How biofuel could be the answer to China’s energy problems

Ambitious targets and a low starting base means there’s a lot of scope for expanding China’s biofuel business writes Oliver Luen

According to recent figures from BP, China consumes as much as 23 percent of the world’s energy. And with great power, comes great responsibility. China is positioning itself as a leader of clean energy production and has set an ambitious target to produce 20 percent of its energy from renewable sources by 2030.

China dominates when it comes to solar, wind and hydropower but sits far behind world leaders Brazil and America when it comes to biofuels.

Biofuels are broken broadly into biodiesel, which uses vegetable oil, animal fats or waste oils; and bioethanol, made from the sugar fermentation of grains and cereals. They can be made from first-generation biomass (e.g. grains), second-generation (e.g. waste) or third (e.g. molecular).

Currently, less than four percent of China’s renewables come from biofuels and there is a conflict between using much-needed grain for food stock or biofuel production. After a rise in grain prices in 2006, restrictions were placed on grain-based ethanol production and a five percent tax is now levied on consumers of this type of fuel. This has led to a shift away from “first generation”, grain-based feedstock to more complex and costly biofuel production.

Second-generation biofuels – essentially fuels made from non-food crops and waste materials – has a clear potential for growth. Waste oils and other products are plentiful in China and can be converted into biofuel without having an impact on food supply.

Experiments are being done to link carbon dioxide omitting smoke stacks directly to algae producing biofuel facilities

There is also interest in further development of third-generation biofuels. These are essentially forms of algae, which can very efficiently be turned into ethanol in a process very similar to alcohol production. What is of particular interest is that these biofuels thrive on carbon dioxide. Experiments are being done to link carbon dioxide emitting smokestacks directly to algae producing facilities. This will both reduce carbon emissions and aid the growth of algae for clean biofuel conversion.

The infrastructure to produce good volumes of biofuel is being put in place and a number of ethanol-producing facilities have been established in recent years in high grain-producing areas such as Inner Mongolia. In 2015, American chemical company DuPont invested with New Tianlong Industry to launch a biofuel plant in Jilin province, and the government have expressed their support for further investment in the sector.

Production, however, is currently far from achieving intended capacity. China’s National Climate Change Plan, launched in 2014, set a target of producing 130 billion cubic metres of biofuel by 2020, which could be hard to meet with current restrictions on the use of first-generation biofuels.

China is currently an importer of biofuels and, thanks to the Belt and Road’s China-Pakistan Economic Corridor, Pakistan has become the largest supplier to China, selling more than 40 million litres of ethanol in the first half of 2015 alone.

With few companies selling biofuel commercially and the majority of consumers being state-owned industry, the challenge is how to make the sale of biofuels profitable. With such ambitious targets and exciting progress in second and third-generation biofuels however, there will be plenty of government support for companies that can help establish an efficient production process.