China’s push for biofuel11/16/2017 | Soybean Exports, Biodiesel
By Jane Li
Led by the National Development and Reform Commission and the Energy Bureau, China’s 15 ministries and commissions jointly issued the policy statement: “Implementation Program for Promotion of Biofuels and Expansion of Bio-ethanol as Automotive Fuel.”
Mandate requiring a minimum amount of biofuel must be blended into fuel for the nation’s cars, similar to the U.S and Brazil, are currently set at a handful of pilot provinces. It’s the first time the government has set a target timeline for pushing the biofuel, known as E10, across the world’s largest car market by 2020. The document also urges the development of cellulosic ethanol, which is made from sources such as grasses, trees and crop waste, which are at present, burned in the fields after harvest, covering the countryside with clouds of smoke.
In 2017 China’s blend rate for ethanol–gasoline is forecast at 2.5 percent, slightly lower than 2016. Over the past decades, there has been no long-term sustained growth in the blend rate.
However, the target for nationwide use of a 10 percent ethanol blend at the current gasoline production level implies a fuel ethanol production level of 12 MMT -5 times the volume now produced, which was about 2.1 MMT in 2015. That, in turn, would require 36 MMT of corn as raw material. It remains unclear how China can reach this target in three years.
China’s biodiesel industry remains in its early stages of development and faces challenges throughout the value chain. The market for biodiesel products is currently confined to specific regions and is relatively small at the national level. 2017 biodiesel production is forecast at 500 million liters, unchanged from 2016 on overall lower diesel demand and stagnant capital investment.
China’s use of renewable-based fuels lags the rest of the world, with only 3 MMT consumption in 2016, or less than 1 percent of total fuel use. The prices of primary energy have been increasing significantly due to the enormous energy consumption over the past decades. The economy suffers from a severe energy shortage. Biofuels are part of China’s long-term strategic energy plan to help protect the environment, prevent energy shortages and reduce dependence on imported energy.
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