Re­new­able, ver­sa­tile and green re­sources gain trac­tion in China’s drive to widen its en­ergy mix

China Daily European Weekly - - Front Page - By KARL WIL­SON For China Daily

Clean, green en­ergy has be­come a growth in­dus­try in China, driven by the need to re­duce car­bon emis­sions and cut air pol­lu­tion that is chok­ing its ma­jor cities. China’s clean en­ergy in­dus­try has al­ready pro­vided more

than 1 mil­lion jobs, and will pro­duce even more in the com­ing years, as the gov­ern­ment ramps up pro­duc­tion of bio­fu­els that are aimed pri­mar­ily at the trans­porta­tion sec­tor.

As one of the world’s big­gest car­bon diox­ide emit­ters, China also faces a ma­jor prob­lem with air pol­lu­tion.

Cli­mate change mit­i­ga­tion and pol­lu­tion abate­ment, par­tic­u­larly in cities, have be­come im­por­tant pol­icy drivers for the gov­ern­ment. The In­ter­na­tional En­ergy Agency has said that although cli­mate change and en­ergy se­cu­rity are of con­cern to China, it is not clear which of these drivers has been the pri­mary mo­ti­va­tor for bio­fu­els de­vel­op­ment.

The poli­cies that China has im­ple­mented so far to help de­velop bio­fu­els have re­sulted in the coun­try be­com­ing the world’s third-largest ethanol pro­ducer. Ethanol is pro­duced from plants such as sugar cane or corn and mixed with gaso­line to pro­duce E10 — a biofuel con­tain­ing 10 per­cent ethanol and 90 per­cent gaso­line.

The gov­ern­ment has man­dated that E10 be made avail­able at fuel sta­tions through­out the coun­try by 2020.

The coun­try’s big­gest oil re­finer, China Pe­tro­leum & Chem­i­cal Corp, or Sinopec, has al­ready started build­ing a B5 biodiesel plant in Shang­hai to re­fine “gutter oil” (il­licit cook­ing oil re­cy­cled from waste oil) and sup­ply fuel to 200 gas sta­tions across the city. B5 is a mix of 5 per­cent leftover oil from the cater­ing in­dus­try and 95 per­cent diesel. Both E10 and B5 will go to­ward re­duc­ing car­bon emis­sions from ex­hausts and cut­ting air pol­lu­tion in China’s ur­ban cen­ters.

Startup com­pany Mo­tionEco kicked off an ini­tia­tive on June 10 in the city of Nan­jing to col­lect waste oil from cook­ing and gutter oil to be con­verted into sus­tain­able, low-car­bon green fuel for use in diesel ve­hi­cles.

Mo­tionEco aims to pro­vide 50,000 liters of green fuel this year to Nan­jing, ac­cord­ing to the com­pany.

Shell is col­lab­o­rat­ing with Mo­tionEco to help ex­plore how to si­mul­ta­ne­ously tackle the chal­lenges of food safety, waste cook­ing oil and sus­tain­able trans­porta­tion in a Chi­nese city.

An­a­lysts say these de­vel­op­ments have sig­nif­i­cant im­pli­ca­tions for the coun­try’s drive to widen its en­ergy mix, achieve en­ergy se­cu­rity and cut pol­lut­ing emis­sions.

“Biofuel is re­new­able, ver­sa­tile and en­vi­ron­men­tally friendly. It is an ideal al­ter­na­tive to fos­sil fuel,” a se­nior of­fi­cial with China’s 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 like diesel and gaso­line.

China’s push to pro­mote biofuel as an al­ter­na­tive fuel is tempt­ing com­pa­nies from var­i­ous in­dus­tries to vie 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 dis­place 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, says 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 non­food stocks and wood waste (cel­lu­losic ma­te­ri­als), mi­cro-al­gae or other tech­nolo­gies,” he says.

An­other fac­tor that has been thrown into the trans­porta­tion/en­ergy mix is the fo­cus on elec­tric ve­hi­cles.

“Bio­fu­els should have a place in the over­all global en­ergy mix, es­pe­cially in the trans­porta­tion sec­tor, but it has been slow to take off,” says Zhai Yong­ping, tech­ni­cal ad­viser on en­ergy in the sus­tain­able de­vel­op­ment and cli­mate change de­part­ment of the Philip­pines-based Asian De­vel­op­ment Bank.

“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.”

He says that when the global price for oil was $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 says.

“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 sup­port in­cen­tives have be­come less clear as many coun­tries shift their fo­cus to elec­tric ve­hi­cles.

