Owing to the increasing world population and global industrialization, demand for energy and transportation fuels has grown steadily worldwide over the last century. Fossil fuels and gasoline products have been the major resource used to meet this ever-increasing energy demand. However, at the current state of consumption, the global oil reserves are expected to be exhausted in the next 40 years.1 A decline in the worldwide crude oil production is predicted, from 1033 billion gallon (gal) in 2010 to approximately 206.6 billion gal in 2050.2

The use of ethanol derived from lignocellulosic biomass (LB) as fuel seems like a promising and eco-benign solution.3 In many countries, it is already blended into gasoline at some concentrations varying from 5 to 25 per cent. Figure 1 summarizes the top 10 countries producing ethanol, derived from sugarcane molasses, juices, corn or other food- and feed-based products. Owing to their values as food/feed and daily commodities, the current raw substrates are no longer attractive for bioethanol commercialization. Types of LB, such as crop residues, forestry waste, grasses and weeds are new attractive substrates for ethanol production because of their renewable nature and vast availability at low cost.4 LB is most abundantly available on earth, with about 200 billion tons produced annually.5 Table 1 summarizes a variety of LBs and the presence of total carbohydrates in each.

Table 1 Availability and specifications of lignocellulosic biomass for ethanol production
Figure 1
figure 1

Top 10 global ethanol producers (millions of gallons).Source: Renewable fuel association, USA,, last visited November 2009.

In the last three or four centuries, significant progress has been made in the bioconversion of LB into ethanol. Despite the achievements made in the laboratory, the successful commercialization of ethanol remains a challenging task for entrepreneurs, economists and scientists.6, 7 The key issues relate to the regular supply of feedstock and the balance between judicious usage of LB and the environment. The cost of ethanol produced from cellulosic biomass is also highly competitive.8, 9 This article aims to summarize the current economic issues around bioethanol production. We advocate the significance of LB-based ethanol to meet current market demand, including possibilities of exploring ideal raw substrates using current innovations for biorefineries, which may assist in reducing the cost of ethanol production and the commercialization of bioethanol worldwide.


A number of LB materials can be used for ethanol production. Figure 2 summarizes the standardized procedure for ethanol production from LB and the usage of by-products utilization. The pretreatment of LB increases its amenability to cellulolytic enzyme action. This is achieved by enzymatic hydrolysis for depolymerization of structural polysaccharides into reducing sugars. The microbial-mediated fermentation of sugars subsequently leads to the downstream ethanol and ethanol recovery process (Figure 2). This simplified method raises several concerns about bioethanol commercialization.

Figure 2
figure 2

Utilization of lignocelluloses for ethanol production and by-products utilization.


Cost of raw materials

Raw materials constitute the most decisive factor in ethanol production. The prices of feedstocks vary according to location, seasons, local state of the supply-demand conditions and transportation needed. In a study conducted by Hamelink et al,10 biomass feedstock cost was found to make up 40 per cent of the ethanol production cost.10 Cellulosic biomass at US$50/metric ton is less expensive than all sources listed except coal. At $50/ton ($3/GJ), the purchase price of cellulosic biomass on an energy basis is the same as that of oil at $0.41/gal. In addition to being available at a low cost, biomass must be available on a large scale for meaningful impact on energy and sustainability challenges. The current productivity of biomass energy crops, such as switch grass and Miscanthus, is quite high showing 5.6 and 15 tones harvestable biomass/acres, which in turn can produce 557 and 1500 gal ethanol/year, respectively11 ( Some weedy materials, such as aquatic weeds - Eicchornia crassipies (water hyacinth), Typha latifolia, Saccharum spontaneum (wild sugarcane), Crofton, Prosopis juliflora and Lantana camara, could be another attractive option for raw materials in the near future for biorefineries.12, 13

