Strategy and Planningfor Sustainable Development of Energy Crops in China
Strategy and Planning for Sustainable Development
of Energy Crops in China
Part ?
Jan 2009
List of Contents
1 Introduction............................................................................................................................. 1
1.1 Background ................................................................................................................. 1
1.2 Significance................................................................................................................. 2
1.3 Status of Energy Crops and Liquid Fuel in China ......................................................... 5
1.3.1 Development Status of Energy Crops ........................................................................ 5
1.3.2 Development Status of Liquid Fuel ............................................................................. 8
1.4 Objectives and Tasks ................................................................................................... 9
1.4.1 Long-term objectives .................................................................................................... 9
1.4.2 Specific objectives ........................................................................................................ 9
2 Methodology and Hypothesis ..............................................................................................10
2.1 Research scheme ....................................................................................................... 10
2.2 Methodology ............................................................................................................. 10
2.3 Basic hypothesis ........................................................................................................ 11
3 Review of energy crops development .................................................................................11
3.1 Energy security and exploration of biomass energy .................................................... 11
3.2 Strategy of climate change and its impact on biofuel exploitation ............................... 12
3.3 Biofuel and grain security .......................................................................................... 14
3.4 Review on international experience of energy crops development and the indication for
China .............................................................................................................................. 17
3.4.1 America ........................................................................................................................ 17
3.4.2 European Union .......................................................................................................... 20
3.4.3 Asia .............................................................................................................................. 22
4 Policy and institutional barriers ...........................................................................................24
4.1 Interest involver in industry chain of energy crops ..................................................... 24
4.2 Status of development policy, legislation and institution framework........................... 28
4.3 Policy and institutional barriers .................................................................................. 32
5 Strategic planning for sustainable development of energy crops in China.......................34
5.1 Basic principles ......................................................................................................... 34
5.2 Strategic objectives .................................................................................................... 36
5.2.1 General objectives ....................................................................................................... 36
5.2.2 Specific objectives ...................................................................................................... 37
5.3 Layout of the industry ................................................................................................ 40
5.3.1 Planting and layout of energy crops for fuel ethanol production ............................. 40
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5.3.2 Layout for production of biodiesel ............................................................................ 47 5.4 Estimation of investment ........................................................................................... 47
5.5 Development mechanism ........................................................................................... 50
5.5.1 Coordination mechanism within departments ........................................................... 50
5.5.2 Mechanism of investment and financing ................................................................... 54 6 Stimulation policy and guarantee measures...................................................................58
6.1 Resources investigation ............................................................................................. 58
6.2 Policy and regulations................................................................................................ 58
6.3 Research and Popularization ...................................................................................... 59
6.4 Stimulation for investment ......................................................................................... 59
6.5 Propaganda and training ............................................................................................ 60
II
1 Introduction
1.1 Background
With fossil fuel being gradually exhausted, energy war and crisis appeared frequently nowadays. Tremendous threatens from global warming were encountered due to large amount of greenhouse gas (GHG) emission caused by fossil fuel combustion. As one of the renewable energy sources, biomass energy is storable and sustainable for energy conversion and therefore regarded as the most promising alternative
1energy. The amount of COabsorbed during production process and that 2
emitted after combustion of biomass energy are equal, from which zero emission of CO is very beneficial for emission reduction of greenhouse 2
2gas. It was predicted by 17 research projects worldwide that annual supply of biomass energy would increase to 100-400 EJ by 2050. The huge variation of predicted data was dominantly resulted from the
3uncertainty in planting area and yield of energy crops. Another integrated
research found that annual supply of biomass energy 50 years later would
4reach 33,1135 EJ. To achieve the goal of satisfactory output, the yearly
1 Karpenstein Machan M. Sustainable cultivation concepts for domesticenergy production from biomass. (Special issue on bioenergy) [J ] .Critical Reviews in Plant Sciences , 2001 , 20(1) : 1,14. 2 Lemus R , Lal R. Bioenergy crops and carbon sequestration [ J ] .Critical Reviews In Plant Science , 2005 ,
24(1) : 1,21. 3 Berndes G. , Hoogwijk M. , van den Broek R. The contribution of biomass in the future global energy supply : A review of 17 studies[J ] . Biomass and Bioenergy , 2003 , 25(1) : 1,28. 4Hoogwijk M, Faaija A , van den Broek R , Berndes G, Gielen D , Turkenburg W. Exploration of the ranges of the global potential of biomass for energy[J ]. Biomass and Bionergy , 2003 ,25 (2) :119,133.
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8 2planting area of energy crops need to be 5×10hm by 2050, i.e. an
8 2 increasing rate of 0.1×10hmcould just guarantee the goal to be
5fulfilled. Use of fuel ethanol and biodiesel that produced from energy crops as transport fuel can reduce the oil demand and GHG emission, improve air quality and performance of vehicles, and is compatible with current existing vehicles and infrastructure for oil supply. It also helps promoting economical development of rural areas and supply transportation with sustainable fuel. Therefore biofuel for transport has dominated the biomass energy industry and become an important option for energy strategy in developed countries.
1.2 Significance
a) To meet the demand of widening agricultural functions and improving peasants’ income
Economical development of rural China was in slow pace for a long time, which is unfavorable for modernization progress of rural area and even the development of national economy. Finding alternative energy solutions for rural economy development becomes imminent for solving the “Three Agriculture related issues”. With biomass energy explored, both grain and biomass are yielded from agricultural production, and biomass obtained is directly sold to biomass energy producers. The
5Berndes G. , Hoogwijk M. , van den Broek R. The contribution of biomass in the future global energy supply : A review of 17 studies[J ] . Biomass and Bioenergy , 2003 , 25(1) : 1,28.
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measures of developing biomass energy industry, constructing energy crops base, adjusting agricultural structure, expanding the sources for income increase and enhancing added value of agricultural products, can significantly help improving peasants’ income and local tax, create more job opportunities, transfer rural labor to the industry and will no doubt strongly promote the construction of new socialist countryside.
b) To meet the requirements of ecological protection and sustainable development
As an alternative fuel for oil, fuel ethanol is advantageous for, a) the combustion products only comprise of CO and water, no CO and 2
other poisonous gases emitted thus pollute less than fossil fuel; b) biomass are obtained from green plants, agricultural and forestry crops and other cellulosic materials which is renewable. When adulterated with 10% of fuel ethanol, the octane number of gasoline increase by 2 unit, anti-knock index increase by 3 unit, oxygen content significantly increase, CO discharge decrease by 25%~30%. Substituting oil with biodiesel was very advisable. It is estimated that if 60 thousand tons of biodiesel were annually produced, they will contribute much to energy saving and emission reduction such that emissions of CO, CO, SO and inhalable 22
particles will decrease by about 145 thousand tons, 400 tons, 60 tons and 100 tons, respectively. Exploitation of waste hillsides and waste lands for energy crops growth, will not only effectively increase the vegetation area,
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improve local ecological environment, build multi-functional ecological system, but also will better the CO absorption ability and carbon 2
sequestration function of greenland, contribute positively to the improvement of ecological environment and sustainable development of social economy.
c) Requirement of national strategy for developing alternative energy.
Energy is becoming one of the major problems that perplexing the economical development of China, and increasingly impactful particularly since the sharp rise of oil price in recent years. China is quite short of fossil fuel, with proved reserves of crude oil and natural gas accounting for only 2.4% and 1.2% of the world total. According to the statistics of General Administration of Customs conducted in January 2008, the net import of crude oil reached 196.8 million tons in 2007, accounting for 47% of total consumption nationwide. China has so far becoming the second energy consumer all over the world, and the consumption will still grow. It is predicted that the oil demand in 2020 will arrive at 450 million tons, of which 200 million tons can be self-supplied and 250 million tons dependent on import. Biomass fuel is regarded as the best solution for oil substitution under the increasing importance of oil security. Non-food raw materials for biomass energy are of abundance in China. The utilization technologies are approaching
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mature stage, particularly some key technologies of which have been broken through. Substituting biofuel for fossil oil is of great significance for finding solutions for weak points of China’s economy and society, and
eliminating unsafe factors.
1.3 Status of Energy Crops and Liquid Fuel in China
1.3.1 Development Status of Energy Crops
Energy crops refer to herbaceous and woody plants that dedicated to energy production. Although started much later than Brazil, the US and other countries developed in biomass energy, great progress has been made in China recent years. The energy crops those have promising development include sweet sorghum, sweet potato, cassava, sugarcane, sugar beet, Jerusalem artichoke, rapeseed and cottonseed.
Sweet sorghum is widely grown in China, but still in small scale scattering in north China such as Beijing, Tianjin, Hebei, Inner Mongolia, Henan, Shandong, Liaoning, Jilin, Heilongjiang, Shaanxi and Xinjiang. After years research new varieties of sweet sorghum that suitable for most area of China have been cultivated, such as Chuntian series,
Yuantian series and Liaotian series. The output of stem, brix of sap, grain yield, wide adaptability, and particularly saline resistance of these varieties all achieved international advanced level.
