Consultant declares biodiesel has worse economics than ethanol

Speaking at the Power-Gen conference in Las Vegas, managing consultant Michele Rubino has been reported as posing the question, "which makes more sense: ethanol or biodiesel?" Rubino, who works at Navigant Consulting, didn't hesitate to say that it was ethanol that made more sense and that "biodiesel has worse economics."

His conclusion was based on the fact that biodiesel is currently more expensive than petroleum diesel and represents a smaller potential market in comparison to ethanol. Currently raw soy oil costs about $2 wholesale per gallon leading to the final biodiesel price being much higher than the regular diesel price of around $1.80. The U.S. Federal government subsidises biodiesel production up to $1 per gallon.

Analysis: If economics were the only factor, we probably wouldn't have ethanol or biodiesel at all because petroleum fuels are still so cheap. But is economics the only factor? Haven't we learnt that we discount the value of a clean and healthy environment at our peril? Did Rubino factor in the massive health and environmental benefits of using biodiesel instead of petroleum diesel? In today's climate, presenting a purely economic argument against a biofuel is a naive and one dimensional point-of-view.

[Source: CNet News]

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