Pretreatment processing and economics in cellulase production

Although feedstock is available in large quantities, the main challenge remains to economize the operating costs of biomass conversion processes that include pretreatment and enzymatic hydrolysis, toward a full-scale commercialization. The pretreatment of LB has been studied extensively with the goal of developing a process that could reduce bioconversion time, lower the usage of cellulose during fermentation and enhance the total yield of ethanol.14 Over the past few years, the cost of cellulase production has been trimmed by a factor of 10 and ranges between 10 and 20 cents per gallon (¢/gal) of ethanol produced.15 Further improvements in batch processes of enzyme production and its simultaneous application in biomass saccharification may economize the conversion of sugars into ethanol.16 Adding together the 9.90 ¢/gal ethanol for dedicated cellulase production and 9 ¢/gal for simultaneous saccharification and co-fermentation (SSCF) gives a total cost for biological processing of 18.9 ¢/gal, which is over four times greater than the 4.2 ¢/gal projected for consolidated bio-processing (CBP).16 The continuous efforts for LB pretreatment, enzyme applications and fermentation have reduced total projected cost for bioethanol from $ 4.61 per gal to about $ 1.173 per gal.17

Lynd et al16 projected that the price of ethanol from a cellulosic feedstock costing $40/dry ton would be 77 ¢/gal ($1.08/gal gasoline equivalent) if produced via dedicated cellulase production and 63 ¢/gal ($0.88/gal gasoline equivalent) via CBP (Figure 3a, b). In comparison, the average wholesale price of gasoline was reported at $0.98/gal for the period 2001-2004 and at $1.32/gal for the first quarter of 2005 ( The economics of ethanol production using different raw materials are compared in Table 2.17, 18, 19, 20, 21, 22, 23, 24 On the basis of scientific facts, the cost of cellulases is a vital factor for the desired success in biorefineries. United States Department of Energy (USDOE) analyzed whether the enzymes necessary to convert biomass to ethanol can be bought for less than 10 ¢/gal of ethanol, the cost of making ethanol could drop to as low as 75 ¢/gal.25

Table 2 Comparison of the cost economics for ethanol production from various substrates
Figure 3
figure 3

(a) Comparison of cost incurred for ethanol production by consolidated bio-processing (CBP) and simultaneous saccharification and co-fermentation (SSCF) with reference to cellulase production (b) Comparison of total process cost for ethanol production by consolidated CBP and SSCF with reference to cellulase production. Source: Data adopted from Lynd et al16.

Ethanol recovery cost

The separation and recovery of ethanol from the fermented liquor of lignocelluloses hydrolysate is another cost-adding factor in the commercialization sector. Ethanol is usually recovered by blasting a stream through the fermentation broth, collecting the vapor and either condensing it or feeding it to a distillation system.26 Owing to high energy consumption, this system has turned out to be uneconomical. Other methods such as the membrane process or a solvent extraction scheme have their own pros and cons. The efficient recovery of ethanol is still a challenging task in biorefineries. This area is the subject of special attention to economize the bioethanol commercialization.


The key question of the major contribution from biorefineries remains. Strategic commercialization and policy support for bioethanol production are required to grow the industries from their current base. To bring the sustainability of biofuel, the major areas that require extensive efforts to achieve an economically viable ethanol production process includes (i) increased hydrolysis of carbohydrate polymers, (ii) increased cellulase titer and less loading, (iii) incorporation of CBP and SSCF technologies for increased ethanol titer from pentoses and hexoses utilizing sugars, (v) integration of the ethanol production process with other processes, (vi) removal of the detoxification step and the requirement for robust microorganisms and (vii) by-product utilization, and improving ethanol recovery from fermented aqueous sugar solutions. Bioethanol profitability also depends on the current price of crude oil, which varies over a wide range from one country to another. The use of different grades of ethanol may also contribute significantly in economics. The environmental benefits possible from biomass-derived ethanol seem considerable, although the total replacement of petroleum with biomass-derived ethanol seems impossible at the moment.

A challenging factor that influences profitability of bioethanol is the direct competition between food and energy, which resulted in the global inflation of the cost of food, feed and energy.27 Table 3 highlights the decisive cost factors including their impact on profitability of bioethanol production. The conversion of biomass to ethanol represents a challenging yet attainable objective, which appears to be achievable by the end of the next decade.28, 29, 30 Table 4 summarizes the cost economics in bioethanol production at different stages.31 On the basis of the trends of current cost and uncontrollable growth, the bioenergy sector is a better investment opportunity for future.32 Already, many entrepreneurs, through financial support from government funding agencies and public and private investors, have invested appreciably to make bioethanol a reality (Table 5). National Renewable Energy Laboratory (NREL) estimated that bioethanol price may drop to as low as $0.72 per gal within the 2010 time frame. The technology development in future would also make grain-based ethanol cheaper, although not appreciative from food industry's perspective. A cost comparison among cellulosic corn-based ethanol and gasoline prices in the United States is summarized in Table 6.28

