BACKGROUND: Energy efficient alternatives to distillation for alcohol recovery from dilute solution are needed to improve biofuel sustainability. A process integrating steam stripping with a vapor compression step and a vapor permeation membrane separation step is proposed. The objective of this work is to estimate the energy and process costs required to make a fuel grade ethanol (0.5 wt% water) from 1 and 5 wt% ethanol aqueous streams using the proposed process. RESULTS: Using process simulation and spreadsheeting software, the proposed membrane-assisted vapor stripping process was estimated to require as little as 8.9MJ of fuel-equivalent energy per kg of fuel grade ethanol recovered from a 1 wt% ethanol feed stream, 2.5 MJ kg(-1) for a 5 wt% ethanol solution. This represents an energy saving of at least 43% relative to standard distillation producing azeotropic ethanol (6 wt% water). Process costs were also found to be lower than for distillation at the 3.0 x 10(6) kg-ethanol year(-1) scale modeled. CONCLUSION: In this hybrid system, the stripping column provides high ethanol recoveries and low effluent concentrations while the vapor compression-membrane component enables the efficient recovery of latent and sensible heat from both the retentate and permeate streams from the membrane system. Published in 2008 by John Wiley & Sons, Ltd.