On March 5, the State Energy Administration issued the Circular on Establishing the Information Monthly Report System for Expanding the Production and Promotion of Biofuel Ethanol and Gasoline for Vehicles, which stated that it was necessary to establish the Information Monthly Report System and to keep abreast of the progress made by relevant provinces (regions, municipalities) and central enterprises in promoting the production and popularization of biofuel ethanol and gasoline for vehicles.
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In fact, it has been less than one year since the target of “realizing the basic coverage of ethanol and gasoline in the whole country by 2020″ was put forward in the Implementation Plan on Expanding the Production and Promotion of Biofuel Ethanol, issued jointly by the National Development and Reform Commission and other 15 ministries. What is the progress of ethanol and gasoline promotion in China? Can the planning objectives be achieved? What problems still exist?
Development lag
Ethanol is the improver of clean fuel and oil quality. Ethanol gasoline (E10) with 10% fuel ethanol can increase the octane number of gasoline and reduce the emission of carbon dioxide and harmful substances such as particulate matter, carbon monoxide and hydrocarbons in vehicle exhaust. According to incomplete statistics, more than 40 countries and regions have promoted biofuel ethanol and automotive ethanol gasoline. The annual consumption of ethanol gasoline is about 600 million tons, accounting for about 60% of the world’s total gasoline consumption.
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Fuel ethanol has been widely used in China since 2001. In 2002, pilot projects of fuel ethanol were launched in Heilongjiang and Henan provinces, and expanded in 2004. By 2018, China had been promoting ethanol gasoline in six provinces including Heilongjiang, Jilin, Liaoning, Henan, Anhui and Guangxi, and semi-closed in 31 cities of Hebei, Shandong, Jiangsu, Inner Mongolia and Hubei. In October 2018, Tianjin also successfully realized closed sales of ethanol and gasoline.
However, according to the reporter’s understanding, in the above pilot areas, in addition to the three northeastern provinces and Tianjin, the development of ethanol gasoline in other provinces and cities is not very good. Taking Guangxi as an example, since April 2008, ethanol gasoline for automobiles has been sold in closed sales in Guangxi. According to the data of the Development and Reform Commission of Guangxi Autonomous Region, the coverage rate of ethanol gasoline for automobiles reached 85.79% in 2009. However, the market share of ethanol gasoline gradually decreased, and the coverage rate dropped to less than 5% by 2017.
In view of the current development situation, many respondents expressed to reporters that it was “more difficult” to achieve the goal of “basic coverage of ethanol and gasoline by the end of 2020″.
According to Liu Lin, an analyst at Zhongyu, the development of ethanol gasoline is lagging behind. “The comprehensive promotion of ethanol and gasoline will inevitably lead to a sharp increase in the output of fuel ethanol, thus driving the whole ethanol industry to a better position. If the total coverage of ethanol and gasoline is achieved by 2020, the fuel ethanol market should be very hot now, but for the moment, the whole fuel ethanol market can only be said to be general. According to the current growth rate of fuel ethanol production, it will be difficult to achieve this goal next year.
Large gap in fuel ethanol
“At present, the promotion of ethanol gasoline is not ideal, the core reason is that there is a large gap in the supply of fuel ethanol.” Zhang Zhe, Senior Engineer of Marketing Institute of China National Petroleum Planning Institute, spoke frankly to reporters.
According to the data of China National Petroleum Planning Institute, the current production capacity of fuel ethanol in China is 2.89 million tons per year, while the current domestic gasoline consumption is about 130 million tons. According to the 10% addition ratio, if we want to achieve basic national coverage by 2020, the demand for fuel ethanol is about 13 million tons, with a gap of 10 million tons.
Among them, the economy of fuel ethanol production is the most important constraint.
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It is understood that the main source of fuel ethanol raw materials in China is maize. In order to promote the development of biofuel ethanol industry, the Ministry of Finance has subsidized the production enterprises of biofuel ethanol relatively high. In 2009, COFCO Biochemical had enjoyed 2055 yuan/ton of raw material subsidies, and the production enterprises were more enthusiastic. Since then, however, subsidies have fallen sharply because of “fighting for grain with the people and grabbing land with grain”. On August 14, 2014, the Ministry of Finance issued the Notice on the Adjustment of Fiscal Policy on Biofuel Ethanol for Fixed-point Enterprises. The criteria for the continued subsidies of biofuel ethanol for approved projects using grain as raw materials are 300 yuan/ton in 2013, 200 yuan/ton in 2014 and 100 yuan/ton in 2015, and no subsidies will be provided after 2016. “In the past few years, the international crude oil price has gone down, while the ex-factory price of fuel ethanol in China has remained low due to its linkage with the price of refined oil. Its profitability is weak and it has no economy.” Liu Lin said.
Zhang Zhe also pointed out that under the superposition of many factors, the enthusiasm of fuel ethanol production enterprises declined. “Some enterprises have reduced the production of fuel ethanol, some of which are converted to edible alcohol, resulting in a lower and lower market share of ethanol and gasoline.”
Promotion schedule should be adjusted appropriately
According to Zhongyu information and statistics, 87% of the current fuel ethanol production in China comes from maize, 11% from cassava and sugarcane, and 2% from cellulose. Corn fuel ethanol production process, including aging rice, wheat and other crops, is the best raw material for fuel ethanol production because of digestible “problem grain” and “aging grain”, stable source of raw materials, mature production technology, and by-product corn oil, distiller’s grains protein feed (DDGS). However, its production capacity is restricted by the stock of aged grain such as corn in China, which is easy to cause worries about the food crisis. Therefore, Zhang Zhe said that the development of fuel ethanol should be tailored to local conditions and develop a diversified production process of ethanol raw materials.
It is reported that cassava and sugarcane have mature technology to produce fuel ethanol, and the production cost is low, but because of the small planting area, they rely more on imports. However, the solid fermentation technology with sweet sorghum as raw material has been commercially operated. Sweet sorghum can be planted on a large scale. The solid fermentation products are ethanol and distiller’s grains, which have no waste water and have large-scale production conditions. It is regarded as the most competitive ethanol raw material in the world.
In addition, cellulose, as the most advanced direction of ethanol production in biomass raw materials, has a wide range of sources of raw materials. It can make full use of crop straw to achieve waste utilization. However, at present, it is not mature in technology, and the cost of commercial process is very high, so large-scale production is not economically feasible.
“Biomass energy is the choice of energy diversification in the future, but the schedule should be adjusted timely according to the actual situation in the promotion process. At the same time, for raw materials in line with the national conditions, we should develop more new technologies and processes to maximize the benefits as far as possible. Like cellulosic ethanol, it should continue to develop, which is a good direction. In addition, because production costs will be affected by fluctuations in raw material prices and international crude oil prices, and the benefits are uncertain, enterprises can adopt more flexible production schemes, such as having the conditions to produce edible ethanol, fuel ethanol, or multiple products co-production.
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