By OGJ editors
HOUSTON, Jan. 19 -- Promoting biofuels as an alternative to petroleum products, the Chinese government has set a goal of producing 2 million tonnes/year of biofuels by 2010 and 10 million tonnes/year by 2020, reported analyst Lijuan Wang of FACTS Inc., Honolulu.
China has become the third largest producer of bioethanol, following Brazil and the US. By the end of August 2006, it had approved four bioethanol fuel companies, which have completed facilities having a total production capacity of 38,100 b/d, Wang said.
Sinopec and PetroChina produce and distribute bioethanol fuel products through their retail networks. Bioethanol gasoline, sold in 27 regions in nine of China's provinces, accounts for 20% of China's total gasoline consumption, meeting the goals of the government's 10th 5-year plan. China will continue to promote bioethanol fuel use in its plan for 2006-10, Wang added.
The country's biodiesel industry, however, is still in its infancy. China has not yet established unified standards for biodiesel production or officially approved any biodiesel projects, although it is taking steps in both directions. It has encouraged Sinopec and PetroChina to produce biodiesel and introduce it into their retail networks, and Sinopec has set up a biodiesel production standard that is awaiting governmental approval.
Six private and local companies produce the country's 4,300 b/d of biodiesel, but many small local biodiesel projects are being planned or are under construction.
Challenges
China's main challenges in developing both bioethanol gasoline and biodiesel are tightening feedstock supply and price increases, "which will constrain the increase in the number of ethanol fuel producers in China," Wang reported.
To encourage bioethanol production, the government created tax incentives, and both national and local governments have provided subsidies promoting the use of old grain.
However, these subsidies are being reduced as China encourages a wider range of nongrain feedstock. In mid-2006 the government said future supported biodiesel would be produced from oil-bearing seeds and plants to augment use of waste oil from restaurants. In addition, future supported bioethanol fuel would be produced by biomass materials, such as sugarcane, cassava, and corn and wheat stalks.
Although both bioethanol fuel and biodiesel in China can continue to expect benefits from preferred governmental policies and loan approvals, such incentives may not guarantee success in meeting the official goals, Wang said. Feedstock crops require too much land and are at odds with agriculture, and "some projects may fail due to the competition of capital, technologies, and product quality."
