Biofuels To Account For 15% of China’s Fuel By 2020

By Scott C. Lucas|17 November 2006

China’s government is dedicated to building up the country’s biofuels industry, and has policies and standards in place for future development to ensure that biofuels meet 15% of China’s transportation energy needs by 2020. The ability of China to meet these objectives depends on competing uses of inputs, including maize, wheat, rice, sugar, cassava, sweet sorghum, and oilseeds, as well as outputs, including sweetener, and alcohol, according to a report from the US Department of Agriculture’s Foreign Agriculture Service (USDA-FAS).

China produces two types of biofuels, ethanol and biodiesel. Over the past 20 years, China has encouraged development of the industry through subsidies and other financial mechanisms. As a result of biofuel development, the country also has benefited from international recognition of the possible environmental benefits from lowered emissions and clean development projects.

Increased development of biodiesel is an expected result of the diesel market in China being twice that of gasoline. While the government has been addressing ethanol for the past twenty years, it only began including biodiesel in its policy mix this year. The result is that while strict ethanol production standards are in place, there are not equivalent standards for biodiesel.

Ethanol production in 2005 was approximately 920,000 metric tons (MT), with a production capacity of 1,020,000 metric tons. Biodiesel production totaled between 100,000 and 200,000 MT. Under China’s current biofuel development policies, ethanol production should increase to nearly 4 million MT by 2010.

China exports a small amount of fuel ethanol, but exports are likely to decrease as it supplies increased domestic demand. due to high tariffs and restrictive import policies, fuel ethanol imports are unlikely in the short run. Maize, sugar, oilseeds, sweet sorghum, wheat, and cassava are likely to take on new importance as sources for ethanol. Efficiency and cost will determine which feedstock sources will dominate the future biofuel industry.