Table 3 Factors governing the commercialization and achievable targets with respect to impact on biorefinery
Table 4 A generalized procedural break-up of expenses in ethanol production from lignocellulosic feedstock(s)
Table 5 Major bioethanol producers and technological implementation in bioethanol production worldwide
Table 6 Comparison of current and potential production costs of gasoline and ethanol in North America


The advancements in the areas of biomass selection and pretreatment, production of high and efficient cellulase titers and development of genetically engineered crops, including ethanologens with unique properties, show promise for making cellulosic ethanol the fuel of the future.29, 30 The use of system biology-based ‘omics’ technologies, viz. genomics, transcriptomics, proteomics and metabolomics, would assist in the study of genes, proteins and metabolites of interest and guide further in improving microbes and plants that show high biomass and tolerance to growth under extreme environmental conditions, turning into high yielding ethanol tiers. The process integration, improved microbial traits for simultaneous production of cellulases and ethanol from mixed sugars, and improvements in the distillation process to get water-free ethanol will lead to a new manufacturing paradigm.30

Microorganisms for ethanol production: an asset in biorefinery

Microorganisms have excelled at producing ethanol from a variety of raw carbohydrates for billions of years under varying cultivation processes. Today, studying the giant ‘microbial libraries’ is in vogue for microbial conversion of lignocellulose carbohydrates into ethanol. In addition, timely interventions, such as strain improvement through mutagenesis, gene cloning and expression, and optimization of potential fermentation parameters, can enhance the production of ethanol.33, 34, 35

Sugar syrup derived from LB either by dilute acids or by enzymatic action contains a variety of sugars. The ideal organism for the production of ethanol would be the one, which can utilize pentose-rich and hexose containing sugars generated from lignocellulosic hydrolysate. The best-known alcohol fermenting organisms Saccharomyces cerevisiae and Zymomonas mobilis are capable of fermenting only hexose sugars and sucrose into ethanol. However, pentose-fermenting organisms are limited including Pichia stipitis, Candida shehatae and Pachysolen tannophilus. Organism that has limited ethanol tolerance and takes longer incubation time to ferment lignocelluloses hydrolysates is not suitable at larger scale for ethanol production.36 Some anaerobic bacteria may ferment xylose but are found to be inhibited at high sugar and alcohol concentration in addition to by-product formation, which virtually lowers the ethanol yield.37 Filamentous fungi tolerate inhibitors, but their higher generation time and lower ethanol yields and productivities make them undesirable microbes for ethanol production at industrial scale.38

Recombinant strains of pentose fermenting Escherichia coli and Klebsiella oxytoca were developed by introducing ethanologenic genes from Zymomonas mobilis.39, 40 The first xylose-fermenting S. cerevisiae strain was also developed through the insertion and expression of xylose-metabolizing genes from P. stipitis.41 Later xylose-fermenting strains of S. cerevisiae were constructed by introducing the genes encoding xylose isomerase from the bacterium Thermus thermophilus42 and the anaerobic fungus Piromyces sp.,43 respectively. Zhao and Bai44 made a recombinant flocculating S. cerevisiae SPSCO1 and studied its performance on a 100 m3 reactor scale by self-immobilization. Liu45 made efforts in developing the furan-resistant S. cerevisiae showing ethanol production from lignocelluloses hydrolysates. Another effort in the direction of developing ethanologenic bacteria, which simultaneously break down cellulose and ferment the resulting sugars into ethanol, could be useful in CBP. Recently, Hong et al46 developed genetically recombinant Kluyveromyces marxianus to produce enzymes homologous to the S. cerevisiae. K. marxianus is thermotolerance in nature and can produce up to 95 per cent of the theoretical yield.

