China announces 'Agricultural Biofuel Industry Plan': new crops, higher targets

China's Ministry of Agriculture has announced its 'Agricultural Biofuel Industry Plan' which forms the basis for the development of a number of new crop bases to provide sufficient biomass resources to meet the country's growing demand for biofuels. The plan implements the shift away from food grains to non-food crops, as it was announced earlier.

The People's Republic's biofuel targets have now been raised: instead of 12 million tons of ethanol by 2020, the new goal is to produce 6 million tons by 2010 and 15 million tons by 2020. For biodiesel, a target of 5 million tons has been set (more on the previous targets). Under the new vision, bioenergy will make up almost 25% of the nation's energy consumption.

According to the Agricultural Biofuel Industry Plan, released yesterday, the new crop bases will consist of sugarcane, sweet sorghum, cassava and rapeseed for use in the production of both ethanol and biodiesel. The plan rules out the expansion of grain-based ethanol production, in particular corn and potato-based fuels, to avoid any detrimental impact on the food sector. For biodiesel, the shift to non-food crops is easier to implement.

According to the ambitious plan:

The total production of biomass energy from non-grain crops will grow to 500 million tons of coal equivalent, worth some 3 trillion yuan [€290/$385 billion], which will account for 24 percent of the nation's total energy consumption.

Of all the non-grain ethanol resources, sweet sorghum is the favorite among agricultural experts due to its low cost, low needs for inputs and the fact it can be grown on non-arable land. Under the plan, a total of 3.8 million tons of ethanol will be produced annually from the stalks of the sweet sorghum. The plan proposes to integrate sweet-sorghum-based ethanol products into the current oil sales system, a privilege so far reserved for grain-based ethanol products:
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Nine provinces - Heilongjiang, Jilin, Liaoning, Jiangsu, Shandong, Henan, Anhui, Hubei and Hebei - currently have gas stations that offer fuel mixed with 10 percent ethanol. The number of provinces is expected to grow this year as ethanol output is increased.

The country's four existing State-approved ethanol plants, which produce some 1.2 million tons per year, are located in the corn and maize production centers of Heilongjiang, Jilin, Anhui and Henan. Like the many unlicensed producers, the plants mostly use corn.

However, the rapid expansion of corn-based production has had a serious impact on corn prices and last year spurred fears of possible food shortages.

"The new investment is likely to be in plants that produce ethanol without competing with grain supplies or taking up arable land," Zhou Dadi, former director of the energy research institute of the National Development and Reform Commission, said.

Four non-grain-based ethanol plants are currently under construction in the autonomous regions of Inner Mogolia and Guangxi Zhuang and the provinces of Hebei and Shandong, which boast ample supplies of cassava and other biomaterials. It is hoped they can help strike a better balance between ethanol demand and food supply.

With the growth in the production of non-grain based ethanol, the proportion of corn used in the process will fall from the present 90 percent to 70 percent after 2009, Cao Zhi, a market analysis on ethanol production, said.

However, some experts say the country lacks sufficient support policies to ensure the development of non-grain ethanol production.

Non-grain-based biofuels are currently not allowed to enter the market and their producers do not enjoy the same government subsidies as grain-based product manufacturers, Cao said.

References:
China Daily: Crop bases to feed biofuel production - July 4, 2007.

Biopact: Researchers look at key drivers of China's bioenergy strategy - April 10, 2007

Biopact: An in-depth look at China's ambitious biofuels program - August 12, 2006