Biofuel annual report - China

Jun 2007

China views biofuels as an essential and strategic component of a secure economy and diversified energy policy. To ensure development of biofuels, the central government takes an active role in regulating both the supply and demand sides of the biofuel market and has limited ownership of production facilities to state industry. With a propensity for command and control, the use of state-run industries to develop biofuel insures the central government adequate “regulation.” The National Development and Reform Commission (NDRC) has been the leader in the biofuel development arena, guiding future energy production and consumption in China.
China’s stated objectives for biofuel development are (1) the improving of the welfare of Chinese rural citizens in China; (2) strengthening China’s energy security and reducing their oil dependence; (3) the mitigation of emissions noxious to the environment. The subtext is (1) farm support prices, (2) national security, and (3) membership and recognition in the international community.
While Chinese coastal areas boom, growth in inland areas proceeds at a much slower pace.
Biofuel production is one of a series of programs to mitigate rural poverty. With most plants located in the northeast, currently ethanol provides an outlet for 10 percent of corn production of northeastern provinces’ corn production, particularly of low quality and older stocks, and could add crops for biofuel production on otherwise marginal land.
In 1975 when China became a net importer of oil, energy security became a concern. Now China depends on coal for 70% of its energy, with most of the remainder fuel oil use for transportation. Consumption in this sector is growing rapidly. Presently biofuels are approximately one million metric tons (MMT).
Taking leadership in the biofuel sector also fits into China’s aspirations to be a leader in the global arena as it uses biofuel to reduce pollution and conserve its environmental assets, consistent with the Kyoto Protocol objectives.
Chinese fuel ethanol production is estimated at 1.45 million MT in 2007, a twelve percent increase from 2006. As a result of increased commodity prices and concerns about food security, the State Council did not approve the 5-year plan introduced last year by NDRC. A new plan is under development and Post intelligence suggest that in the plan China will base future fuel ethanol production on non-food feedstocks and target a 3-4 million metric ton increase in fuel ethanol production by 2010.

By: GAIN (Global Agriculture Information Network - USDA)

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