BIOFUELS PUSH TO HELP CLEAR THE AIR
Nation targets broad-based energy mix, reduced carbon emissions
Clean, green energy has become a growth industry in China, driven by the need to reduce carbon emissions and cut the air pollution choking major cities.
The country’s clean energy industry already provides more than 1 million jobs and will create even more in the coming years as the government steps up its production of biofuels, aimed primarily at the transportation sector.
As the world’s largest overall carbon dioxide emitter, China faces a major problem with air pollution.
Climate change mitigation and pollution abatement, particularly in cities, have also become important policy drivers for the government.
The International Energy Agency said that although climate change and energy security are of concern to China, it is not clear which of these has been the primary motivator for the development of biofuels.
The policies China has implemented to help develop biofuels have resulted in the country becoming the world’s third-largest ethanol producer. Ethanol is made from processing crops such as sugar cane or corn. It is then mixed with petroleum to produce E10 — a biofuel that is 10 percent ethanol and 90 percent petroleum.
The government has mandated that E10 petrol be made available at gas stations throughout the country by 2020.
The country’s biggest oil refiner, China Petroleum & Chemical Corp, or Sinopec, is building a biodiesel (B5) plant in Shanghai to refine used cooking oil, or “gutter oil”, with plans to supply the finished product to 200 gas stations across the city. B5 is a mix of 5 percent used cooking oil and 95 percent diesel.
Both E10 and B5 will help reduce carbon emissions from vehicular exhaust and cut air pollution in China’s urban centers.
Analysts say these developments have significant implications for the country’s drive to broaden the base of its energy mix, achieve energy security and cut emissions.
“Biofuels are renewable, versatile and environmentally friendly. They are an ideal alternative to fossil fuel,” a senior official with the National Energy Administration told Xinhua News Agency.
Analysts say Sinopec’s decision to increase its involvement in the biofuel market marks a significant shift in strategy.
Biofuels, although desirable from an environmental point of view, are more expensive than traditional fuels such as diesel and petrol.
China’s push to promote biofuel as an alternative fuel is tempting companies from various industries to compete for a larger share of the world’s fastest-growing new energy vehicle market.
According to the IEA, biofuels for transportation, including ethanol and biodiesel, have the potential to replace a substantial amount of petroleum.
Venkatachalam Anbumozhi, an economist with the Economic Research Institute for ASEAN and East Asia and an expert on energy policy, said biofuels in Asia, including China, are mostly driven by external factors such as the global oil price.
“What Asia needs to do is differentiate and distinguish between first-generation biofuel — that is biofuels made from agricultural feedstocks, vegetable oils and animal fats — using conventional technology, and to speed up the development of second-generation biofuels made from non-food stocks and wood waste, micro-algae or other technologies,” he said.
Another factor that has been thrown into the transportion/energy mix is the focus on electric vehicles.
Zhai Yongping, technical adviser on energy in the sustainable development and climate change department at the Asian Development Bank in Manila, said, “Biofuels should have a place in the overall global energy mix, especially in the transport sector, but they have been slow to take off.
“Having said that, some countries — China, the United States and Brazil, most notably — are doing better than others when it comes to biofuel technology and production.”
Zhai said that when the global price for oil was at $100 a barrel, biofuels were an economic substitute for oil, especially in the transportation sector.
“Even at $70 a barrel, it is still a good proposition,” Zhai said.
“Since we started to take biofuels seriously, we have also seen the focus on electric vehicles and battery technology, which has overshadowed biofuel.”
In principle, most countries support biofuel technology, but financial incentives have become less clear as many nations shift their focus to electric vehicles.
Zhai said the development of biofuel and electric transportation technologies should be developed sideby-side.
“I think China sees this as an option, with researchers now working on second-generation biofuel technology which does not require food stocks being used in its production,” he said.
“In China’s case, it has a clear policy on reducing emissions and air pollution, and is serious in using and developing technologies in all areas, including biofuels and electric vehicles.
“What is less clear are the financial incentives provided to biofuels compared to electric vehicles. Ideally, the subsidies should be technology-neutral, given that both biofuels and electric vehicles can meet similar policy purposes.”
Last year, global biofuel production grew by just 2 percent (140 billion liters), while average production growth of about 3 percent a year is anticipated over the next five years, according to the IEA.
Overall, however, conventional transportation fuels remain dominant in Asia despite advances in biofuel technology in some countries such as China and Japan.
