Biofuel in China

Introduction

To maintain a secure energy supply is what the Chinese government want to accomplish. For this reason, biofuel seems to be a reasonable choice. By the help of government support, the China biofuel industry has developed rapidly, just like the economic boom. The China biofuel industry comprises the production of ethanol and biodiesel. The government support will still focus on ethanol production in the near future. Biofuel production, industry status, environmental and social impacts, market and policies will be discussed in the following.

Biofuel production and industry status

Ethanol and biodiesel are two parts of the Chinese biofuel production. However, ethanol and biodiesel are going through distinct paths. Policies mainly focus on the ethanol development. The Chinese biofuel production in 2010 was 2,327,900 tonnes which reached a value of 1,471.9 million USD, representing a compound annual growth rate (CAGR) of 15.9% and 16.2% respectively from 2006 to 2010 (Datamonitor, 2011). It is forecast that in 2015, the value of the Chinese biofuel production will be 2,462 million USD which is 67.3% more than that in 2010 (Datamonitor, 2011a).

Ethanol

Production

Ethanol is a clean and sustainable energy which can be used either pure or combined with gasoline. Fermentation method is current common way to produce ethanol. Several feedstocks can be used to produce ethanol: starch (e.g. corn, wheat), sugar (e.g. sugarcane) and cellulosic biomass. Production using the formal two families of feedstocks is classified as the first generation technology. The second generation technologies are those use cellulosic biomass as feedstocks (Berg, 2001). Nowadays, the research undergoing in China focus on increasing the enzyme’s ability, developing microbial strains to produce cellulose and producing genetic microbes for large scale production (Li and Chan-Halbrendt, 2009).

Industry status

According to Datamonitor (2011a), ethanol production in 2010 reached 1,943,600 tonnes, which is 83.5% of the total volume of biofuel production. The ethanol industry in China is totally dominated by the state. All plants as feedstocks are owned by the state. The only operators to purchase ethanol products are Sinopec and CNPC (two state-owned companies). Furthermore, more than half of gas stations in China are owned by these two enterprises and the combination of ethanol and gasoline are finished by them (O’Kray and Wu, 2010). Private investment is not restricted but large enterprises are owned by the state while foreign investment can only be as unimportant partners. According to O’Kray and Wu (2010), eight projects with a 2.2 million tonnes volume of production were undergoing in Heilongjiang, Jilin, Henan, Anhui, Guangxi and Chongqing. At the same time,