3.2.2 Ethanol conversion cost a. Utilization of ethanol by-products - CO2: There are several ways an ethanol plant can collaborate with CO2 customers as a supplier of untreated gas or purified CO2 product. The more finished the CO2 by-product leaving the ethanol factories, the larger the production cost of ethanol is offset. However, note that the processing costs as well as capital and operating costs will also increase. The simplest way is collecting and selling the CO2 by-product directly as raw material to a nearby processor, if any. Some processors such as soda manufacturing facilities, and enhanced oil recovery projects may accept CO2 product with lower purity requirement, than the traditional food or beverage customers. A modest selling price for “raw CO2 product” is estimated between $4 and $15/tonne [14]. For every kg of ethanol produced, approximately one kg of CO2 can be captured. So, per litre of ethanol, about Bt 0.31 can be salvaged from CO2. - Manure: One tonne of cassava chips passing ethanol conversion process can produce about 84-89 kg sludge of 10% moisture content [9]. This sludge having value of good soil conditioner can be sold to cassava farmers [6] with low price (2 baht per kg). Some heat is required for sludge dewatering. Assume that the process heat is derived from rice husk. Among various biomass-based energy resources relevant to Thailand, rice husk ranks second after bagasse regarding supply outputs [15]. After subtracting drying cost from manure selling price, one can find the contribution of manure to one litre of ethanol is Bt 0.46. If these two options are practical, ethanol ex-refinery price can drops to Bt 21.43. b. Substituting rice husk for bunker oil The pilot plant producing ethanol from cassava uses bunker oil as the main source of process energy. Per MJ available, it costs about Bt 0.44, whereas rice husk costs only Bt 0.05. If a nearby source of rice husk is available, its substitution for bunker oil would save Bt 2.02 per litre of ethanol produced. Thus, combined options of utilization of ethanol by-products and substitution rice husk for bunker oil can lead to a final ethanol cost of Bt 19.41 per litre, still Bt 2.46 over the breakpoint cost.
3.2.3 Profit margin Every step involved in ethanol production cycles brings with it some profit margin. Consistent with an estimate based on the floor price of feedstock, per litre of ethanol produced, farmers get profit of about Bt 1.37, cassava chip processors may get Bt 1.19, and ethanol factories were assumed to earn Bt 3.62. If the profit margin in ethanol conversion phase can be reduced to Bt 1.16 per litre, the cost of gasohol now becomes competitive with gasoline on fuel economy basis. Table 2 is a summary of various possibilities of ethanol cost reduction.