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Environmental Economics of Ethanol Production – a brief introduction

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  • Evers, Jonathan Rhys
  • Hundloe, Tor
  • Daniels, Peter L.

Abstract

By treating organic wastes as a resource, and applying a different method of waste management, organic wastes could contribute significantly to global energy needs. The ethanol distillation process waste product, stillage, is a soup-like waste stream that contains substantial organic content. By digesting this material three resources are recovered – biogas (80 per cent methane), biosolids (high in nutrients equivalent to high grade fertiliser) and recyclable water. Current waste treatment in ethanol production focuses on drying the stillage waste and using the resultant material as mulch to be spread over crops. This is an energy intensive, low-benefit, process that increases production cost. If a waste treatment process could convert the waste into a recoverable resource, this would reduce the cost of ethanol production and would ensure all externalities are valued. For example, methane could be re-used as a source of energy in distillation and production. Unless an economic advantage can be established, there is no true benefit of this type of waste treatment – this is how the economy currently works. All industry and business decisions relate to the bottom line and whether the project will make money (profitability). When a value is put on externalities, it is possible to show whether a project will be profitable. This is so even when considering the impact on the environment and society, not just the economy. Ultimately, when all externalities can be quantified, valued and shown to be positive, the project is sustainable. This research has been carried out to establish the importance of valuing externalities in relation to the triple bottom line of ethanol production. By using waste treatment to recover resources in ethanol distillation, and using those resources directly in operation, process and production, while at the same time valuing foregone and used externalities, the cost of production should decrease Values for the externalities can be derived from various references, such as current market value. Carbon now has a value per tonne of emissions established in several markets around the world – these values can be attributed directly to energy use. The value of water has been established through research and can also be attributed to water use.

Suggested Citation

  • Evers, Jonathan Rhys & Hundloe, Tor & Daniels, Peter L., 2009. "Environmental Economics of Ethanol Production – a brief introduction," Research Reports 94880, Australian National University, Environmental Economics Research Hub.
    • Handle: RePEc:ags:eerhrr:94880
    DOI: 10.22004/ag.econ.94880
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    References listed on IDEAS

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    1. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
    2. Baker, Allen & Zahniser, Steven, 2007. "Ethanol Reshapes the Corn Market," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-6, May.
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