It is reported by FAO that the harvest area, total output and unit area
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2yield of cassava in China 2006 achieved 265.8 thousand hm, 4.318
2million tons and 16.2 tons/hm, respectively. Cassava production was
distributed in the areas of Guangdong, Guangxi, Hainan, Yunnan and Fujian provinces, with about 90% in Guangdong and Guangxi. Currently 90% of cassava was used for starch production.
China is the biggest producer of sweet potato in the world. From
2FAO statistics, the harvest area and total output in China were 4709 khm
and 100 million tons in 2006, accounting for 52.3% and 81.0% of the
2world total. The unit area yield of sweet potato in China was 21.3 t/ hm,
much higher than the world average level. Sweet potato is extensively cultivated in China with main production areas of Sichuan basin, Huanghuaihai plain, Yangtze valley and coastal provinces in Southeast China. According to a statistics, 50% of sweet potato produced in China was directly used for feed, 15% for industrial processing, 14% for direct eating, 6% for seed potato, and still 15% mildew due to improper storage.
Though extensive popularization of independently cultivated ROC
series which is high-yield and high sugar content, the unit area yield, average sugar content, white sugar equivalent rate of sugarcane in China
22were increased from 66 t/hm, 13.0% and 8.58% to 73.5 t/hm, 14.56%
and 12.23%, respectively. Sown area of sugarcane in China 2006 was
21495 khm, totally outputting 99.784 million tons of sugarcane. The output increased by 52.67% from 65.416 million tons to 99.784 million
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tons by only 12.0% increase of sown area.
Sugar beet is primarily produced in the regions further north than latitude 40 degree north of China, including Northeast China, North China and Northwest China. All three regions are suitable for spring sown sugar beet, have short frost-free period, low accumulated temperature, long sunshine duration and quite large difference in temperatures. High yield and sugar content and less plant disease can be
2achieved. The sown area of sugar beet in China 2006 was 287 khm,
from which 10.536 million tons of beet were produced with unit area
2yield of 36746 kg/hm. The sown areas of sugar beet are mostly (more than 88%) distributed in Heilongjiang, Xinjiang and Inner Mongolia,
22 more specifically 111.1 khm in Heilongjiang, 94.4 khmin Xinjiang
2and 48.9 khm in Inner Mongolia.
Jerusalem artichoke, which originated from North America and introduced to China via Europe, is vastly grown in both north and south China. Scatteringly grown in China, Jerusalem artichoke is mostly preserved as food, low added value and being utilized in small scale. Although several enterprises for further processing of Jerusalem artichoke exist in Inner Mongolia, Gansu and Xinjiang, the products are still fall behind those from Europe due to backward technology and weak competitiveness. China has so far cultivated Juneng series, Nanyu series
and Qingyu series those can be grown in saline lands and assuring high
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yield of tuber.
1.3.2 Development Status of Liquid Fuel
Fuel ethanol production began its industrialization in China 2000. Manufacturers, blenders and retailers of fuel ethanol were exempted from tax and surtax. Appointed manufacturers could obtain the government’s
subsidy from 2001. There are presently five licensed fuel ethanol plants in regular production. Four fifths of the plants take corn and wheat as raw materials, remained plants feed with cassava. Total capacity of these plants is 1.7 million tons every year. Ethanol gasoline, a mixture of 10% of ethanol and 90% of gasoline, has been launched to apply in 10 provinces since 2008.
Biodiesel was initiated late in China, but attracts more and more researches input from institutes and enterprises. Certain progresses were made so far such that large-scale manufacturing plants were established based on various raw materials. Hebei based Pilot plants with annual capacity of 10 thousand tons was established in 2001 by Hainan Zhenghe Bio-energy Company; In August 2002 Sichuan Gushan Vegetable Fat Chemistry Co. Ltd. developed a production equipment that can yearly yield 15 thousands tons of biodiesel; Fujian Longyan Zhuoyue New Energy Development Company built equipments with annual output capacity of 20 thousand tons and 100 thousand tons in September 2002 and the yearend of 2003, respectively. By the end of 2006, actual capacity
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for biodiesel production reached 250 thousand tons. Three biodiesel plants with capacity of 60 thousand tons affiliated to PetroChina, Sinopec and China National Offshore Oil Corp. were authorized as
demonstrations plants.
1.4 Objectives and Tasks
1.4.1 Long-term objectives
Develop energy crops in a rational way to expand functions of agriculture, prolong agricultural industry chain, improve income and job opportunities for peasants, better ecological environment and fulfill the national strategy for construction of new socialist countryside and energy substitution.
1.4.2 Specific objectives
This project is based on the achievements obtained by technical assistance project Strategy research for development of biomass energy in China. Specific objectives are as follows,
(1) Fully investigate and assess the resources and potential of energy crops in China;
(2) Systematically evaluate the technical economical, environmental and social influences of energy crops;
(3) Analyze the factors hamper the development of energy crops, make proposals for development mechanism, encouraging policy and
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construction planning.
2 Methodology and Hypothesis
2.1 Research scheme
Aiming at long-term objectives and specific objectives, and though learning from advanced foreign experiences in developing energy crops and liquid biofuel industries, this research analyzed the policy and institutional barriers that hindering the progress of energy crops, proposed strategic planning for the development of energy crops and liquid biofuel, and brought forward stimulating policy and safeguard measures for fulfilling the goals. The accomplishment of these tasks is on account of the research results of experts on resources, technical economics, environment and sociology, as well as the Middle and
Long-term Development Plan for Renewable Energy and Development
Plan for Agricultural Biomass Energy.
2.2 Methodology
(1) Literature investigation. Statistics data, laws and policy, papers and monographs and project reports were reviewed.
(2) Workshop. Workshops were held for communications and data screening to ensure the reliability and trueness of conclusions.
(3) Field investigation. Field investigations were conducted to visit
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the organizations, experts, representatives from enterprises and peasants relevant with energy crops and liquid biofuel, to comprehend the development status and perspectives of the industries.
2.3 Basic hypothesis
The strategic planning is based on the assumptions that, firstly current conversion technologies can achieve expected industrial capacity and are economically feasible; secondly development of energy crops would not impair national grain security and not destroy ecological environment.
3 Review of energy crops development
3.1 Energy security and exploration of biomass energy
Energy is vital to national economy, and one of the foundations for human life. Thousands years of agricultural society is an era leading by Biomass economy. But coal became the major energy after industrial
ththrevolution in 19 century. And the 20 century has witnessed human
being encounter with Hydrocarbon economy in which oil and natural gas dominating the energy mix. Besides the usages as transport fuel, oil is also raw material for more than 2500 chemicals such as plastics, synthetic fiber, synthetic rubber and compound ammonia. The excess dependence of economy and society on energy, fossil fuel particularly,
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has caused two troubles that become increasingly serious. One is the severe environment pollution and the other is existing fossil fuels gradually diminish. Global oil demand outclasses the throughput since world economy booms, especially since China, India, Mexico and other developing countries grows. It is estimated by the US federal agency for energy information (EIA) that the daily energy demand will increase by 22.5 million barrels by 2025 under influence of developing countries. However the demand increased in developed countries is only 14 million barrels. The oil reserve will be exhausted in 50 to 80 years if calculated by the consumption. Excess consumption of fossil fuels released much unutilized energy and carbon, destroyed the balance of energy and carbon in nature, damaged the ozonosphere, and directly led to disasters like global warming and acid rain. Fossil fuels are destined to be exhausted. Owing to greenhouse gas effect and sharp rise of oil price, biomass energy again raised extensive attentions. For better development of rural economy, exploration and utilization of biomass energy emerge as required.
3.2 Strategy of climate change and its impact on biofuel exploitation
Global climate changes have raised great attentions of all communities all over the world in recent years. A research by University of Minnesota has found that the GHG emission of biodiesel is 41% less
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than that of normal diesel oil, and GHG emission of fuel ethanol is 12% lower than that of gasoline. The energy obtained from combustion excesses total energy consumed in growth and extraction processes. The energy output of biodiesel and fuel ethanol is 93% and 25% higher than respective energy input. The harms of biofuel to the environment happen in the production process of raw materials. The raw materials extensively adopted for biofuel production, corn, soybean and sugarcane for instance, damaged the environment in certain scale. Take the US for example, corn cultivation needs large amount of nitrogen, phosphate fertilizer and pesticides; air, water and soil would suffer from pollutions during ethanol fermentation; mass consumption of ethanol would also accelerate the GHG emissions. Due to increase of production cost, corn-soybean rotation was substituted for single corn cultivation, which is unfavorable for biodiversity, pest prevention and land protection. Additionally biofuel development will contradict with grain production, forestry conservation and other land usages. Immoderate tree cutting in tropic zone will gravely destroy the biodiversity. In Brazil, millions hectares of virgin forest were damaged to grow sugarcane for ethanol fermentation. The related harms in temperate zone were primarily caused by excessive fertilization and mechanized cultivation.
Accordingly the basic principles of energy crops development for China lies in, firstly insistence on that energy crops planting doesn’t
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conflict with food demand and doesn’t occupy land necessary for grain
production; secondly energy crops cultivation should not damage ecological environment. Producing fuel ethanol and biodiesel using non-food materials should be encouraged and properly guided. Chinese government attaches great importance to climate change, and will develop energy crops in sustainable way. China formulates environment protection as a basic national policy, takes the Scientific Outlook on Development as the idea of administration. Energy saving was greatly boost by the goal of reducing the energy consumption per unit GDP by 20% in 2010 compared to that in 2005. China will adjust agricultural structure and cultivation modes, promote good varieties and advanced technologies, improve utilization efficiency of resources, and enhance the adaptability of agriculture to climate change and ability for sustainable development.
