By Mi Duo, Research Institute of PetroChina Jilin Petrochemical Co.
The most selective product to replace petroleum
Ethanol fuels – high-quality oxygen enriching agents and blenders – can improve combustibility by mixing with gasoline. This will reduce the generation of incomplete combustion pollutants such as carbon deposits and carbon oxides inside vehicle engines, thereby reducing the emission of carbon oxide and particulates in vehicle tailpipe emissions.
Ethanol fuels are usually divided into several categories according to the technology used in their production, including Generation 1 eatable ethanol, based on food crops such as corn and wheat, Generation 1.5 ethanol, based on economic crops such as cassava, sugarcane, and sorgo stalks, Generation 2 cellulosic ethanol, based on corn cob and corn straw, and Generation 3 microalgae ethanol, based on carbohydrates inside microalgae. Both Generation 1 and Generation 1.5 ethanol fuels are starch-based, while Generation 2 is cellulosic-based. With technology quite different from that used for Generation 1 and 1.5, and depending on the feedstock off the hook from crops, Generation 2 is a trendy product today in China and has been put into commercial production. Fed by a large amount of carbohydrates containing starch, cellulosic, and semi-cellulosic inside microalgae, Generation 3 fuel is still in the phase of research and development, and has not been put into commercial production.
Why does China need to develop ethanol fuels? Because it can help ease the tightness of the petroleum supply, and can drive up the consumption of commodity crops (especially corn) as well. The four pilot enterprises have greatly extended their industrial chain, adding chemicals such as ethyl acetate, degradable plastics, bioethylene, and bioethylene oxide to their production list.
Good opportunities to develop ethanol fuels
1. A couple of supportive policies
The National Development and Reform Commission, the National Energy Administration, and the Ministry of Finance jointly issued the Implementation Plan for Expanding the Production of Ethanol Biofuels and Promoting the Use of Vehicle Ethanol Gasoline in September 2017, stipulating that vehicle ethanol gasoline should be adopted across the nation by 2020. On August 22, 2018, the State Council made a decision at its executive meeting to promote the use of vehicle ethanol gasoline further, in which, to be specific, the use of vehicle ethanol gasoline was to be expanded in another 15 provinces in addition to the original 11 pilot provinces, almost total market coverage in China except for a few regions.
2. Stable feedstock supply
By January 2017, China built temporary stockpiles of corn (237 million tons), rice (120 million tons) and wheat (50 million tons). The inventory of corn alone could produce around 71.8 million tons of ethanol, on the premise that 3.3 tons of corn make one ton of ethanol. In addition, China’s reusable stalks and forestry wastes exceed 400 million tons per year, so if producers kick off the commercial production of cellulosic ethanol, the ethanol output will exceed 60 million tons.
3. Against the backdrop of higher dependency on overseas crude oil
China’s dependency on foreign crude oil was above 70% in 2018. Therefore, moderately developing ethanol fuels and other alternative energy sources will not only expand the total energy capacity, it will also mitigate the dependency on foreign crude oil and enhance national energy security. Based on the total gasoline consumption of 122 million tons in 2017, ethanol demand will be around 13.5 million tons if E10 ethanol gasoline covers the market, so the equivalent replacement of gasoline will be 8.1 million tons (calculated according to heat value), amounting to a reduction of 34.6 million tons of crude oil imports.
4. Faster transition towards low carbon and green life
The concept of “embracing green low-carbon lives” has become widepread all over the world. Ethanol gasoline is particularly environment-friendly, as the emission of PM2.5 exceeds 40% compared with that from general gasoline grades. More precisely, hydrocarbon concentration in vehicle tailpipe emissions is down on average by 42.7% and carbon monoxide by 34.8%.
Many challenges still ahead
1. Relatively high production costs of ethanol fuels
The average price of corn in China is currently RMB2 003/ton. If calculated based on the formula of 3.3 tons of corn per 1 ton of ethanol, the cost of using corn alone could reach as high as RMB6 610/ton. With other costs included, the total production cost for each ton of ethanol could hit RMB9 000/ton, while the wholesale price of 92# gasoline is only RMB7 984/ton, leaving a gap in production cost above RMB1 000/ton.
Producers are dedicated to developing highly-efficient pre-treatment, hydrolysis, and fermentation technologies to streamline production, and thus reduce the costs. So far, some of them have debottlenecked by adopting cellulosic to produce ethanol fuels. To improve the conversion rate and reduce per-ton costs is not only today’s task but also tomorrow’s.
2. A lack of secular and sustainable policies to support the industry
Despite the adoption of some policies favourable for non-food feedstock-based ethanol fuels, such as a value-added tax refund after levying and a consumption tax exemption, results have not met expectations amid a lack of systematic, sustainable, and secular policies for technology & innovation, as well as for researching non-food feedstock-based ethanol fuels development. Therefore, the government is taking great efforts to create supportive policies, a definite industrial development layout, and strict measures and regulations, as they are essential for the development of ethanol fuels.
3. Low market recognition and acceptance
Because of the limited promotion activities, ethanol fuels are not widely recognized and accepted. This situation has imposed limits on production scale and marketization.
It’s been more than one decade since China stepped into the ethanol fuels market, and the whole production & sales system is largely mature today. However, further growth will need support from policies, public information campaigns, and technological innovation.