Zhai says the de­vel­op­ment of biofuel and elec­tric trans­porta­tion tech­nolo­gies should be de­vel­oped “side by side”.

“I think China sees this as an op­tion, with re­searchers now work­ing on sec­ond-gen­er­a­tion biofuel tech­nol­ogy that does not re­quire food stock be­ing used in its pro­duc­tion,” he says.

“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 tech­nolo- gy-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 around 3 per­cent a year is an­tic­i­pated over the next five years, ac­cord­ing to IEA data.

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 Sin­ga­pore-based Asian Clean Fu­els As­so­ci­a­tion, be­lieves 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 says.

“For ex­am­ple, fac­tors in­clud­ing (fuel cy­cle) well-to-wheel re­duc­tion, land use, wa­ter con­sump­tion, specifics such as en­gine per­for­mance to fuel econ­omy, over­all emis­sions and over­all in­fras­truc­ture costs re­quire deep eval­u­a­tion and anal­y­sis in or­der to en­sure the suc­cess of such a pro­gram,” he says.

Over the past 15 years, the Asian Clean Fu­els As­so­ci­a­tion has been work­ing with gov­ern­ments across Asia to help plan and evaluate their bio­fu­els pro­grams.

In Septem­ber last year, China for the first time set a tar­geted time­line of 2020 to roll out the use of ethanol in gaso­line na­tion­wide for cars 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 large-scale pro­duc­tion of cel­lu­lose ethanol and ad­vanced biofuel tech­nolo­gies by 2025.

It 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. China launched cornto-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 third-largest 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 (13 bil­lion euros; £11.9 bil­lion) over the next two years.

A study in April by Queens­land Uni­ver­sity of Tech­nol­ogy in Aus­tralia said that the Aus­tralian gov­ern­ment should man­date the use of bio­fu­els, say­ing it could de­liver more than 8,000 di­rect and indi­rect jobs and gen­er­ate $1 bil­lion a year in rev­enue. At present, only two Aus­tralian states have man­dated ethanol mixes in fuel sold at the pumps.

Just how sus­tain­able bio­fu­els are is open to de­bate, ac­cord­ing to An­bu­mozhi of the Eco­nomic Re­search In­sti­tute for ASEAN and East Asia.

“If you look at it from the macroe­co­nomic level, it does con­trib­ute to en­ergy se­cu­rity,” he says.

“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 says.

“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 says.

With a grow­ing pop­u­la­tion, ris­ing in­come lev­els and ex­pand­ing ur­ban­iza­tion, Asia’s de­mand for oil is in­creas­ing rapidly.

Ac­cord­ing to the IEA, Asia’s oil use will

ex­pand to around 6.6 mil­lion bar­rels per day by 2040 from 4.7 mil­lion now, with the num­ber of road ve­hi­cles grow­ing by two-thirds to around 62 mil­lion, the agency said in an Oc­to­ber 2017 re­port.

Due to lim­ited fuel re­serves, most of the coun­tries in the re­gion are heav­ily de­pen­dent on im­ports for their oil sup­ply, which is a ma­jor, if not the most cru­cial, con­cern in their en­ergy poli­cies, an­a­lysts say.

Although it has been de­bated in­ten­sively, biofuel is seen 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 in­comes of farm­ers through­out the re­gion. How­ever, 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 start­ing in 2021, amid mount­ing con­cerns about its im­pact on the en­vi­ron­ment.

Malaysia and In­done­sia fear that if the ban goes ahead, the liveli­hood of well over 1 mil­lion ru­ral work­ers could be af­fected.

Palm oil, also a ma­jor in­gre­di­ent in prod­ucts from foods to cos­met­ics, has long been con­tro­ver­sial. En­vi­ron­men­tal­ists say it drives de­for­esta­tion, with huge swaths of rain­for­est, par­tic­u­larly in In­done­sia, logged in re­cent decades to make way for palm oil plan­ta­tions.

Use of the com­mod­ity in foods and cos­met­ics had al­ready dropped in Europe, partly due to pres­sure from green groups on ma­jor cor­po­ra­tions, 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.



Work­ers process the wood waste in a bioen­ergy com­pany in En­shi, Hubei prov­ince.

Left: A researcher tests a biofuel made from cook­ing oil in Shangrao, Jiangxi prov­ince. Right: An em­ployee of a bioen­ergy re­cy­cling com­pany checks meth­ane equip­ment in Heng­shui, He­bei prov­ince.


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