3.3 Biofuel and grain security
Currently transport biofuels are mainly made from grain or vegetable oil. This will certainly affect food and feed supply. There are hundreds of fuel ethanol plants in the US, 112 plants of which totally produced 19.45 million tons of ethanol by using more than 20% of national corn output in 2007. Presently there will still be many fuel ethanol plants to be built or already under construction. Experts predicted
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that bout 30% of grain in the US will be used for ethanol production by 2008, invoking significant reduction in grain storage. It is inevitable that shortage of supply will lift the food price. The upsurge of biofuels will bring forward a series of huge changes to global agriculture. Rise of corn price is not only a consequent trend, but also the beginning of gigantic transformation. Price rise of other agricultural and animal products will consequently be triggered, even for all scopes of food.
Revealed by Consumers Price Index (CPI) of Britain, the annual increasing rate of food price has reached 6%, a new top in recent 6 years. According to the latest Economic Herald printed in Hong Kong, in June
15 of 2007 wheat price in France future goods reached the highest price since 1998 of 181 Euros. Contract price of wheat in Chicago increased by 28.5 cents in July, reached a new top of 11 years at 6.18 US dollars per bushel. Meanwhile Asian countries also didn’t avoid the storm of price
rise. The price rise of food was drove the most by the price rise of grain. The global grain storage is now at the lowest level over the last 30 years, according to the research report of World Bank. International Grain Council (IGC) stated that the global output of grain from 2007 to 2008 will increase by 6.2% to achieve 1.666 billion tons, but is still less than the total consumption. IGC estimated the global grain consumption will arrive at 1.68 billion tons in 2007, 3.1% increase than that in 2006. The situation that demand exceeds supply will of course invoke the lift of
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grain price.
International Monetary Fund warned in World Economy Outlook, the
demand for biofuel has already lifted the prices of corn and soybean. A report from World Bank also pointed out that the grain price has jumped about 20% since 2006, and prices of corn and wheat have reached the highest level over last decades. Besides the effect of economic boom, the development of biofuels is as well closely related with the price rise.
FAO pointed out that in the premise of grain security guaranteed and biomass energy developed in sustainable way, transport biofuels will avail to promote agricultural economy. Considering the lands and water demand of energy crops, development of biomass energy needs to be deliberated much more for countries greatly challenged by grain security. Governments are decisive in standard preparation to balance between energy and foods and to protect environment. For this purpose, FAO established biomass energy platform in 2006 dedicated to guide the development of transport biofuel.
The raw materials for biofuels therefore need to be various, ranging from non-food energy crops to cellulosic straws. The US started its research 20 years ago on ethanol production using drought resistant switchgrass. Another plan was to produce 250 million tons of fuel ethanol by 1 billion ton of agricultural and forestry wastes.
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3.4 Review on international experiences in energy crops development and the indications for China
Biofuels have so far seen large scale production and applications in some countries. The total output of fuel ethanol worldwide was 39.17 million tons in 2007, and total output of biodiesel in EU was about 5.71 million tons. As a whole, about 1% of liquid transport fuel was provided by biofuels. The developments of biofuel industry are, however, unbalanced in different foreign countries.
3.4.1 America
America is publicly known as pioneer for biofuels development. The fuel ethanol produced by Brazil and the US accounts for 70% of the world total.
thSeized the opportunity of low oil price in 80s of 20 century, and
poor motives for alternative energy development, Brazil quickly developed fuel ethanol taking advantages of its large sugarcane output, and became the biggest producer and consumer of fuel ethanol in the world. The fuel ethanol output of Brazil reached 4.2 billion gallons, 4.4 billon gallons and 4.62 billion gallons in 2004-2006. And 15 million tons was produced in 2007, accounting for 38% of global output. According to the data announced by Energy and Mines Ministry of Brazil, energy produced by sugarcane in 2005 accounted for 13.9% of national total—218.6 million tons of oil equivalent. Biomass energy at present
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becomes the third largest energy source in Brazil. Among the 100 sugarcane based ethanol plants under construction, a half will be put into production by 2010. At that time biomass energy will become the second largest energy source over hydro and electricity energy. In addition, Brazil will produce biofuels from grain, soybean, animal fat and other agricultural products. The biofuels put in domestic market has already saved 120 billion US dollars of foreign exchange for Brazil.
There are 320 ethanol plants in Brazil and will be over 50 in the future 5 years. To meet the market demand, related companies in Brazil planned 6 billion US dollars in next 5 years for construction of sugarcane plantations and ethanol plants. A newly announced project of Brazil challenged that the ethanol gasoline be extended to reach 50% of total vehicles fuel in next 10 years. The annual consumption of ethanol will increase to 6 billion gallons in next 10 years.
Brazil is implementing its biodiesel planning to mix 2% of biodiesel into existing diesel oil. The government will enforce the measure compulsorily in 2008 and lift the ratio to 5% in 2013.
The ethanol output of the US has doubled since 2001, from which presently applied for vehicles accounting for 3% of the total transport fuel. The fuel ethanol produced in the US was 3.9 billion gallons in 2005, about 33% of the global throughput. Bioethanol is produced mainly from corn in the US. According to the statistics from Renewable Energy
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Association of the US, the ethanol plants in operation reached 101 by July 2006 with throughput of 4.82 billion gallons. Additionally 34 new plants under constructions and 7 plants under expanding will contribute an increase of more than 2.22 billion gallons to annual throughput. The proportion of corn used for ethanol production grown from 6% in 2000 to 20% in 2006. Fuel ethanol production is at present the third largest usage of corn in the US.
The US government focuses it energy policy on fuel ethanol and biofuels. US congress approved Energy Law in August 2005, in which renewable fuels standard (RFS) is a very important item. The RFS required adulteration of gasoline with increasing proportions of renewable fuels year by year. The demand for renewable fuels in the US should rise from 4 billion gallons in 2006 to 7.5 billion gallons in 2012. The balance between renewable fuels and gasoline in 2012 should be kept for the future. To meet the requirements of RFS, nearly 50% of gasoline in the US needs to be blended with 10% of ethanol. Former president Bush suggested in state of the national address at the beginning of 2007, the production of renewable and alternative energy, including biofuels, is required to reach 35 billion gallons before 2017. Department of Energy (DOE) has formulated a plan for year 2010 that large scaled and integrated bio-refinery be constructed feeding with agricultural materials.
To promote the development of fuel ethanol, US government
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provided tax discount for domestic corn growers, and subsidy of 51 cents per gallon for companies producing gasoline-ethanol blend fuel. The development of biodiesel in the US also grows that there are 4 biodiesel plants with total capacity of 300 thousand tons annually. The biodiesel output of the US in 2005 was 75 million gallons, equal to 260 thousand tons.
Latin American countries didn’t fall behind in biofuels development. Argentina, with annual output of 56 million liters, is another big producer of biofuels in Latin America. Argentina plans to strengthen the investment in next 2 years to strive for doubling production of biofuels. 3.4.2 European Union
European Union approved a directive regarding the use of biofuels in May 2003 that stimulated the production of fuel ethanol and biodiesel in EU. The consumption of biofuels is required by the directive to be 5.75% of all fuel consumptions by the end of 2010. 526 million liters of ethanol and 2.2 billion liters of biodiesel were produced by EU in 2004.
Germany becomes the biggest producing country of biodiesel in the world. The large scaled application of biofuel was of great significance to German energy strategy. The share of biofuels has so far already reached 60% in German market of renewable energy. The sources for biofuels include plants, timber, biogas, degradable household garbage and city garbage. Together with large-scale application and commercialization of
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first generation of bioenergy, Germany urged to develop the second generation bioenergy which is more economical and environment protective. The new generation of bioenergy technology will directly make use of straw, timber, wood chips and animal manures, to effectively solve the ecological troubles that encountered through biofuel application with lower cost, higher conversion efficiency and better energy quality.
France has taken a series of measures to spur the exploitation and utilization of bioenergy since 2003. The lands for fuel oil crops planting
2arrived at 320 thousand hm in France 2003. Biofuel oil output of the
same year reached 410 thousand tons, 80% of which was biodiesel. The farmlands used for fuel oil crops were planned by the government to be 2
2million hm by 2010. France announced in March 2006 that 1 billion Euros will be appropriated to build 10 sets of biofuel equipments, aiming at the proportion of biofuels reaching 5.75%, 7% and 10% in 2008, 2010, and 2015 in total fuels consumption, respectively. France intended to quadruple its biofuel capacity to 3 million tons per year by 2008. Making use of these equipments grains and sugar beet will be used for production of biodiesel and bioethanol.
The largest biodiesel plant with capacity of 250 thousand tons was built in the UK in 2004. Biofuel companies intended to expand the annual output of biodiesel to 750 thousand tons. A new technology producing hydrogen from sunflower oil was developed by University of Leeds. The
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purity of hydrogen obtained can reach up to 90%, pure enough to provide effective and clean hydrogen products for automobiles and home-use fuel cell. Sugar beet and other plants are also utilized in the UK to produce bio-butanol, which usually sold at gas station after blended with gasoline.
