Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

other waste materials as discussed in Section III.B of this preamble) and costing the same as
corn based ethanol produced by conventional means.
We estimated production costs for soy-derived biodiesel of $2.06 per gallon in 2004
and $1.89 per gal in 2012. For yellow grease derived biodiesel, we estimate an average
production cost of $1.19 per gallon in 2004 and $1.10 in 2012.
The impacts on overall gasoline costs with and without fuel consumption
subsidies resulting from the increased use of ethanol and the corresponding changes to
the other aspects of gasoline were estimated for both of these cases. The 7.5 bill gal/yr
case would result in increased total costs which range from 0.33 cents to 0.41 cents per
gallon depending on assumptions with respect to ethanol use in RFG and butane control
constraints. The 9.9 bill gal/yr case would result in increased total costs which range
from 0.93 to 1.05 cents per gallon. The actual cost at the fuel pump, however, will be
decreased due the effect of State and Federal tax subsidies for ethanol. Taking this into
consideration results in “at the pump” decreased costs (cost savings) ranging from 0.82 to
0.89 cents per gallon for the 7.5 bill gal/yr case and “at the pump” decreased costs
ranging from 0.98 to 1.08 cents per gallon for the 9.9 bill gal/yr case. We ask for
comment on these derived costs as well as on the analysis methodology used to derive
these costs, and refer the reader to Section 7 of the DRIA which contains much more
detail on the cost analysis used to develop these costs.
A. Renewable Fuel Production and Blending Costs
1. Ethanol Production Costs
a. Corn Ethanol
A significant amount of work has been done in the last decade on surveying and
modeling the costs involved in producing ethanol from corn, to serve business and
investment purposes as well as to try to educate energy policy decisions. Corn ethanol costs
for our work were estimated using a model developed by USDA in the 1990s that has been
continuously updated by USDA. The most current version was documented in a peerreviewed
journal paper on cost modeling of the dry-grind corn ethanol process 59 , and it
produces results that compare well with cost information found in surveys of existing plants.
60 We made some minor modifications to the USDA model to allow scaling of the plant size,
to allow consideration of plant energy sources other than natural gas, and to adjust for energy
prices in 2012, the year of our analysis.
The cost of ethanol production is most sensitive to the prices of corn and the primary
co-product, DDGS. Utilities, capital, and labor expenses also have an impact, although to a
59
Kwaitkowski, J.R., McAloon, A., Taylor, F., Johnston, D.B., Industrial Crops and Products 23 (2006)
288-296
60
Shapouri, H., Gallagher, P., USDA’s 2002 Ethanol Cost-of-Production Survey (published July 2005)
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