It’s High Time for China to Develop Fuel Ethanol

By Mi Duo, Cao Zirong,  PetroChina Jilin Petrochemical

China’s fuel ethanol capacity reached 2 510kt/a in 2016. Table 1 shows the producers.
Fuel ethanol was already used in eleven provinces – all areas of Heilongjiang, Henan, Jilin, Liaoning, Anhui and Guangxi, and parts of Hebei, Shandong, Jiangsu, Inner Mongolia and Hubei. The consumption of fuel ethanol was around 3 100kt in 2016. Ethanol gasoline with a blending ratio of 10% (E10) accounted for 25.9% of the nation’s gasoline consumption in the year. Table 2 shows consumption growth during 2011-2016.
If during the “13th Five-Year Plan period (2016-2020)”, the blending ratio of fuel ethanol in gasoline remains at 10%, as it is today, the demand for fuel ethanol in China will be around 10 000kt in 2020. The supply is expected to fall short by at least 7 500kt (only for ethanol gasoline) in 2020.
An examination and approval system is implemented for fuel ethanol in China. Fuel ethanol businesses enjoy favorable fiscal and tax policies. Figure 1 shows a theoretical settlement price trend of fuel ethanol in China in 2016. It can be seen that the price generally increased while fluctuating in the range of RMB5 450-6 500/t. The business environment for fuel ethanol players improved in 2016: fuel ethanol sold at much higher prices while the cost of making corn-based fuel ethanol was down considerably because corn prices declined.
China imported 712kt of ethanol in 2016, an increase of 1.71% over 2015. Within that, 697kt of modified ethanol was imported. The United States, Korea and Brazil were the main sources. The United States supplied 96.3%, 44.5 percentage points more than in 2015. Other sources provided close to 3.6%, 44.5 percentage points lower than in 2015.
Fuel ethanol accounts for only 2.6% of the gasoline consumed in China today. The fuel ethanol sector has extremely excellent opportunities for development.          

Table 1   Fuel ethanol producers in China, 2016

Producer    Location of production unit    Raw material    Capacity (kt/a)
Henan Tianguan Group Co., Ltd.    Henan    Wheat, corn, tubers    700
Jilin Fuel Ethanol Co., Ltd.    Jilin    Corn    600
Anhui BBCA Group    Anhui    Wheat, corn    440
COFCO Biochemical Energy (Zhaodong) Co., Ltd.    Heilongjiang    Corn    250
Guangxi COFCO Biomass Energy Co., Ltd.    Guangxi    Cassava    200
SDIC Guangdong Bio-Energy Co., Ltd.    Guangdong    Cassava    150
Shandong Longlive Biotechnology Co., Ltd.    Shandong    Corncob    50
Liaoyuan Jufeng Biochemistry Science and Technology Co., Ltd.    Jilin    Corn    50
Zonergy Co., Ltd.    Inner Mongolia    Sweet sorghum stalk    30
Jinan Shengquan Group Share Holding Co., Ltd.    Shandong    Cellulose    20
Shandong Zesheng Bioengineering Technology Co., Ltd.    Shandong    Corn stalk    20
Total            2 510


Table 2   Consumption of fuel ethanol in China, 2011-2016

Year    2011    2012    2013    2014    2015    2016
Consumption (kt)    1 770    1 620    1 700    1 900    2 300    3 100
Annual growth (%)    2.7    -6.2    4.9    11.8    21.1    34.7