Finnish government submitted a proposed law to its congress in October 2007 to lift the mix proportion of biofuel in transport system, asking Finnish energy suppliers to increase the proportion of biofuels in transport fuels to at least 2%, 4% and 5.75% in 2008-2010. Enterprises didn’t reach the set standard will be fined. Finnish government then
decided to appropriate an extra 9 million Euros to support the development of the second generation biofuel.
3.4.3 Asia
Japan reckons biofuel as a good solution to energy demand, and is developing fuel ethanol towards global market by taking advantages of industry and science and technology. Mitsubishi and other large corporations intended to establish plants in Brazil, and Japan Development Bank invests 300 million US dollars from for joint production and R&D. Mitsui Bank and Brazil Petroleum Corporation are preparing to build pipeline in Brazil exclusive for fuel ethanol transport, and set up special agency in Japan to import fuel ethanol from Brazil. It is planned by Japan that 40% of the motor vehicles will consume biofuel by 2010.
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In Southeast Asia, Thailand is fond of reducing its oil import and providing support for cassava and sugarcane planters, and popularizing the 10% blend fuel in 2007. Ministry of Energy of Thailand decided a ban on MTBE in 2007, and to add 10% of ethanol into #91 gasoline from 2008. The scheme for biodiesel development of Thailand was issued in July 2001. Thailand Petroleum Corporation promised to purchase 70 thousand tons of tung oil and 20 thousand tons of cocoanut oil every year. With Tax exemption applied, the first biodiesel plant is already in operation.
Philippine will soon extensively use 2% biodiesel to aid coconut producers. The biodiesel plant invested with 650 million Pesos in Philippine was put into production in May 2006. It is the first large-scale biodiesel plant that has capacity of 60 million liters annually. 5% blend fuel was started to use in 2007. Philippine government will encourage replacement of gasoline with bioethanol gradually through legislative approach. This bioethanol plan will add at least 5% of ethanol into gasoline supplied nationwide. The proportion of 5% will be enhanced to 10% after 4 years implementation of the law.
Peter Cremer, a Singapore petrochemical company, will invest 20 million US dollars in Jurong Island of Singapore to establish biodiesel equipments with total annual capacity of 200 thousand tons. In Malaysia and Indonesia, palm oil industry gained increasing support since the
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demand for diesel grown. Indonesia built 4 sets of medium sized biodiesel equipments in 2006 to advance the application of alternative energy.
India has re-launched the program to popularize 5% blend fuel in most areas using sugar based ethanol. The government planned to increase the proportion to 10-20%. At present in 9 states and 3 regions of India ethanol proportion of 5% is enforced mandatorily.
4 Policy and institutional barriers
4.1 Interest involver in industry chain of energy crops
The major interest involver for the development of energy crops and biofuel industry include governments at all level, energy companies, biofuel producers, raw materials agents, township governments, village committees, peasants and consumers.
(1) Governments. Governments at all levels support the
development of energy crops on behalf of the state and society, and play decisive roles in planning of industry development, market construction, and establishment of relative mechanisms and abilities through impacts of policy making and public service. The efforts and input are primarily implemented by investigation of resources, varieties cultivation, planning for development, stimulating policies, standardize the market and service
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system. Ministry of Agriculture and agricultural administrations at all levels for instance, are in charge of organizing and guiding resources investigation, planning, service system establishment and subsidy policy formulating. National Development and Reform Commission and related system are in charge of examining and approving biofuel projects, and directing the price of fuel ethanol and biodiesel. Ministry of Science and Technology is responsible for scientific research and key problem tackle with emphasize on policy drafting and strengthening input for new varieties cultivation and technological conversion, promoting the progress of development of science and technology and industrialization process.
(2) Energy companies- including oil suppliers and gas stations;
(3) Biofuel producers- purchase energy crops from peasants for production of fuel ethanol and biodiesel, and sell biofuel to energy companies and other energy consumers;
(4) Raw material agents. As intermediary agents, they help enterprises to collect raw materials. If crops are grown in large area, land rent agents and contractors will consequently emerge.
(5) Township government and village committee. They assist raw material agents and biofuel producer with raw material collection. It is proved by rural practices that some of them will possibly turn into intermediary agents.
(6) Peasants. They are one of the direct interest involvers, supply
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biofuel producers with energy crops, and probably employees of contractors managing large area of energy crops.
(7) Consumers. They are one of the direct interest involvers, and also the end users of products from energy crops. Consumers participate in quality supervision and other activities.
By kinds of cooperation modes relationships favorable and mutual beneficial have appeared amid the interest involvers in the industry chain of energy crops to jointly boost the development of the industry. The cooperation modes currently applicable are listed in Table 4-1.
Table 4-1 Cooperation modes among major interest involvers
Peasants’ Peasants’ ResponsibilApplicable Participation modes involvemeinvestor contributiity for risk stage nt on
Peasants Companies Companiegrow crops Peasants’ Demonstratioundertake s provide based on decision n, large scale, Peasants+company market risk, part of agreement, restricted by commercializpeasants for productiogreatly companies ed natural risk n goods involved
Companies
Lead by establish
enterpriseplantations,
s peasants Peasants Invested Demonstratioprovide Companies have no Peasants+base+compby n, large scale, lands and undertake all right for any companiecommercializlabor force, risks decision s ed land rent and making
employment
form, less
involved
Government Governments Invested Peasants Lead by Peasants+governmenorganizes undertake by have much Demonstratiogovernmet cultivation market risk, governmeright for n nt by peasants, peasants for nt decision
26
Peasants’ Peasants’ ResponsibilApplicable Participation modes involvemeinvestor contributiity for risk stage nt on greatly natural risk making involved
Demonstrati
on invested
by Peasants’ Governments government, Invested right for Peasants+ undertake peasants by decision Demonstratiodemonstration market risk, contribute governmemaking n +government peasants for lands and nt restricted by natural risk labor force, government greatly
involved
Government
sign Peasants’ Joint Promoted agreement right for Companies investmenby with decision Peasants+ undertake t by governmecompanies, making Demonstratiogovernment market risk, government and and restricted by n, large scale +companies peasants for nt and enterpriseorganizes government natural risk companies cultivation, and s greatly companies involved
Peasants
cultivate,
and set up Decision association Peasants large scale, peasants+industrial making by for sale and undertake all peasants commercializassociation individual technical risks ed peasant instruction,
greatly
involved Lead by
peasants Peasants set
up
cooperative, Decision for Peasants large scale, peasants+ making by production undertake all peasants commercializcooperative participated and sale risks ed peasants cooperation,
greatly
involved
27
4.2 Status of development policy, legislation and institution framework
Chinese government issued many policy and laws and regulations in recent years to spur the development of energy crops. Details are described as follows.
(1) Energy Saving Law of PR China
It specifies that the government support the exploration and utilization of new energy and renewable energy such as biogas, solar energy, wind energy, hydro energy and geothermal energy. Exploration and utilization of new energy and renewable energy are encouraged by other governmental documents, for example National Policy on Energy
technology, Directory of Industries, Products and Technologies that Currently Inclined to Be Encouraged Nationwide, Notification on the
related Problems of Further Support to the Development of Renewable Energy.
(2) Renewable Energy Law of People’s Republic of China
The law comprises of 32 provisions in 8 chapters, they are General, Resource investigation and development planning, Guide for industry and technical support, Popularization and application, Price management and charge apportion, Economical stimulation and supervision measures, Legal responsibility and Supplementary provisions. The law made clear the significance of renewable energy in
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national energy strategy, stressed the stimulation effect to economical progress and sustainable development of the society. Meanwhile the law established the policy for aimed total amount, mandatory access to power grid, price discrimination of electricity, charge apportion and special fund management.
thThe 16 provision stipulates that “the government encourages
exploitation and utilization of biofuels, and energy crops cultivation”, “the government encourages exploitation and utilization of liquid biofuels, oil sale enterprises should include liquid biofuels acceptable with national standards into their market system, complying with the requirements of energy department of the State Council and provincial governments”.
thThe 25 provision stipulates “financial organizations should provide privileged loan with interest discount to renewable energy projects those listed in national instruction directory of renewable energy industry and qualified for financial credit.”
thThe 26 provision specifies “Tax exemption should be granted for projects listed in the instruction directory of renewable energy industry. Detailed implementation methods are set by the State Council.” the
instruction directory of renewable energy industry put liquid biofuel on the list as a direction to be encouraged.
th(3) Outline of the 11 five-year plan for national economy and social
development
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It brings forward favorable policy on financial and tax and investment, mandatory market share, encourages production and consumption of renewable energy, raise the proportion of renewable energy in primary energy consumption, explore wind energy intensively
6to establish 30 10000 kW-scale wind power plants, and build 10
kW-scale bases of wind power in Inner Mongolia, Hebei, Jiangsu and Gansu, accelerate the development of biomass energy, encourage power generation using straw, refuse burning and gas from refuse burying, construct some power plants feeding straw and forestry materials, expand the capacity of biomass shape fuel, fuel ethanol and biodiesel, lift the installed capacity of wind power and biomass power to 5 million kW and 5.5 million kW respectively, actively exploit solar, geothermal and ocean energy.
