap will probably close within three years, according to a BNEF survey of 11 of the industry’s biggest companies.
“If our survey proves accurate, cellulosic ethanol will make meaningful inroads into the vehicle-fuel market during the last years of this decade,” Harry Boyle, a biofuel analyst at BNEF, said in the statement.
Ethanol production from edible crops such as corn has raised concern that grain plantations are being converted, cutting food supply and pushing up prices. Using non-edible plants or waste can help save the more fertile land for food and avoid the need to shift edible crops into more sensitive areas such as forest and peatland, which store carbon dioxide.
Countries across the world are setting targets to reduce the use of fossil fuels in vehicles to cut imports and meet carbon-reduction goals. In the U.S., where corn-based ethanol already is competitive with gasoline, the Renewable Fuel Standard requires gasoline and diesel producers to blend 36 billion gallons of biofuel a year into their products by 2022, including 16 billion gallons of cellulosic fuel.
Refinery construction, the biggest expense for producers last year, may account for as much as 45 percent of the cost of making a liter of cellulosic ethanol by 2016, the survey showed. Feedstock will account for about 34 percent.
So-called semi-commercial facilities that produce about 90 million liters of ethanol a year cost about $290 million to build, according to the statement. There are 10 such plants planned, under development or already operating, half of which are in the U.S.
--Editors: Amanda Jordan, Tony Barrett