producers, to build an ethanol demonstration unit for the purposes of scaling up Iogen process technology (McCoy, 1998).
OFD manufacturing cost estimates are also shown graphically in Figure 2-1 and compared to the estimated value of bioethanol in potential markets. Although OFD has made significant improvements in planning and estimating, the lack of demonstrated cost reduction in the last decade is a cause for concern (see Figure 2-1). Major cost reductions will be essential for ethanol to compete in a nonsubsidized motor-fuel market. A comparison of the manufacturing cost for cellulosic ethanol using the core technology being researched by OFD with the value of fuel ethanol in the potential markets outlined earlier in this chapter shows a wide gap between bioethanol manufacturing cost and market value.
Because of the uncertainty of future government regulations and/or subsidies for biofuels, the Office of Fuels Development should not rely on subsidies as market drivers for biomass-based ethanol but should assume that biomass-based ethanol must become cost competitive with other transportation fuels when setting program goals and judging progress.
Although cost estimates for the manufacture of bioethanol made in 1991 were not as complete or detailed as recent cost estimates, there has been apparently little if any drop in the projected cost of bioethanol based on technologies under development in the Office of Fuels Development program.