Biomass selection

To economize overall bioethanol process, the selection of biomass is an important criterion in the commercialization of cellulosic ethanol. Apart from the conventional resources (i.e. agro residues, woody materials, paper wastes), the new raw materials viz. weedy materials, energy crops such as Miscanthus, switch grass, and biotech industrial wastes derived from enzymes manufacturing industries have gained increased attention for ethanol production. Algae have also been touted as a rich and ubiquitous source of renewable fuel.32

Bioenergy-based current innovations led to the creation of genetically modified plants for the production of higher levels of sugars with less lignin by the downregulation of lignin synthetic genes. Crops producing cellulases are also being genetically modified for the over production of cellulase by recent advances in ‘molecular farming’.47 Forcing plants to overproduce their own cellulase is a much cheaper alternative to producing it in a separate system, and offers the ability to scale up.47 A new variety of corn was developed by overexpression of phosphoenolpyruvate carboxylase (PEPC), yielding broader leaves and high biomass density because of greater CO2 fixation.48 Expression of an inorganic carbon transporter gene from cyanobacteria to tobacco produced an elevated photosynthesis rate and eventually increased in plant biomass.49 Another effort in this direction was made by Jing et al,50 who manipulated the genes to improve nitrogen metabolism and increase the rate of biomass production. Good et al51 overexpressed bacterial glutamate dehydrogenase to increase biomass in tobacco plants. These studies have been carried out in model plants such as tobacco and need to be studied in bioenergy crops.

Pretreatment and enzymatic hydrolysis of LB

The efficient utilization of LB is an unavoidable opportunity that needs to be met to reduce the cost of ethanol production in biorefinery. Several pretreatment methods have been reported in the past using LB to improve ethanol production.52, 53 Methods including physical (mechanical comminution, pyrolysis), physico-chemical (steam explosion (autohydrolysis), ammonia fiber explosion (AFEX), CO2 explosion, chemical pretreatment (ozonolysis), acid hydrolysis, alkaline hydrolysis, oxidative delignification, organosolv process and biological processes (biological pretreatment) have been used for the pretreatment of lignocellulosic materials in the past and reviewed.54, 55 Methods such as dilute acid, hot water, steam explosion, AFEX, ammonia recycle percolation and limes are capital intensive,53 whereas others, such as biological pretreatment, are extremely slow.56

Enzymatic hydrolysis of pretreated cellulosics is carried out using highly specific cellulolytic enzymes. Among cellulolytic enzymes, cellulases are usually a mixture of several enzymes. At least three major groups of cellulases are involved in the hydrolysis process: (i) endoglucanase (EG, endo- 1,4-D-glucanohydrolase, or EC, which attacks regions of low crystallinity in the cellulose fiber, creating free chain-ends; (ii) exoglucanase or cellobiohydrolase (CBH, 1,4- β-D-glucan cellobiohydrolase, or EC, which degrades the molecule further by removing cellobiose units from the free chain ends; and (iii) β-glucosidase (EC, which hydrolyzes cellobiose to produce glucose.57 The products of enzymatic hydrolysis are usually a mixture of reducing sugars primarily glucose and xylose, and other sugar monomers such as arabinose, mannose, cellobiose, and so on.14 Enzymatic hydrolysis is carried out at mild conditions, thus minimizing by-product formation and corrosion. Microorganisms belonging to Clostridium, Cellulomonas, Bacillus, Thermomonospora, Ruminococcus, Bacteriodes, Erwinia, Acetovibrio, Microbispora and Streptomyces can produce cellulases.58 The cellulolytic anaerobes, such as Clostridium thermocellum and Bacteroides cellulosolvens, produce cellulases with high specific activity with no high enzyme titers.52 Taherzadeh and Karimi59 reviewed the recent developments made in enzymatic hydrolysis of lignocellulosics.

Management of certain hydrolytic parameters viz. temperature, substrate to enzyme ratio and loading of appropriate amount of enzymes for the substrates, and addition of surfactants or other additives may effectively curtail cost expenditure by improving yield of fermentable sugars.58 Enhancement of cellulose hydrolysis, by adding surfactants to the hydrolysis mixture, has been reported by Tabka et al.60 Yang and Wyman61 used bovine serum albumin to increase the surface area of pretreated corn stover solids and reported enhanced glucose yields (92 per cent) at a cellulase loading of 15 FPU/g of cellulose.

