September 15, 2006

China to limit impact on grain while tripling fuel ethanol output

China plans to triple its fuel ethanol output by 2010 to reduce the country's reliance on imported oil and boost rural income, a government official said Thursday (Sep 14). 

China's annual fuel ethanol output should top 3 million tonnes by 2010, up from 1 million tonnes last year, Liu Qun, from the National Development and Reform Commission (NDRC), China's top planning body, said.

Fuel ethanol should make up more than 5 percent of the country's gasoline consumption, compared with less then 2 percent now, the division chief from NDRC said, adding that the industry would continue to receive strong financial support from the government.

Not only are the four government-sponsored fuel ethanol plants in China exempted from taxes, they also receive RMB1,300 (US$163.6) for each tonne of ethanol produced.

Ethanol-blending areas would also be expanded to the central and western parts of the country.

Beijing is currently exploring the use of non-food raw materials as feedstocks for ethanol so that the impact on food production is limited.

For example, the new 100,000 tonne per year ethanol plant of Tianguan Group, one of the four government-sponsored fuel ethanol producers, would be using early rice as feedstock.

The southern region of Guangxi, the country's largest cassava grower, would build fuel ethanol facilities for 1.0 million tonnes in the coming five years. When completed, it would use cassava as feedstock. 

COFCO's Vice President Yu Xubo told the conference it was seeking opportunities to set up non-grain ethanol plants in five provinces, including the one in Guangxi.