April 5, 2007

China's corn-related ethanol producers may lose subsidies

Ethanol producers in China face trouble as the government will most likely abolish essential subsidies for their industry, revealed an energy research official said.

At an energy forum in Shanghai, Xu Zhouwen, vice chairman of the Energy Development and Research Center said the four main ethanol producers in the country cannot survive without government subsidies.

As costs of corn rises rapidly in the country, subsidies for ethanol produced from corn may be removed to encourage the use of other raw materials.

Current subsidies for ethanol stand at RMB1,300 a tonne, compared with RMB1,700 last year.

The Chinese government has meanwhile, encouraged new bio-chemical production bases where resources are abundant, with plans to set up two such bases in Jilin and Henan provinces.