The "Implementation program for promotion of biofuels and expansion of bio-ethanol as automotive fuel" jointly issued by 15 Chinese ministries and commissions, led by the National Development and Reform Commission and the Energy Bureau on September 13, 2017 was described as having "great practical and strategic significance." By 2020, automotive use of bio-ethanol fuel will be expanded nationwide from the handful of pilot provinces currently using it. The document also urges development of cellulosic ethanol and advanced biofuels to achieve a world-leading position in biofuels by 2025.
Biofuel initiatives have waxed and waned in China for two decades--in sync with market conditions for corn, the main raw material. The first fuel ethanol plants in China were opened 15 years ago during an earlier corn glut. All were built in grain-producing areas to process massive stockpiles of corn and wheat with a hefty cash subsidy for every ton produced. As grain supplies became tight again in 2006, the National Development and Reform Commission banned additional grain-based ethanol plants and began to phase out the subsidy. Now China once again has a even higher stockpile of moldy corn built up by maintaining an ill-considered support price program, and officials are once again in ethanol-expansion mode.
The need to dispose of the corn stockpile dovetails with China's ambition to be a global leader in combating climate change, and promises less reliance on imported petroleum. The use of "clean" biofuels is meant to mollify Chinese residents choking on fumes from vehicle exhaust. The promise to develop cellulosic ethanol from crop straw, stalks, and trees aims to utilize rural wastes that traditionally were burned in peasants' stoves over the winter but are now burned in the fields after harvest, covering the countryside with clouds of smoke.
According to one estimate, the target for nationwide use of a 10% ethanol blend at the current gasoline production level implies an fuel ethanol production level of 12 mmt--nearly four times the volume now produced (2.1 mmt in 2015, according to the five-year plan for renewable energy). That, in turn, would require 36 mmt of corn as raw material. It is unclear how China can reach this target in three years. China has never produced more than 2.5 million metric tons of fuel ethanol in the industry's 15-year history.
Two years ago, industry reports indicated that ethanol production ground to a near-halt due to a perfect storm of the removal of subsidies, low gasoline prices (the fuel ethanol is set as a proportion of the gas price in China) and artificially high corn prices. Since then the corn price has dropped by nearly half and ethanol producers have been able to ramp up production again, but output is a little more than half of the 4-mmt target set for 2020 in the current five-year plan for renewable energy.
China's corn inventory is estimated to be around 200 mmt by most news media reports in the country. Scientists happily point out that China has huge amounts of moldy and contaminated grain unsuitable for feed or food that could be used to make fuel ethanol, while the by-product distillers grains can be used as livestock feed. These optimistic pronouncements don't seem to account for the even higher concentration of molds and toxins in the distillers grain by-products that would make it unusable. This would seemingly leave a stockpile of toxic byproduct equal to two-thirds the original volume of grain used for ethanol production.
China's initiative to make biofuel from non-grain raw materials is not new either. Ten years ago when global grain prices were soaring China's 11th five-year plan for 2006-2011 called for making biofuel from nongrain materials, including sweet sorghum, potatoes, cassava, and jatropha trees (for biodiesel). Early sweet sorghum projects undertaken by state-owned Chinese companies and a multinational fizzled due to the cost and timing of procuring and transporting huge volumes of sorghum. A cassava-based ethanol plant in Guangxi Province opened in 2008 shut down by 2011 when it faced soaring raw material costs and resistance from fuel retailers. Local cassava farmers could not supply raw materials as planned, and cassava had to be imported from Thailand and Vietnam. Planned cassava-based plants in Zhejiang and Guangdong Provinces were never built. A project to grow cassava for ethanol is being set up in Cambodia. Jatropha trees covering hillsides in southwest provinces were abandoned years ago because they don't pollinate easily and lacked sufficient water.
This decree likely came from leaders eager to position China as a global leader in the fight against climate change. Did they consider the history of missed targets and abandoned projects? Can anyone explain why the results will be better this time?
2 comments:
Another great post, thanks for your insight.
Even if the plans are ambitious, the fact that the govt. is even considering such a move suggests they are sitting on very substantial stocks - likely bigger than current USDA/FAO estimates.
I wonder if these agencies might soon make a substantial revision to their numbers, as they did back in the early 2000s?
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