This paper evaluates life cycle energy analysis of molasses based ethanol (MOE) in Nepal. Net energy
value (NEV), net renewable energy value (NREV) and energy yield ratio are used to evaluate the energy
balance of MOE in Nepal. Total energy requirements in sugarcane farming, cane milling and ethanol
conversion processes are estimated and energy allocation is made between co-products (molasses and
sugar) as per their market prices. The result shows negative NEV (13.05 MJ/L), positive NREV (18.36 MJ/
L) and energy yield ratio (7.47). The higher positive value of NREV and energy yield ratio reveal that a low
amount of fossil fuels are required to produce 1 L of MOE. However, negative NEV reveals that the total
energy consumption (both fossil and renewables) to produce the ethanol is higher than its final energy
content. Nevertheless, the renewable energy contribution amounts to 91.7% of total energy
requirements. The effect of the increased price of molasses and reduced energy consumption in the
sugarcane milling and ethanol conversion are found to be significant in determining the energy values
and yield ratio ofMOE. In addition, there are clear measures that can be taken to improve efficiency along
the production chain. Finally, energy security, scarcity of hard currency for importing fossil fuels and
opportunities for regional development are also strong reasons for considering local renewable energy
options in developing countries.