13 August 2008
China Energy Newswire
Shanghai. August 13. INTERFAX-CHINA – China’s ban on new grain-based biofuel projects has done little to curb interest and research into biofuels, though obstacles such as bottlenecks in supply and sourcing of feedstock remain, industry insiders told Interfax recently.
In March this year, China National Cereals, Oils and Foodstuffs Corp. (COFCO), China’s largest grain trader, put the first non-grain-based ethanol fuel project, fed with cassava, into operation in southern China’s Guangxi Zhuang Autonomous Region.
Meanwhile, another major Chinese fuel ethanol producer, Henan-based Tianguan Group, has converted its corn ethanol production line into an ethanol production base using cassava as feedstock.
The switch to cassava was prompted by the government’s insistence that Chinese biofuel production must not interfere with the country’s production of grains for human or livestock consumption. But even with the switch, Chinese ethanol projects are encountering difficulties as overnight, soaring demand has reduced the availability of raw material supplies while inflation has pushed up feedstock prices.
Feng He, an official with COFCO’s Guangxi operation, told Interfax recently that the project is facing some trouble from rising cassava prices. According to Feng, the sourcing price of dry cassava chip increased from RMB 1,300 ($189.78) per ton last year to RMB 1,700 ($248.18) per ton this year, a climb of 30 percent in just one season.
“At the moment, the company is sourcing all the feedstock for this project from local farmers,” Feng said. “To keep costs down, we need our own cassava plantation, which we are in the process of constructing now.”
Zhang Xiaoyang, chairman of Tianguan Group, told China Business News on July 29 that the company has rented 50,000 hectares of land in China’s southern neighbor, Laos, to plant cassava. The company also plans to build ethanol plants in Laos in the future.
COFCO chose a different tack, staying inside China but is looking to other sources for their fuel. In 2007, the company began negotiations with Huanghua City in Hebei Province, Yangxin county in Shandong Province and Wuyuan county in Inner Mongolia to supply sweet sorghum for ethanol production, though talks have stalled.
Local agriculture officials with Huanghua City and Yangxin county confirmed with Interfax that relations had hit an impasse, but were reluctant to reveal more.
On July 28, China Times cited a researcher for COFCO as saying that as sweet sorghum is harvested only once a year and difficult to store in bulk, long-term, large-scale fuel ethanol production is hard to sustain.
Morover, another unnamed COFCO official told China Times that there is still some dispute over the feasibility of industrializing sweet sorghum-based fuel ethanol.
An agriculture expert who asked to remain anonymous told Interfax that COFCO may be just focusing most of its attention on cassava-based fuel ethanol production, and reducing its effort on other projects.
However, Zhang Hao, deputy director of the agricultural department in Wuyuan county, Inner Mongolia, told Interfax that the lack of specialist equipment was also forming a bottleneck to cooperation.
According to Zhang, the county began working with COFCO in 2007, using COFCO investment and technology supplied by Beijing’s Tsinghua University. The county hosted small-scale feasibility studies into the production of sweet sorghum-based fuel ethanol.
“The study showed that large-scale planting of sweet sorghum is feasible here, and Tsinghua’s technology is reliable,” Zhang said. “However, we do not have sufficient equipment to build a plant on an industrial scale.”
According to Zhang, they are now cooperating with China Guangcai Renewable Energy Investment Co. Ltd., a joint venture invested by capital from the United States, Brazil and Hong Kong. The company is planning to plant 1 million mu (66,666 hectares) of sweet sorghum by 2015.
China is also looking into jatropha as a source of biofuel, though one expert told Interfax that jatropha production, which has many advantages, needs some time before making inroads to supplying China’s demand for biofuels.
Roland Jansen, president of Mother Earth Plantations Pte Ltd., a Singapore-based company focused on cultivating and researching jatropha, forecast that Hainan Island, the southernmost Chinese province, may become one of the largest jatropha nurseries in the world.
In June this year, the National Development and Reform Commission (NDRC) gave the go-ahead for the construction of three bio-diesel projects fed with jatropha -
China National Petroleum Corp.’s project in Sichuan Province, a project run by Sinopec Group in Guizhou Province and CNOOC’s Hainan project. CNPC’s project is designed to produce 50,000 tons of the fuel per year while the other two will have annual production capacities of 60,000 tons. A Hainan agricultural department official told Interfax recently that CNOOC may begin construction on its Hainan project this month.China’s interest in jatropha stems from the fact that it can be planted on hillsides and wasteland, meaning it does not compete with land that could otherwise be used in the production of all-important grains for human consumption.
Jansen, whose company has signed deals to plant 1 million hectares of jatropha in West Timor over the next three years, stressed that work is still very much at the research stage and that jatropha is still a long way from being a commercially viable source of fuel. He noted that the University of Sichuan, in particular, is playing an important role in jatropha research, not just for its application as a biofuel, but for medicinal properties too.
However, even with the backing of the government, biofuels are only part of the solution to constantly growing energy demands, according to Jansen. Biofuels will not replace the millions of barrels of crude oil produced worldwide everyday and in a country as thirsty for fuel as China, supply will always be an issue.
“We cannot satisfy demand,” he said.
