China’s Fuel Ethanol Development in Line with “Green” Strategy, but Progress Is Slow

By Mi Duo, CNPC Jilin Petrochemical Research Institute


At present, some provinces of China, such as Heilongjiang, Jilin, Liaoning, Henan, Anhui, and some areas of Hubei, Hebei, Shandong, Jiangsu, Guangxi, have basically established ethanol gasoline as an alternative to ordinary lead-free gasoline.
China’s bio-fuel ethanol production technology has matured. COFCO Guangxi Biomass Energy Co., Ltd. built China’s first non-grain fuel ethanol plant, with a capacity of 200 kt/a. As of 2014, China’s fuel ethanol capacity had reached 2.025 million t/a, with corn-based capacity at 1.74 million t/a. In 2011, China’s total output of fuel ethanol was 1.77 million tons, down 2.7% YoY. In 2012, it was 1.62 million tons, falling 6.2% from the previous year. In 2013, output was 1.7 million tons, up 4.9% YoY. And in 2014, it was 1.9 million tons, up 11.8%. China’s fuel ethanol producers in 2014 are shown in Table 1.
Heilongjiang Jianye Fuel Co., Ltd. and the Danish company, Bio-Fuel Technology Holding jointly funded and built a large comprehensive utilization processing base for straw, with a straw cellulose ethanol capacity of 300 kt/a and five byproducts. The official ground breaking ceremony was held in Hulan district, Harbin city in August 2014.
Demand
Demand in China’s fuel ethanol market depends on the domestic demand for automobile gasoline, domestic promotion of ethanol gasoline and the proportion of ethanol gasoline mix. Apparent consumption of gasoline here was 93.4 million tons in 2013 and 101.15 million tons in 2014, increased by 8.3% YoY. Calculated by 10% ethanol content in ethanol gasoline the maximum demand for fuel ethanol would have been 10.115 million tons in 2014. However, the actual demand was only 18.8% of the calculated maximum demand. The growth of production capacity and the promotion process were both slow.
During the next five years (2016-2020), China’s oil consumption elasticity coefficient will keep falling. Assuming it falls by 5%, the combined annual demand for gasoline and diesel will be about 340 million tons by 2020 – gasoline will be 97-100 million tons and diesel will be 210-220 million tons. If calculated by the existing 10% ethanol content in ethanol gasoline, China's maximum demand for fuel ethanol will be 10 million tons in 2020. Government-approved supply capacity is now 2.025 million t/a. A shortage of at least 8 million tons of fuel ethanol is expected for 2020.
Considering that China’s new method of pricing refined oil will be gradually integrated with international oil prices and considering the rising prices of raw materials for fuel ethanol, one must expect domestic fuel ethanol prices to rise in the next few years.
While fuel ethanol is in line with China’s green development strategy, non-grain fuel ethanol project costs are relatively high and cellulose-based ethanol industrialization demonstration projects have progressed slowly in China. The resources and varieties of cellulose for cellulose fuel ethanol are widely varied.
The government needs to pay more attention to the supporting technologies for producing ethanol from one or two kinds of straw, which exists in a wide range of resources and varieties and could reduce the cost of cellulose-based ethanol production by increasing scale. Although the ethanol technology of microalgae still faces lots of technical difficulties, it has shown good prospects for development and will now be the main research direction.         

Table 1    China’s fuel ethanol producers, 2014

Producer    Location    Raw material    Capacity (kt/a)    Remarks
Henan Tianguan Fuel Ethanol Co., Ltd.    Henan    wheat, corn, potato    500    Two devices with the capacity of 200 kt/a and 300 kt/a, respectively.
Jilin Fuel Ethanol Co., Ltd.    Jilin    corn     600    Completed 300 kt/a capacity in August 2003 and expanded to 400 kt/a in 2005. In 2009, the capacity was expanded to 550 kt/a and 600 kt/a in 2011.
COFCO Biochemical (Anhui) Co., Ltd.    Anhui    wheat and corn    420    Two devices, 100 kt/a & 320 kt/a.
COFCO Bio-Chem Energy (Zhaodong)    Heilongjiang    corn    220    Two devices, 120 kt/a & 100 kt/a.
COFCO Guangxi Bio-mass Energy Co., Ltd.    Guangxi    cassava    200    Completed in 2008, with a two-period investment of RMB1 463.59 million in total.
Shandong Longlive Bio-technology Co., Ltd.?    Shandong    cellulose    55    Completed in 2012.
Zonergy Company Limited    Inner Mongolia    sweet sorghum stalk    30    The Phase I was completed in 2012, with an investment of RMB418 million. The Phase II, 70 kt/a, is under construction.
Total            2 025