(4) Management of Special Funds for Renewable Energy
Development
Explore renewable energy to replace oil, give maximal aid to bioethanol fuel and biodiesel projects. Bioethanol fuel refers to fuel ethanol made from cassava and sweet sorghum.
(5) Ministry of Finance, National Development and Reform Commission, Ministry of Agriculture, State Administration of Taxation, and State Forestry Administration announced in Proposals for financial
and tax support on the development of bioenergy and biochemicals, that
30
the government encourages to exploit winter idle land, saline land, waste hillsides, waste land and other unutilized land to establish raw material base for bioenergy and biochemistry, for stable raw materials supply and less competition for land cultivating grain crops. The base construction should combine with land exploration and preparation, comprehensive development of agriculture, and forestry ecology projects, and enjoy the privilege policy. Bioenergy enterprises run in “company + peasants”
mode and leading biochemical enterprises will be subsidized by the government. The scenarios of subsidization will be prepared by National development and reform commission, Ministry of Finance, Ministry of Agriculture and State Forestry Administration.
(6) Economical stimulation
Pilot popularization of vehicle used ethanol gasoline was conducted in Heilongjiang, Jilin, Liaoning, Henan and Anhui provinces, and city of Xiangfan, Jinmen, Suizhou, Xiaogan, Shiyan, Wuhan, Yichang, Huangshi and Ezhou in Hubei province, city of Jinan, Heze, Zaozhuang, Linyi, Liaocheng, Jining and Taian in Shandong province, city of Shijiazhuang, Baoding, Xingtai, Handan, Cangzhou, and Hengshui in Hebei province, and city of Xuzhou, Lianyungang, Huaian, Yancheng and Suqian in Jiangsu province. The ethanol plants are fed with aged grain, and have total capacity of 1.02 million tons.
To support the fuel ethanol enterprises, many privileged policies
31
were issued by the government. 480 million Yuan of national debt funds were invested for construction of fuel ethanol plants in Henan, Anhui and Jilin provinces. Tax privilege was also granted, the consumption tax of fuel ethanol was exempted for 4 pilot enterprises approved by the government. The total exemption since 2002 has reached 190 million Yuan; 2 billion Yuan was appropriated by central government to subsidize enterprise deficit, effectively ensured regular production of pilot fuel ethanol plants. The ethanol fuel produced by the 4 appointed plants was popularized in 9 provinces. Added 8%~12% into gasoline, the sales of vehicle-use fuel ethanol achieved about 10 million tons, 20% of the gasoline consumption nationwide. In addition, the subsidy for selling one ton of fuel ethanol according to Ministry of Finance should reach 1883 Yuan in 2005, 1628 Yuan in 2006, 1373 Yuan in 2007 and 2008.
4.3 Policy and institutional barriers
China has made certain progress in exploration and utilization of biomass energy in recent years. The technology, scale, level and speed of development for energy crops, however, fall behind much to those in developed countries. Factors hindering the development are various. Firstly late start is an influential factor. Meanwhile lack of practical stimulating policy is a major barrier for further development of biomass
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exploitation. Biomass energy is rich but scatters in every rural area. Large scaled utilization of biomass requires understanding and affirmation from all the society, cultivating market along with the industrialization and commercialization of biomass energy technologies, and the ratio of biomass energy to commercial energy significantly improved to reach large amount of consumers. Achievement of the prospect relies on effective economical stimulating policies. Current situations are described as follows,
(1) There is no definite provision for exploration and development of energy crops in present basic laws.
Renewable Energy Law somehow specifies and encourages
thdevelopment of biomass energy in the 16 provision. It is obvious that
from the legislative background, purpose and context of the 33 provisions, however, the law serves for and stresses the target of power generation. In the supporting regulations, namely Tentative management measures for
price and sharing of expenses for electricity generation from renewable energy and Relevant Provisions for the Administration of the Generation of Electricity Using Renewable Energy Resources, there is also no
provision for other utilization methods.
(2) Shortage of policy and regulations levering the market such as tax and subsidy for investment.
Market and administrative measures, such as subsidy for investment,
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tax concession and purchase at high price by the governments are taken in EU and US to boost the rapid development of liquid biofuel. And these experiences force a rethink and improvement for China.
(3) Effective negotiation and coordination are poor among different departments.
The scarcity of negotiation and coordination mechanism will do advantages to environmental protection in rural areas. Agricultural production, energy and environmental protection in one area are presently administrated by different departments. Requests that conflict and cannot be united were given by different departments only considering their own will due to the different preferences and interests they conceived. The shortages of negotiation and coordination mechanisms regarding the development of biomass energy and improvement of rural environment make it difficult to strive together united and are not propitious for industrial development.
5 Strategic planning for sustainable development of energy
crops in China
5.1 Basic principles
(1) Utilize non-food materials, and purport to better the three
agriculture related issues at top priority.
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Bioenergy production should be produced using cassava, sweet potato, sweet sorghum, Jerusalem artichoke, sugar beet, sugarcane and cellulosic straws. The three agriculture related issues should be put in the
top priority all the time during industrial development. Further expanding the functions of agriculture, increasing job opportunities, and improving peasants’ income is the most imminent task.
(2) Protect ecological environment and emphasize clean production
During the process of exploration of energy crops and liquid biofuel, it is also essential to protect the biodiversity, prevent water and soil runoff, and keep land fertile by organic fertilizers; intensively boost the technology of clean production, popularize green chemistry process, lower consumption of energy and materials, reduce pollutes emission; strengthen research and development for pollution control, protect the ecological environment.
(3) Extend the industry chain with integrated utilization preferred.
It is necessary to extend industry chain and achieve simultaneous development for the overall development of energy crops and liquid biofuel industry. Innovation is stressed very important to keep pace with international advanced technology. Integrated utilization of energy crops for both biofuel and other comprehensive applications will improve the economical efficiency. The applications include but not limited to seed cultivation of energy crops, construction of raw material base, fuel
35
ethanol and biodiesel production, biogas production from wastewater, furfural production using bagasse, and shape fuel production by residues of sweet sorghum.
5.2 Strategic objectives
1) Determine the development scale and layout for each province;
2) Estimate the investment needed for each province, including the expense of land preparation and plant construction. Estimate the total investment needed;
3) Determine the market share of biofuel to reach 15%, 25% and 50% in 2010, 2015 and 2020, respectively.
5.2.1 General objectives
Though fuel ethanol production using tubers and sweet sorghum, and biodiesel production using wasted animal fat and vegetable oil, offal from oil & fat plants and cottonseed at the present stage, the general objectives are set, a) by 2010 enhance the yield per unit area of energy crops, substituted planting and planting on reserved land to guarantee the raw material supply; work hard to bring key technology to international advanced level, gradually actualize commercialization of non-food fuel ethanol, enlarge the market share of biodiesel; b) by 2015 increase the growing area of sugary and starchy energy crops to form large-scale plantation, heighten the capacity of fuel ethanol and
36
diodiesel to 10.17 million tons and 700 thousand tons respectively; c) by 2020 further increase the planting area of energy crops and capacity of liquid biofuel, lift the annual capacity of fuel ethanol and biodiesel to 20.45 million tons and 2 million tons respectively, start to produce fuel ethanol at commercialized level using agricultural and forestry wastes, produce cottonseed based biodiesel with market competitiveness，build a
series of energy crops bases, significantly improve industrialization level and reduce the cost, the innovation and industry system almost established; Have no impact on grain security, promote rural economical development, improve the environment, extensively replace fossil oil based fuel with biofuel, and achieve sustainable development. 5.2.2 Specific objectives
(1) Fuel ethanol. Strategy of developing fuel ethanol stage by
stage was adopted for each region. Energy crops planting, cassava, sweet potato and sweet sorghum for example, as well as straw based cellulose ethanol, are expected to ensure the raw materials supply and commercialization of liquid biofuels.
2More specifically, 10% of the reserved land, 670 thousand hm, will
be utilized to grow sweet sorghum, cassava, sweet potato and other energy crops by 2010, supplying an extra of 2.53 million ton of fuel ethanol annually. Another 750 thousand tons of fuel ethanol could be obtained by improving the yield per unit area of cassava and sweet potato,
37
bettering saccharification, fermentation technologies, and separation process. A total of 100 thousand tons of ethanol can be gained by substituting sweet sorghum for ordinary sorghum. Additionally 1.52 million tons will be fermented from aged corn and wheat. The total annual supply of fuel ethanol can therefore reach 4.9 million tons. Pilot plants are also established to industrialize the technology of cellulosic ethanol, to significantly reduce the production cost and speed up the process of industrialization, and to further regulate the liquid biofuel market, establish standards, monitoring and service nets.
2By 2015, 25% of the reserved land (1.69 million hm) will be used
for planting of sweet sorghum, cassava and sweet potato, extra producing 6.89 million tons of fuel ethanol. 1.5 million tons of fuel ethanol can be obtained by improving the yield per unit area of cassava and sweet potato. 250 thousand tons of ethanol can be gained by substituting sweet sorghum for ordinary sorghum. Combined with that can be produced by fermentation of aged grain, the total production can reach 10.17 million tons. Several demonstration plants for cellulosic ethanol are established and have general conditions for industrialization.
