Old Version

Driving Biofuel Production

China has rich raw material reserves to produce ethanol fuel but it is urgent to upgrade technology and reform the supervision mechanism before putting it into scale production

By NewsChina Updated Dec.1

Four days after the Ministry of Industry and Information Technology announced that China is planning to ban gasoline-and diesel-powered vehicles and replace them with electric vehicles or new energy vehicles, a timeline was released to roll out the use of ethanol gasoline. 
On September 13, 2017, 15 central ministerial departments revealed that gas mixed with ethanol will be used to fuel vehicles nationwide by 2020, and China will build an advanced liquid biofuel system and put cellulose ethanol into scale operation before a complete market mechanism is formed by 2025. Experts argued that China is bidding farewell to the era of gasoline and diesel to clean up pollution and shift to clean energy. 

Easing Fuel Bottlenecks 

Biofuel is produced through biological fermentation. Currently, it is common for gasoline to be blended with 10 percent ethanol, widely known as E10. The national guideline on the promotion of ethanol gasoline stipulates that China will promote the use of E10 nationwide.
Zhang Yongguang, a senior engineer at the Sinopec Research Institute of Petroleum Processing, told NewsChina that it is necessary to take into consideration types of vehicle engines that can use fuel containing ethanol before the widespread promotion of the fuel. 
He led research which conducted a series of experiments in 2000 that found an overwhelming majority of gasoline-powered engines in China can use E10 without the need to adjust the engines or combustion systems.
Zhou Dadi, former director of the Energy Research Institute of the National Development and Reform Commission, told the China Daily that the main advantage of ethanol fuel, high in oxygen content and highly combustible, is that it is low carbon and environmentally friendly. It is commonly used worldwide since it reduces harmful tailpipe emissions of carbon monoxide, particulate matter and nitrogen oxides and can help ease the energy supply bottleneck. China nowadays has roughly 200 million registered vehicles nationwide, and their emissions, as well as being greenhouse gases, are major contributors to the air pollution that has plagued China for years. 
Similar to the situation in China, the US also has a large number of vehicles. Since 1979, however, the US began to promote the use of E10 and to date nearly all of the gasoline sold at its 150,000 gas stations contains 10 percent ethanol. Zhang told our reporter that China’s drive to use clean fuel has borrowed a lot of experience from the US, adding that more than 40 countries and regions consume about 600 million tons of ethanol fuel every year, accounting for around 60 percent of the world’s annual gasoline use. 
According to Qiao Yingbin, former director of the science and technology department of Sinopec, also one of the world’s largest refiners, a switch to E10 could cut vehicle exhaust emissions by one-third and help prevent groundwater pollution if gasoline is replaced by the same amount of ethanol. 

Bumps in the Road 

As early as June 2000, the Chinese Research Academy of Environmental Sciences lodged a suggestion to the State Council, China’s cabinet, to promote the use of ethanol gasoline in a bid to cut vehicle emissions, address the huge stockpiles of corn and to adjust the nation’s energy structure. In September that year, a project with the capacity to produce 600,000 tons of ethanol fuel broke ground in northeastern China’s Jilin Province. 

From 1996, China started yielding bumper harvests. Production of wheat, corn, rice and other grains hit a record high of over 512 billion kilograms in 1998, leading to massive overstocks nationwide. 
To deal with this, China began to support four State-owned enterprises in launching corn-to-ethanol pilot programs. Since the end of 2003, a five-year subsidy plan was rolled out targeting the four enterprises, which were entitled to 2,736 yuan (US$414) per ton of ethanol they produced. Meanwhile, the General Administration of Quality Supervision, Inspection and Quarantine released China’s national standards on ethanol gasoline for vehicles. 

By February 2004, the pilot programs to produce ethanol gasoline had been extended to cities in nine provinces, but since early 2005, the grain stocks were largely exhausted. One enterprise in Heilongjiang Province even began to harvest grain to produce ethanol. China banned the use of grain for ethanol production in 2007 to ensure sufficient food supply, and biofuel manufacturers have since turned to sweet potatoes, sorghum and straw stalks instead.
According to Qiao, one ethanol project with an annual production of 150,000 tons was put into production in April 2016, but to date, no ethanol has been sold. He said that even though enterprises that produce ethanol are mostly monopolies, they rarely rake in huge profits. Most operate at a loss.
The rising costs of production, government mandated price protections for grain purchasing and the declining price of oil continued to dampen enthusiasm for these enterprises. In 2005, the international crude oil price plummeted to US$43 per barrel from US$147. Zhang estimated that enterprises generally suffered a loss of 1,000 to 2,000 yuan (US$150 to US$300) for each ton of ethanol they produced.
Official statistics showed that the entire ethanol fuel industry in China had combined assets of 22.4 billion yuan (US$3.4b) in 2015, but had registered debts of 15.2 billion yuan (US$2.3b), with bank loans totaling 12.1 billion yuan (US$1.8b). 

Challenges Ahead 

In recent years, China has undergone a renewable energy revolution. At the end of 2016, 34.6 percent of China’s installed capacity of electricity was generated by renewable resources, including photovoltaics, solar, wind and hydro power. To date, more than 25 percent of China’s electricity consumed is generated by renewables. 
China’s renewable liquid biofuel sector, however, has seen relatively sluggish growth and only three million tons of liquid biofuel were consumed in 2016, less than one percent of refined oil products. 
This has become the main hindrance in China’s transition of its energy structure. In 2016, China imported a total of 381 million tons of petroleum and dependence on overseas oil reached 65.4 percent. In the US, however, its annual consumption of over 40 million tons of ethanol fuel has increased its energy self-sufficiency by eight percentage points. 
Official statistics show that China’s annual stocks of corn hit 230 million tons and since 2015, the nation saw new surpluses of corn. More than 20 million tons of corn is unfit for consumption due to moisture and mildew, excessive levels of mycotoxins and heavy metals. In addition, more than 700 million tons of straw are produced annually.
“China’s oversupply and old stocks of grains, coupled with wastes in the rural and forestry sector, provide an abundant supply of material to develop ethanol fuel,” Yue Guojun, chief engineer with the China National Cereals, Oils and Foodstuffs Corporation, told NewsChina.
Zhang cautioned that although China has reached an advanced international level for the first generation of ethanol fuel technology based on grain, it still lags in the second generation of technology derived from lignocellulose biomass – the woody part of plants – such as straw and sugarcane.
He argued that the key problem for China’s first generation of ethanol fuel lies in its transportation, because currently most ethanol fuel producers are located in northeastern China. In the future, the regional layout has to be mapped out, including establishing enterprises in eastern and southern China. For the second-generation technology, he added, China was still working to break through the co-fermentation of C5 sugars.
Guo Jiaofeng, a researcher with the Development Research Center of the State Council, told our reporter that for China to reach the goal of using ethanol gasoline nationwide by 2020, there are no problems in investment, raw material and the market, but the key lies in tightening its supervision.
“It is high time for local governments’ energy authorities to supervise the production, retails and wholesale of ethanol fuels in order to sort out the current fragmented regulatory framework,” he said.