Some economic aspects of the Hungarian biofuel programs

Lakner, Zoltán – Szabó-Burcsi, Dóra – Magó, László

Keywords: comparative analysis, simulation, return on investment, welfare economics

The use of renewable materials in energy production is gaining in importance all over the world. The production of bioethanol and biodiesel is an important element of the agricultural strategy of numerous countries, even though the economic and environmental impact of these projects is subject to significant debates. Our paper analyses the welfare effects of the Hungarian bioethanol programme, as well as the economic feasibility of the projects. It can be demonstrated that the Hungarian bioethanol programme will cause a rather marginal increase in agricultural prices.
The cost of bioethanol production is estimated between 470 and 630 €/m3, influenced by numerous factors. This estimate is in line with the average European values. The possibilities for reducing costs are rather limited, as the two most important components are raw material costs and energy costs. The return on investment indicators are most favourable in the case of small-scale, farm based ethanol plants, producing DSG as a by-product with a simple technology, and in case of extremely large-capacity plants.

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