Interventions of new technologies in cellulase biotechnology by expressing and purifying a variety of potent cellulases from microorganisms, tracing metabolic pathways to identify biomolecules through systems biology methods viz. genomics, transcript profiling and proteomics, and metabolomics may improve biomass hydrolysis performance under preferred process conditions.26 These findings and characterization of genes are likely to have significant implications for the design of industrial processes for the commercial production of biomass-degrading enzymes.

Variants of enzymatic hydrolysis coupled with fermentation

Cellulase activity is being inhibited by cellobiose to a lesser extent by glucose. Several methods have been developed including the use of high concentrations of enzymes, supplementation of beta-glucosidases during hydrolysis, the removal of sugars during hydrolysis by ultrafiltration, and by SSF process, which seems more economical for commercialization. SSF is the process in which reducing sugars are being produced during cellulose hydrolysis and simultaneously fermented into ethanol, which reduces the product inhibition.62

Microorganisms T. reesei and S. cerevisiae have been used in SSF at optimal temperature 38°C, which compromised for hydrolysis (45–50°C) and fermentation (30°C).17, 62 To maintain the optimal temperature (38°C) of SSF, thermotolerant yeasts and bacteria have been used in the SSF to raise the temperature close to the optimal hydrolysis temperature. Comparing with the two-stage hydrolysis – fermentation or separate hydrolysis and fermentation (SHF) processes, SSF has following advantages: (1) increased hydrolysis rate by the conversion of sugars that inhibit cellulase activity; (2) lower enzyme requirement; (3) higher product yields; (4) lower requirements for sterile conditions as glucose is removed immediately and ethanol is produced; (5) shorter process time; and (6) less reactor volume because a single reactor is used.52 However, the SSF process does carry disadvantages such as (i) incomplete temperatures for hydrolysis and fermentation, (ii) ethanol tolerance of microbes and (iii) inhibition of enzymes by ethanol.63 The new variant of SSF is simultaneous saccharification and co-fermentation (SSCF), wherein both pentoses and hexoses are simultaneously fermented into ethanol. The most recent variant of SSCF is CBP, which includes cellulase production, application of enzymes into hydrolysis of cellulosics and eventual conversion into ethanol by pentose and hexose utilizing microorganisms.16, 64 These new modifications in process development may provide biorefineries new avenues in ethanol commercialization.

Bioreactor designing

An appropriate vessel, bioreactor, is the detrimental factor for commercial success of any fermentation-based industry. Innovations in bioreactors have designed ideal plug flow, percolation, counter-current and shrinking-bed reactors for biomass pretreatment and enzymatic hydrolysis.59, 65 The selection of suitable process configurations, viz. SSF, SSCF and CBP, is crucial while designing cost-effective processes for bioethanol production.66 Conventional processes like fed-batch and continuous batch have own pros and cons for commercial ethanol production. For lesser investment and longer process operation, the use of immobilized cells is an advantageous method for increased ethanol productivity keeping prolonged process operation and stability.67, 68 The use of cheap and natural carriers in immobilization ensures that this method can be exploited with minimal increase in the overall production cost.67

Distillation of ethanol

The recovery of water-free ethanol after the fermentation of cellulosic sugars determines the overall cost and economics of ethanol. It is a challenging task to obtain full recovery of non-hydrous ethanol from hydrous fermented broth. There has been much discussion regarding biomass pretreatment, saccharolytic processes and ethanol fermentation, but ethanol recovery from cellulosic fermented broth needs to be researched to make process cost effective. In general, lignocellulose hydrolysate is a diluted sugar solution, which means less ethanol is produced after fermentation, making the distillation process energy-intensive and costly. The possible solutions to this problem include concentrating the cellulosic sugar syrup, increasing the amount of substrate during the saccharolytic process, or using the high-throughput distillation or membrane-assisted approaches. A number of novel distillation methodologies such as per-evaporation, supercritical solvent extraction, mechanical vapor compression, membrane assisted or molecular sieve adsorption could be the best technologies for ethanol recovery from a fermented cellulosic sugar solution.69, 70