Clarence Woo, executive director of the Asian Clean Fuels Association in Singapore, said biofuels in Asia have had a positive impact on reducing pollution.
“Within the framework of biofuels implementation, there are numerous issues that need to be looked at to ensure the benefits are derived holistically,” he said.
Over the past 15 years, the association has been working with governments across Asia to help plan and evaluate their biofuels programs.
In September, China, for the first time, set 2020 as a target to roll out the use of ethanol in gasoline for cars nationwide as part of efforts to clean up pollution and optimize the country’s energy mix.
According to a joint release by the National Development and Reform Commission, the National Energy Administration and the Ministry of Finance, the country will implement the plan while targeting the largescale production of cellulose ethanol and advanced biofuel technologies by 2025.
This is the first time the government has set a timeline for promoting E10.
Analysts say government support has greatly boosted confidence in the sector. China is the world’s third-largest bioethanol producer and uses nearly 2.6 million metric tons a year.
Gasoline blended with ethanol (grain-based alcohol) accounts for one-fifth of China’s annual gasoline consumption. The country launched corn-to-ethanol pilot programs in 2004 as part of efforts to cut emissions and advance new energy.
Earlier this year, India announced a new policy to promote biofuels as part of efforts by the world’s thirdlargest emitter of greenhouse gases to cut imports of fossil fuels such as oil, gas and coal.
The Indian government aims to develop a biofuel economy worth $15.6 billion over the next two years.
In Thailand, the government aims to increase the ethanol content in fuel from 7 to 10 percent; Indonesia wants to increase it from 20 to 25 percent, while Vietnam wants a 5 percent blend in its fuel mix.
A study in April by Queensland University of Technology in Australia said the Australian government should mandate the use of biofuels, adding this could deliver more than 8,000 direct and indirect jobs and generate $1 billion a year in revenue. At present, only two states in the country have mandated ethanol mixes in fuel sold at the pumps.
Just how sustainable biofuels are is open to debate, according to the ERIA’s Anbumozhi.
“If you look at it from the macroeconomic level, it does contribute to energy security,” he said.
“At the meso or sector level, the answer is mixed. Biofuels do contribute to the reduction in CO2 emissions in the transport sector, but when you look at it from the micro or farm level, the answer is no,” Anbumozhi said.
(In general, meso-level indicates a population size that falls between the micro and macro levels, such as a community or organization.)
“My point is that biofuels need to compete with oil. It is difficult for biofuels, which are expensive to produce, to compete with oil if the price surges, and there is always a question over food security,” he said.
With a growing population, rising income levels and expanding urbanization, Asia’s demand for oil is increasing rapidly.
Asia’s oil use will increase to about 6.6 million barrels per day by 2040 from 4.7 million now, with the number of road vehicles increasing by two-thirds to about 62 million, the IEA said in a report in October.
Due to limited fuel reserves, most countries in the region are heavily dependent on imports for their oil supply, which is a major, if not the most critical, concern in their energy policies, analysts said.
Although it has been debated intensively, biofuel is perceived as one possible option to address the oil security issue, since expanding the use of biofuels will not only result in reducing the demand for oil but also contribute to the diversification of import sources for liquid fuels.
Biofuel production will also provide an additional way to increase the income of farmers throughout the region. But this argument has its own problems, especially for Malaysia and Indonesia — the world’s biggest producers of palm oil.
Earlier this year, the European Parliament voted to ban the use of palm oil in biofuels from 2021, amid mounting concerns about the impact on the environment.
Malaysia and Indonesia fear that if the ban goes ahead, the livelihoods of well over 1 million rural workers could be affected.
Palm oil, also a major ingredient in products from food to cosmetics, has long been controversial, as environmentalists say it drives deforestation, with huge swathes of rainforest, particularly in Indonesia, logged in recent decades to make way for palm oil plantations.
The use of the commodity in food and cosmetics has already declined in Europe, partly due to pressure on major corporations from green groups, but its use has been increasing in biofuels.
Replacing fossil fuels with biofuels has the potential to generate several benefits. In contrast to fossil fuels, which are exhaustible resources, biofuels are produced from renewable feedstock.
Their production and use could, in theory, be sustained indefinitely — resulting in major economic benefits and reducing the dependency on imported oil.
It is difficult for biofuels, which are expensive to produce, to compete with oil if the price surges, and there is always a question over food security.”
Venkatachalam Anbumozhi, an economist with the Economic Research Institute for ASEAN and East Asia