2By 2020, 50% of the reserved land (3.37 million hm) will be used for
planting of sweet sorghum, cassava and sweet potato to produce 14.7 million tons of fuel ethanol. 2.22 million tons of fuel ethanol can be obtained by improving the yield per unit area of cassava and sweet potato.
38
510 thousand tons of ethanol can be gained by substituting sweet sorghum for ordinary sorghum. Cellulose ethanol production is commercially applied, by either enzyme hydrolysis of cellulose or thermo-chemical process in which cellulose is gasified and synthesized. Total supply of cellulose ethanol can reach 1.5 million tons per year. Combined with 1.52 million tons of ethanol produced by fermentation of aged grain, the total production can reach 20.45 million tons.
(2) Biodiesel. Strategy of developing fuel ethanol stage by stage was adopted for each region. Cottonseed and other wastes are used to produce biodiesel. The detailed objectives are as follows.
By 2010, the biodiesel produced by transesterification of waste animal fat, waste vegetable oil, offal from oil & fat plants, and cottonseed reaches 550 thousand tons.
By 2015, biodiesel productions from cottonseed are expanded with lower cost; total production of biodiesel reaches 700 thousand tons.
By 2020, large scale production of biodiesel by waste animal fat, waste vegetable oil, offal from oil & fat plants, and cottonseed is achieved through breakthrough in hydrogenation technology. 1 million tons of biodiesel are yielded by cottonseed; synthetic diesel oil is thermo-chemically converted from gasified products of straw and other agricultural and forestry wastes, presenting annual output of 2 million tons.
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5.3 Layout of the industry
5.3.1 Planting and layout of energy crops for fuel ethanol production
The planting of energy crops was planned for each province in this
report, taking into account of the status of resources, developing level of
ethanol conversion technology, the results from social and environmental
assessment, and future market demand for liquid biofuel. Table 5-1 gave
the details.
Table 5-1 Layout of energy crops planting for each province of
China
Regions Province/ Types of 2010 2015 2020
directly Energy Land Ethanol Land Ethanol Land Ethanol
governed Crops exploited output exploited output exploiteoutput
24244city (hm) (10 t) (hm) (10 t) d t) (10
2(hm)
Northeast Liaoning Sweet 7992 3.00 19980 7.99 39960 15.98
China Jilin sorghum 16715 6.27 41787 16.71 83574 33.43
Heilongji20646 7.74 51615 20.65 103230 41.29
ang
Sum 45353 17.01 113383 45.35 226765 90.71
North China Beijing Sweet 1061 0.40 2651 1.11 5303 2.55
Tianjin sorghum185 0.07 462 0.19 925 0.45
Hebei , sweet 11268 4.23 28170 11.80 56340 27.11
Shandong potato 34214 12.83 85535 35.82 171069 82.33
Henan 10365 3.89 25912 10.85 51825 24.94
Sum 57092 21.41 142731 59.77 285462 137.38
Loess plateau Shanxi Sweet 7592 2.85 18979 7.59 37958 15.18
Shaanxi sorghum 5589 2.10 13974 5.59 27947 11.18
Gansu 74635 27.99 186588 74.64 373175 149.27
Sum 87816 32.93 219541 87.82 439081 175.63
Mongolia-XiInner Sweet 17066 6.40 42666 17.07 85332 34.13
njiang Region Mongolia sorghum
Ningxia 24878 9.33 62195 24.88 124389 49.76
Xinjiang 327705 122.89 819263 327.71 1638525 655.41
Sum 369649 138.62 924123 369.65 1848246 739.30
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Regions Province/ Types of 2010 2015 2020
directly Energy Land Ethanol Land Ethanol Land Ethanol
governed Crops exploited output exploited output exploiteoutput
24244city ) (10 t) (hm) (10 t) d t) (hm(10
2(hm)
Middle and Shanghai Sweet 1617 0.59 4043 1.77 8087 4.55
low valley of Jiangsu potato 17950 6.59 44875 19.63 89749 50.48
the Yangtze Zhejiang 7516 2.76 18790 8.22 37579 21.14
River Anhui 5968 2.19 14919 6.53 29838 16.78
Jiangxi 26553 9.74 66382 29.04 132764 74.68
Hubei 5870 2.15 14675 6.42 29350 16.51
Hunan 4226 1.55 10564 4.62 21128 11.88
Sum 69699 25.58 174248 76.23 348495 196.03
South China Fujian Cassava 5234 2.31 13086 6.54 26172 17.33
Guangdo4282 1.89 10705 5.35 21410 14.17
ng
Guangxi 1923 0.85 4808 2.40 9616 6.37
Hainan 919 0.41 2297 1.15 4595 3.04
Sum 12359 5.45 30896 15.45 61793 40.91
Southwest ChongqinSweet 6725 2.47 16812 7.36 33625 18.91
China g potato
Sichuan 12355 4.53 30888 13.51 61775 34.75
Guizhou 502 0.18 1255 0.55 2510 1.41
Yunnan 12522 4.60 31306 13.70 62612 35.22
Sum 32104 11.78 80261 35.11 160522 90.29
1) Northeast China
Northeast China, which includes Heilongjiang, Jilin and Liaoning
2provinces, covers 791.8 thousand km of land. It is one of the main producing areas for grain in China thanks to the abundant land resources
2and fertile soil. There are 453 khm of reserved land in Northeast China, mostly waste grassland and saline land those suitable for growth of sweet
2sorghum. The planting area of sorghum in 2006 reached 269 khm, and
sweet sorghum production can be realized by substituted planting. It is
planned that 10% of reserved arable land be explored for further planting
41
2 45 khmof sweet sorghum by 2010. If the target fulfilled, 2.72 million tons of sweet sorghum stem will be yielded to add 170 thousand tons of ethanol; substituting ratio of sweet sorghum reach 10%, because of which
2the planting area, stem output and ethanol obtained are 27 khm, 1.62
million tons and 100 thousand tons, respectively. The output increase of ethanol in 2010 is therefore 270 thousand tons. By 2015, 25% of reserved
2 arable land are planned to be explored for planting 113 khmof sweet
sorghum. If the target fulfilled, 6.8 million tons of sweet sorghum stem will be extra yielded; substituting planting of sweet sorghum reach 68
2khm. The output increase of ethanol in 2015 is therefore 700 thousand tons. By 2020, 50% of reserved arable land are planned to be explored for
2 planting 227 khmof sweet sorghum. If the target fulfilled, 13.61 million tons of sweet sorghum stem will be extra yielded to add 900 thousand tons of ethanol; substituting ratio of sweet sorghum reach 50%, because of which the planting area, stem output and ethanol obtained are 135
2khm, 8.09 million tons and 510 thousand tons, respectively. The output increase of ethanol in 2020 is therefore 1.41 million tons.
2) North China
North China comprises of Beijing, Tianjin, Hebei, Shandong and
22Henan and covers 539.4 thousand km. The 571 khm of reserved arable
land is mainly constituted by waste grassland, saline land and tidal land which suitable for planting of sweet sorghum and sweet potato. By 2010,
42
10% of reserved arable land are planned to be explored for planting 57
2 khmof sweet sorghum and sweet potato. The output increase of ethanol in 2010 is therefore 210 thousand tons; By 2015, 25% of reserved arable
2 land are planned to be explored for planting 143 khmof sweet sorghum
and sweet potato. The output increase of ethanol in 2015 is therefore 590 thousand tons; By 2020, 50% of reserved arable land are planned to be
2 explored for planting 285.5 khmof sweet sorghum and sweet potato. The
output increase of ethanol in 2020 is therefore 1.12 million tons.
3) Loess Plateau Region
Loess Plateau region refers to Shanxi, Shaanxi and Gansu provinces.
2The 879 khm of reserved arable land is primarily waste grassland and saline land which is reclaimable for planting of drought and barren resistant crops such as sweet sorghum. By 2010, 10% of reserved arable
2 land are planned to be explored for planting 87 khmof sweet sorghum to
produce 330 thousand tons of ethanol; By 2015, 25% of reserved arable
2 land are planned to be explored for planting 219 khmof sweet sorghum
to produce 870 thousand tons of ethanol; By 2020, 50% of reserved
2 arable land are planned to be explored for planting 439 khmof sweet
sorghum to produce 1.75 million tons of ethanol
4) Inner Mongolia-Xinjiang Region
Inner Mongolia- Xinjiang region includes Inner Mongolia, Ningxia
2 and Xinjiang. There are 3696 khmof reserved arable land in this region,
43
which is majorly waste grassland reclaimable for planting of sweet sorghum and sugar beet. It is planned that by 2010, 10% of reserved
2 arable land be explored for planting 369 khmof sweet sorghum, from
which 2.72 million tons of sweet sorghum stem will be yielded to add 1.38 million tons of ethanol; By 2015, 25% of reserved arable land be
2 explored for planting 924 khmof sweet sorghum to yield 3.69 million
tons of ethanol; By 2020, 50% of reserved arable land be explored for
2 planting 1848 khmof sweet sorghum to yield 7.39 million tons of
ethanol.