In order to estimate the potential impact of the clean development mechanism (CDM) on the economics of biomass-to-ethanol projects, it is important to evaluate two parameters: the unit reduction of CO2 eq emissions of one liter of fuel ethanol produced from a given type of feedstock according to a specific technology, and the price of one ton of certified emission reductions on the international market.71 It is well established by now that bioethanol is renewable in nature as the production process uses energy from plant resources. The net carbon dioxide added to the atmosphere is ‘zero’, making ethanol an environment-friendly energy source.1, 10 In addition, the exhaust emissions and toxicity of ethanol are lower than petroleum as it contains more oxygen. Ethanol production from lignocelluloses has a greater net energy balance (NEB) than cornstarch-derived ethanol.72 Among the different biomass sources, switch grass, sorghum and Miscanthus have the highest NEB.73, 74 Moreover, these sources also have ecological benefits and can assist in decreasing soil erosion, improving water quality and protecting natural energy.73 The CDM is an arrangement under the Kyoto Protocol allowing industrialized nations with a greenhouse gas emissions reduction commitment to invest in projects that reduce emissions in developing countries rather than expensive emission reduction approaches in their own countries.75 Unlike fossil fuel-based refineries, bio-refineries do not have to deal with long-term environmental clean-up and soil or water remediation on accidental spills. To promote the biorefinery infrastructure, the International Panel on Climate Change (IPCC) advocated the implementation of bioethanol policies that would help reduce the pollution load in the environment.


Cellulosic ethanol commercialization is the process of building an industry out of methods of turning cellulose-containing organic matter into fuel. Companies such as Iogen, Broin and Abengoa are building refineries that can process biomass into ethanol. Companies viz. Diversa, Novozymes and Dyadic are engaged in producing enzymes that could enable cellulosic ethanol in future. A shift from food crop feedstocks to waste residues and native grasses offers significant opportunities for groups ranging from farmers to biotechnology entrepreneurs, including green energy investors. In recent years, the growth of commercial plants for bioethanol across the United States has mushroomed, including 26 new plants under construction in 2008 alone.

In the current market, Brazil is at the top among bioethanol producers ( The Brazilian Government has strengthened the expedition of sugarcane into ethanol, which helped the country to overcome fossil fuel dependency. The investment made in 1975, under National Alcohol Program (NAP), created almost 44 per cent of the Brazilian energy matrix renewable.76 Brazil is now aggressively pursuing utilization of the sugarcane crop for renewable energy production using bagasse and leaves. According to Petrobras Biocombustives, the bioethanol production in Brazil may triplicate by 2020, passing from the actual 7.15 billion gal to 18.2 billion gal.77 On the basis of statistics provided by the National Petroleum, Natural Gas and Biocombustives Agency (, there are 243 bioethanol processing plants registered in the country and nearly 33,620 gasoline services stations authorized for the sale of bioethanol.78

As a result of a regular increment in importing gasoline, China encouraged ethanol as an alternative transportation fuel by introducing fuel ethanol production by exploring the large feedstock of various agro-residues (for example, corn stover, wheat straw and rice husk).79 The private sector will still have to make efforts to utilize vast feedstock reserves for bioethanol production on a commercial scale, which may eventually release the country from fossil fuel dependency.80

Moving forward, the Government of India has already declared and mandated to blend 5 per cent ethanol in gasoline in nine states including five union territories, which is being increased up to 10 per cent by the end of 2010 ( Currently, this amount of ethanol is being obtained from sugarcane molasses-derived ethanol. However, the future increase in demand needs to be explored by lignocellulosics-derived ethanol. India is now taking necessary steps to promote biofuel research at several research Institutions and research universities. Private sectors are also engaging themselves with a strong result-oriented policy within a tangible time frame.12 Other countries such as Canada, Germany, Spain and Sweden are actively participating in bioethanol production. Table 5 summarizes the status of the major bioethanol producers worldwide.


The keys to the establishment of a commercial process are a reduction in capital and operating costs for each of the unit operations and the fullest utilization of by-products. The implementation of bioethanol would generate more employment opportunities and income in rural areas and reduce greenhouse gas emissions, which makes it worthwhile for the government to encourage biofuels by providing tax benefits. It is recommended that appropriate policy objectives be imposed to foster bioethanol commercialization. These policy objectives could include the correction of certain tax anomalies, exemption from excise duty and sales tax, deregulation of feedstock and its pricing, and simplification of licensing for bioethanol production.