China Biofuels Activities
Here you'll find information about China's work in biofuels. Learn more about its:
Background
China's economic growth in the 1990s resulted in a rapid increase of petroleum consumption and led to serious air pollution problems. To deal with fuel shortage, energy security, and air quality issues, the Chinese government began promoting biofuels in 2000. However, concerns about feeding the world's most populous nation could limit the growth of China's biofuels industry. China has long been concerned about its food security; thus, the top priority for land use is growing crops for food.
Production
China is the world's third-largest producer of ethanol, but most of it is consumed by the pharmaceutical and beverage industries. In 2006, there were four operating ethanol biorefineries (Figure 1) running at maximum capacity, about 1.02 million tonnes. Though Beijing has stopped approving new fuel ethanol projects since December 2006, four more plants in the provinces of Guangxi (110,000 tonnes), Hebei (300,000 tonnes), Liaoning (300,000 tonnes), and Hubei (200,000 tonnes) were scheduled to be completed in 2007.
Figure 1. China Ethanol Producers and Areas with E10 Consumption
Source: Institute for Energy Economics, Chew Chong Siang
China National Cereals, Oils and Foodstuffs Corp. (COFCO) is investing 50 million Yuan (U.S.$6.5 million) to build a cellulosic ethanol pilot plant. The plant in Zhaodong, in the northeastern province of Heilongjiang, will have an annual capacity of 5,000 tonnes. Another cellulosic ethanol pilot plant with a production capacity of 10,000 tonnes is being planned in the Yucheng area of Shandong.
Biodiesel is in its early development stage in China. In 2006, biodiesel production was 30,000 tonnes from a dozen of small-scale production facilities. Principal biodiesel producers are Fujian Zuoyue New Energy Co.Ltd, Sichuan Gusan Biodiesel Co. Ltd, and Hainan Zhenghe Biodiesel Co.Ltd. Since 2006, biodiesel plants have opened in Shanghai, Fujian, Jiangsu, Anhui, Chongqing, Xinjiang, and Guizhou, among other places. The plants are private, state-owned, and even foreign-owned enterprises. New plants are much larger than the existing ones, some reaching 600,000-750,000 tonnes/year. Dozens of biodiesel projects are under construction, or in planning stages, with cumulative capacity of more than 3 million tonnes/year.
Feedstock
Nearly 80% of the fuel ethanol in China is made from corn. Three of the existing facilities (Heilongjiang, Jilin, and Anhui) use the grain as feedstock. The biorefinery in Henan uses wheat. Concerns about food supply and high prices led the industry to look at other, non-grain feedstock, such as cassava, sweet sorghum, and sweet potato, viewed as transitional feedstock in the long term. The crops could be grown on China's 116 million hectares of marginal land unsuitable for producing grains. Ultimately, China plans to transition to ethanol production from cellulosic biomass, particularly crop residue, which is of sufficient supply. Estimates show that the member economy generates approximately 1,500 million tonnes/year of agricultural and forest residues, which is sufficient to produce 370 million tonnes of ethanol. Currently, there are several pilot plants producing ethanol from lignocellulosic biomass via biochemical conversion process.
Feedstock supply is a key factor in limiting biodiesel development in China. Vegetable oils are the main feedstock for plants elsewhere, but it is not economical for China to import them to make biodiesel because it already imports significant amounts for food consumption. The existing feedstock is used cooking oil, acid oil, and animal fat. A lot of waste oil and grease are produced from the food-processing industry due to cooking habits. It is estimated that about 3 million tonnes of waste oil and grease are produced in China annually. For a long-term development of biodiesel, China is considering nonedible feedstock, such as Barbados nut (Jatropha Curcas), Chinese pistachio (Pistacia Chinensis), Chinese tallow tree (Sapium Sebiferum), etc. Jatropha is abundant in Southwest China (Sichuan, Yunnan, Guizhou, etc.) with the potential for planting in large scale, and providing good economic and social benefits. However, this area also contains ecologically sensitive and biodiverse forest area; thus, careful considerations should be made in policy decisions.
Economics
The following charts show specific economic statistics for the member economy.
| Ethanol | RMB/MT |
|---|---|
| From corn | 5,000 |
| From sweet sorghum | 4,000 |
| From cassava/sweet potato | 4,500 |
Source: NDRC 2007
| Biodiesel | RMB/MT |
|---|---|
| From used cooking oil | 4,000 |
Source: NDRC 2007
Biofuels in Use
E10 is used in five provinces: Helongjiang, Jilin, Liaoning, Henan, and Anhui; and 27 cities: nine in Hubei, seven in Shandong, six in Hebei, and five in Jiangsu (Figure 1). Gasohol consumption in 2005 accounted for nearly 20% of national gasoline consumption.
According to a U.S. Department of Agriculture (USDA) report, biodiesel currently produced in China is of low quality, and it is not suitable for fuel use. It has been used as a solvent or as an additive to coal in thermal power plants or industrial cooking facilities in rural areas.
Infrastructure and Vehicles
There are 75,000-85,000 refueling stations in China, with approximately 20,000 offering E10.
Trade
Most exports of ethanol from China are undenatured (potable), particularly in Japan, Korea, and Singapore where it is used for alcohol production. In 2006, China hit a record volume of exports, about 500,000 tonnes. This was mostly due to higher demand in the United States because of phasing out methyl tertiary-butyl ether (MTBE), which increased the price of alcohol.
Official statistics on biodiesel trade are not available, but estimates show that total exports were approximately 10,000 tonnes in 2006 (USDA). Some attempts were made to import palm oil from Indonesia and Malaysia, but they have been suspended due to increasing prices of this feedstock.
Policy
In 2001, the State Council launched a Fuel Ethanol Program, which led to the establishment of the four ethanol plants and distribution of E10 in nine provinces. Polices — such as free income tax, VAT refunding, and fiscal subsidies — were made available to ethanol producers. In 2006, each ton of ethanol received a 1,373 Yuan subsidy. Beijing has committed 1.1 billion Yuan (U.S.$143 million) to help develop vehicles that run on biofuels. In comparison, policy measures for the biodiesel industry are not developed. Technical standards, distribution channels, production techniques, equipment, environmental evaluations, etc. are yet to be finalized.
Under the revised National Plan, fuel ethanol production is to increase to 3 million tonnes/year by 2010 and to 10 million tonnes/year by 2020. Biodiesel is to grow to 300,000 tonnes/year in 2010 and 2 million tonnes/year in 2020. According to the plan, E10 sales are to expand in more provinces in 2010, and E20 and E85 possibly will be introduced, as well as B5 or B10 in 2020.
The Chinese government's overall policy for biofuels is to move this technology forward in a way that it doesn't compete with arable land, grain is not used as feedstock, and it doesn't destroy the environment. No new corn-based ethanol plant is to be approved. It considers giving subsidies and tax breaks to demonstration projects: plants using non-grain feedstock and plantations growing non-food crops.
Sources
- The National Development and Reform Commission (NDRC)
- U.S. Department of Agriculture, GAIN Report 2006 and 2007 (PDF 97 KB) Download Adobe Reader.
- Institute for Energy Economics, Japan