A report by researchers from the US Department of Agriculture and Louisiana State University on the economic feasibility of the production of ethanol from sugar in the US has concluded that while such production could be economically viable in the short-term given the current high prices of ethanol, an expected moderation in prices could make it unprofitable for most sugar and raw sugar feedstocks by the summer of 2007.
The study assessed the production of ethanol from sugar feedstocks including (1) sugarcane juice, (2) sugar beet juice, (3) cane or beet molasses, (4) raw sugar and (5) refined sugar. Of those, only the cost of molasses was low enough to make it competitive with corn.
In general, the study found that estimated ethanol production costs using sugarcane, sugar beets, raw sugar, and refined sugar as a feedstocks are more than twice the production cost of converting corn into ethanol.
While it is more profitable to produce ethanol from corn in the United States, the price of ethanol is determined by the price of gasoline and other factors, rather than the cost of producing ethanol from corn. With recent spot market prices for ethanol near $4 per gallon, it is profitable to produce ethanol from sugarcane and sugar beets, raw sugar, and refined sugar.
The optimal location of an ethanol processing facility is largely dependent on being in close proximity to its feedstock supply, regardless of which feedstock is being utilized. This has been proven with corn-based ethanol in the United States as well as sugar-based ethanol in Brazil. Corn-based ethanol plants in the United States are located close to large supplies of corn, primarily in the Midwest, to minimize feedstock transportation costs. Ethanol facilities utilizing sugar or molasses would be most economical if located at or near sugarcane or sugar beet processing facilities.
The authors also note that cellulosic conversion of biomass into ethanol could reduce the cost of converting sugarcane into ethanol in the future. Challenges would include development of high tonnage varieties of sugarcane as well as economical processing costs of cellulose on a commercial scale.