5) Middle and Low Valley of the Yangtze River
Middle and Low Valley of the Yangtze River covers Shanghai,
2 Jiangsu, Zhejiang, Anhui, Jiangxi, Hubei and Hunan. The 697 khmof
reserved arable land are mainly waste grassland and tidal land that suitable for planting of sweet potato. It is planned that by 2010, 10% of
2 reserved arable land be explored for planting 69 khmof sweet potato,
from which 2.09 million tons of sweet potato will be yielded to add 260 thousand tons of ethanol; By 2015, 25% of reserved arable land be
2 explored for planting 174 khmof sweet potato, from which 6.01 million
tons of sweet potato will be yielded to add 760 thousand tons of ethanol;
2 By 2020, 50% of reserved arable land be explored for planting 348 khmof sweet potato, from which 15.68 million tons of sweet potato will be yielded to add 1.96 million tons of ethanol.
44
6) South China
South China refers to Fujian, Guangdong, Guangxi and Hainan
2 provinces. There are 124 khmof reserved arable land in this region,
mainly waste grassland and tidal land. It is the main producing area of
2 cassava in China. 265 khmof cassava were harvested to produce 4.31
2million tons in 2006 with yield per unit area of 1.6 t/hm. Ethanol
production is quite promising by planting cassava on reserved arable land and improving the productivity of currently planted varieties. It is planned that by 2010, 10% of reserved arable land be explored for
2 planting 12 khmof cassava to produce 50 thousand tons of ethanol. If fine varieties grown and field management strengthened yield per unit
2area of 30 t/hm will extra contribute 750 thousand tons of fuel ethanol. The total ethanol increase by 2010 will be 800 thousand tons. By 2015,
2 25% of reserved arable land will be explored for planting 31 khmof
cassava to produce 150 thousand tons of ethanol. If fine varieties grown and field management strengthened 1.5 million tons of fuel ethanol will be extra contributed. The total ethanol increase by 2015 will be 1.65 million tons. By 2020, 50% of reserved arable land will be explored for
2 planting 62 khmof cassava to produce 2.78 million tons of cassava which can be converted to 410 thousand tons of ethanol. If fine varieties
2grown and field management strengthened yield per unit area of 45 t/hm
will extra contribute 2.22 million tons of fuel ethanol. The total ethanol
45
increase by 2020 will be 2.63 million tons.
7) Southwest China
Southwest China includes Chongqing, Sichuan, Guizhou and
2Yunnan. There are 321 khm of reserved arable land, almost waste
grassland in this region. Sichuan basin is the main producing area of sweet potato of China. Reserved arable land can be utilized to grow sweet potato. Productivity of current grown varieties can be improved. It is planned that by 2010, 10% of reserved arable land be explored for
2 planting 32 khmof sweet potato to produce 963 thousand tons fresh sweet potato which can yield 120 tons of ethanol. By 2015, 25% of
2 reserved arable land should be explored for planting 80 khmof sweet
potato to produce 2.81 million tons fresh sweet potato which can yield 350 tons of ethanol. By 2020, 50% of reserved arable land should be
2 explored for planting 161 khmof sweet potato to produce 7.22 million
tons fresh sweet potato which can yield 900 thousand tons of ethanol.
8) Qinghai- Tibet Region
Qinghai- Tibet Region includes Qinghai and Tibet with reserved
2arable land of 279 khm. Due to the typical plateau climate of low
temperature and inadequate heat, the productivity of reserved arable land is too low to explore and ecological environment is quite fragile. The waste grassland and saline land in this region are planned to develop pasture, not to grow energy crops in short duration.
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5.3.2 Layout for production of biodiesel
The technology of biodiesel production in China has reached the international level. The difficulty faced is shortage of raw materials that more than 30 million tons of soybean and nearly 10 million tons of edible oil need to be imported every year. The raw material that meet requirements of both price and quantity demand is cottonseed oil. By using Cottonseed oil which is intensively yielded in Xinjiang, and waste animal fat and waste vegetable oil, 1 million tons of biodiesel can be produced annually. It is planned that by 2010 demonstration plants producing biodiesel using cottonseed oil be established in Xinjiang, Henan, Jiangsu, Hubei, Shandong, Hebei and Anhui to output 550 thousand tons of biodiesel. By 2015 demonstration area will be expanded with cottonseed oil based biodiesel intensively developed, to totally output 700 thousand tons of biodiesel. Researches on synthesis and straw gasification will be strengthened to accelerate the process of industrialization. By 2020 a total of 2 million tons of biodiesel were produced on the basis of stable supply of cottonseed oil and synthetic biodiesel by gasified straw actualized.
5.4 Estimation of investment
The investment of developing energy crops and producing liquid biofuel was estimated according to the objectives and planning proposed
47
by this report. The estimated investment to the year of 2015, including expenses for land preparation and improvement, irrigation and drainage, infrastructures for liquid biofuel plants, is totally 180.9 billion Yuan. By 2010, 27.2 billion Yuan will be input to produce 4.9 million tons of fuel ethanol and 550 thousand tons of biodiesel; By 2015, 49.9 billion Yuan will be input to produce 10.17 million tons of fuel ethanol and 700 thousand tons of biodiesel By 2020, 10.38 billion Yuan will be input to produce 20.45 million tons of fuel ethanol and2 million tons of biodiesel.
The investment needed for developing fuel ethanol on reserved arable land in each province was estimated as detailed in Table 5-2.
Table 5-2 Investment estimation for each province
8Regions Province/ Types of Energy Crops Investment(10
Municipality Yuan)
2010 2015 2020
2.52 5.29 9.79 Northeast China Liaoning Sweet sorghum
5.27 11.07 20.48 Jilin
6.50 13.68 25.29 Heilongjiang
14.29 30.05 55.56 Sum
0.35 0.76 1.53 North China Beijing Sweet sorghum, sweet
0.06 0.13 0.27 Tianjin potato
3.55 7.68 15.42 Hebei
10.78 23.31 46.83 Shandong
3.26 7.06 14.19 Henan
17.98 38.89 78.15 Sum
2.39 5.03 9.30 Loess Plateau Shanxi Sweet sorghum
1.76 3.70 6.85 Shaanxi
23.51 49.45 91.43 Gansu
27.66 58.18 107.57 Sum
5.38 11.31 20.91 Inner Inner Sweet sorghum
Mongolia-Xinjiang Mongolia
7.84 16.48 30.48 Region Ningxia
103.23 217.10 401.44 Xinjiang
116.44 244.89 452.82 Sum
48
0.53 1.20 2.57 Middle and lower Shanghai Sweet potato
5.87 13.30 28.50 valley Jiangsu
2.46 5.57 11.93 of the Yangtze River Zhejiang
1.86 4.20 9.03 Anhui
8.28 18.67 40.16 Jiangxi
1.83 4.13 8.88 Hubei
1.32 2.97 6.39 Hunan
21.73 49.01 105.42 Sum
1.87 4.05 9.02 South China Fujian Cassava
1.53 3.31 7.38 Guangdong
0.66 1.42 3.17 Guangxi
0.33 0.71 1.58 Hainan
4.22 9.10 20.38 Sum
2.10 4.73 10.17 Southwest China Chongqing Sweet potato
3.85 8.69 18.69 Sichuan
0.16 0.35 0.76 Guizhou
3.90 8.81 18.94 Yunnan
10.01 22.58 48.56 Sum
In addition, the total investment estimated includes input needed for the following developing modes.
, In Northeast China, fuel ethanol can also be developed through substituted planting of sweet sorghum. 405 million Yuan will be invested by 2010 to enable production of 100 thousand tons fuel ethanol; 608 million Yuan will be invested by 2015 to enable production of 250 thousand tons fuel ethanol; 1 billion Yuan will be invested by 2020 to enable production of 510 thousand tons fuel ethanol.
, In South China, fuel ethanol production can be expanded on currently used land by improving the yield per unit area of sweet potato and cassava. By 2010, 3.375 billion Yuan will be invested to enable production of 750 thousand tons fuel ethanol; By 2015, 3.375 billion
Yuan will be invested to enable production of 1.5 million tons fuel
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ethanol;By 2020, 3.24 billion Yuan will be invested to enable production of 2.22 million tons fuel ethanol.
, Cellulose ethanol can be developed in areas abundant in straw resource after industrialization of the technology. 7.5 billion Yuan will be input for cellulose ethanol production by 2020 with capacity of 1.5 million tons.
, Biodiesel production by waste oil and cottonseed oil. 2.2 billion Yuan will be input to achieve capacity of 550 thousand tons by 2010; further 2.2 billion Yuan will be input to achieve capacity of 700 thousand tons by 2015; further 1.2 billion Yuan will be input to achieve capacity of 1 million tons by 2020. In addition, 4 billion Yuan will invested to develop biodiesel production by straw gasification and synthesis, and achieve capacity of 1 million ton by 2020.
5.5 Development mechanism
5.5.1 Coordination mechanism within departments
(1) Responsibility of different departments
The strategies for energy crops development in China rely on and stimulated by cooperation and coordination amid different departments. The responsibilities are subdivided into three levels. At the first level Ministry of Finance and National Development and Reform
Commission are responsible for policy and planning; At the second lever,
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Ministry of Agriculture and the Ministry of Science and Technology are responsible for implementation of the tasks; At the third level, Ministry of Environment Protection is responsible for implementation and guarantee of the tasks. Coordination mechanism of free communication, cooperation and effective operation is needed among different levels and among different departments. See Fig. 5-1.
, Ministry of Finance. Formulate financial policies that stimulating the development of energy crops and liquid biofuel, establish policy system for financial input, subsidy, price and tax, provide all-around supports to variety cultivation, technological research and development, pilot and demonstration, and industrialization for energy crops.
, National Development and Reform Commission. Write the
strategic targets and planning for energy crops development into Mid-Long term Development Plan for Renewable Energy, formulate
instructions and policies for the development of energy crops and liquid biofuel, direct and supervise the implementation of development objectives and planning by locals, put industrialization projects of fuel ethanol and biodiesel into practice.
Ministry of Agriculture. Ministry of Agriculture is mainly responsible for implementation and practice of strategic tasks, including variety cultivation, pilot plantation and base construction for energy crops.
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Responsibilities of governmental departments
National
leading group MOF NDRC:
, Strategic planning , Finance policy
, Industrialization , Finance input
,
MOST: MOA : MOEP
, Environment policy , Pilot &Demo. , R&D
, Supervision , Popularization , Pilot &Demo.
, ,
Strategic tasks • Variety cultivation • fuel ethanol technology • Fuel ethanol
• Base construction • Biodiesel technology • Biodiesel
Fig 5-1 Coodination mechanism inner the governmental departments
, The Ministry of Science and Technology is department providing technical support for development of energy crops, and responsible for research plans for variety cultivation, large scale planting and liquid biofuel technology. It also organizes pilot or demonstration projects together with Ministry of Agriculture.
, Ministry of Environment protection is responsible for preparing laws and regulations and policies related to environment protection, supervising enforcement of laws and regulation and policy implementation, supporting the development of biomass energy in view
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of environment and sustainable development.
(2) Coordination within departments
, Coordination at macro level, e.g. for policy and planning. To establish systematic policies and planning on investment, tax and industrial development.
, Coordination between macro level and execution level. The macro level side needs to know the difficulties the execution level sides encounters to formulate feasible policies and measures; the execution level sides are expected to understand well and sufficiently implement all policies and measures.
, Coordination within execution level sides.
The Ministry of Science and Technology and Ministry of Agriculture should communicate well on research plans to ensure the perspectives and to closely satisfy the requirements of energy crops development. Pilot research is another aspect that need close cooperation between two sides to realize expected achievement.
Coordination on industrialization needs to be strengthened between Ministry of Agriculture and National Development and Reform Commission. The status and development of agricultural production, as well as organic combination of energy crops base and liquid biofuel base, are to be considered during construction of straw based power plants.
, Integrated coordination. National leading group is responsible for
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integrated coordination.
5.5.2 Mechanism of investment and financing
International experiences should be sufficiently adopted for the development of energy crops. The governments should proactively direct and accept energy producers and civil organizations, and exert the levering function of market to establish effective investment and financing mechanism.
(1) Establish policy and laws system, enlighten public awareness
Framework of policy and laws system that avail the development of energy crops is required to be established by government. It is suggested by legislation, plan preparation and propaganda the government gain public support to direct the market demand and create investment opportunities. Popularization plans for biomass clean energy were issued by many countries, for instance pilot applications in automobiles have set a good example. The federal government of the US proposed a plan to purchase 100 thousand clean automobiles in 2005. Australia has prepared standard strict for pollutes emission of vehicle used gasoline. Zero energy consumption community was built in Beddington of the UK.
(2) Governments invest to support the research and development of key technology, and strengthen cooperation with private sectors to accelerate the process of industrialization.
The R&D of key technologies for variety cultivation and energy
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conversion are generally supported by the government at first stage, followed by investment from industrial community and enterprises, and finally gained rapid process of industrialization and commercialization. Strengthening the cooperation between governmental and private departments is of crucial effect in the whole process. Australian government, for instance, has realized to share risks and achievements, effectively spurred the initiative of enterprises to invest in green industry, and speeded up the transformation of key technologies through cooperation with private enterprises.
(3) By financial and tax encourages and market regulations, stimulate chief involvers to participate into base construction for energy crops and investment to liquid biofuel production.
The public policy and measures issued by various countries to encourage the development of liquid biofuel are all market-orientated. It is planned through various financial and tax stimulation and market regulations, to lower the investment cost for clean energy and lift the investment cost for projects with severe pollutions and high energy consumption, direct the investment from technologies of severe pollutions and high energy consumption to biomass clean energy technologies that consumed low energy and environmental friendly.
(4) Increase market demand by government purchasing
Governmental encouragement on clean energy consumption and
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other measures of purchasing are of inestimable significance for exploring the market for biomass energy. Therefore many countries, US, Japan, Germany and Australia for example, are proactively encouraging the purchasing policy for biomass clean energy. Governmental departments have set a good example in practicing the policy, e.g. figuring limits of energy consumption for governmental departments, clearly specify in purchasing law that the products purchased by governments must comply with the certification standards and grade labeled, regularly posting purchasing directory of clean energy, framing instruction for government purchasing and strengthening energy auditing to governmental departments.
(5) Exert the levering function of commonweal funds and governmental funds.
Commonweal funds are popular ways of supporting policy for development of bioenergy. Dedicated commonweal funds are established in over 20 countries such as the US, Britain, Germany, France, Australia, Italy, Japan and Korea. Renewable energy funds in California, Energy saving funds in Vermont and carbon funds in the UK are good examples.
(6) Fully exert the function of capital in investment for bioenergy
According to the experiences from Europe and the US, the most influential factors for financing for bioenergy projects lies in whether
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profit of the projects are realizable, stable and foreseen to make investors confident. It is suggested that by policy aid and proper mechanism for investment and financing, investment cost be lowered and market risk be controlled, effect of insurance company be actualized. Theses factors are of great significance to financing for biomass energy projects. The mechanisms applied for investment and financing include pre-project input, allowance for investment, loan with discounted interest, privileges for depreciation, trade of Drain-off-waste, market quota and voluntary agreement mechanism.
(7) Improve information system, establish public information platform for investment and financing.
The detailed announcement of related policy, regulations, planning, commonweal projects, detailed measures and application approach by the government will avail investors from enterprises and industrial community to well comprehend the policy trends, be familiar with investment environment for biomass energy industry, and thus enhance their confidence in investment. It is also beneficial for directing the investments and lowering aimlessness and risk of investment. Department of Energy of the US, for example, has published very detailed instruction for investment in biomass energy.
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6 Stimulation policy and guarantee measures
6.1 Resources investigation
Resources investigation is the first premise for development of energy crops. China has large amount of saline land, unutilized hillsides and winter idle land on its vast territory applicable for energy crops growth. In-depth studies on the suitable land resources, suitable energy crops and influence factors, however are needed at present. It is therefore important to comprehensively assess the performance of major energy crops, amount of suitable land resources, distribution and economical efficacy of energy crops after investigation, to lay foundations for scientific planning of energy crops industry and step-by-step implementation of the strategy.
6.2 Policy and regulations
Support policy on finance, tax and price are issued by the government to regulate market order according to Renewable Energy
Law and Financial and Tax policy supporting the development of biomass energy and biochemical industry. The interests of
manufacturers, sellers and consumers are practically protected by legislation. Restrictions on inferiors and support for superiors are conducted. Pollution charge is heightened, especially the restriction of
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disposable fossil-based package materials is practiced through legislation to eliminate white pollution. Standards and specifications are prepared for high-blend-ratio ethanol gasoline, biodiesel and blended biodiesel, biogas based transport fuel, biodegradable plastic products, testing methods and for fire control and safe production. 6.3 Research and Popularization
The government encourages technological innovation, increase of unit area yield by researches, breakthrough of key technologies converting energy crops to liquid biofuel and improvement of conversion ratio to lower the cost and increase economical benefits. It is also recommended to optimize the structure of products, improve the economical efficacy of the industry through rise added value of the products and extending the industry chain, strengthen both domestic research and international cooperation, introduce fine varieties of energy crops, cassava and sweet sorghum foe example, for demonstration and widespread planting, and exert the influence of demonstration bases and variety cultivation bases.
6.4 Stimulation for investment
Central government and local governments at all levels should invest by allowance and subsidy to guide rapid and robust development of
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energy crops industry, advance the initiatives of peasant, owners, financial organization home and abroad, international organizations, governments of foreign countries and enterprises, establish benign financing mechanism and sustainable economy in which the
governments regulate and direct the development, enterprises participate proactively, and resources allocated by the market.
6.5 Propaganda and training
Propaganda should be extensively done on internet, TV, newspaper and magazines to publicize the significance of speeding up the development of energy crops. Demonstration function of outstanding pilot plants should be widely promulgated to provide experiences and to create good atmosphere that all people concern and support the development of energy crops. Technical training and base construction for biomass energy should be emphasized. If possible, view and emulation and technical training across the whole country could be held in various ways and at different levels.
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