China's Ministry of Finance (MOF) has drawn up policies to
promote the production of non-food sources for biofuels, a senior
MOF official told a Beijing energy conference.
The ministry will use subsidies and other forms of financial
support to reduce the risks of producing these sources, said Zeng
Xiao'an, deputy director of the MOF's Department of Economic
Development, at a synthetic fuel forum held in Beijing
Thursday.
"We have worked out a complete set of policies to support
non-food biofuels, as they are clean energy sources with a limited
negative impact on the environment," Zeng said.
Flexible subsidies will be offered to biofuel producers who lose
money on crops when crude oil prices are low, he said, and the
government would encourage enterprises to reserve funds to offset
such risks.
Farmers will receive a 3,000-yuan (US$405) subsidy for each
hectare of forest products for biofuels, such as ethanol and
bio-diesel, and 2,700 yuan for each hectare of crops for biofuels,
Zeng said.
The ministry would also subsidize demonstration projects
producing ethanol from cellulose, sweet sorghum and cassava or
making bio-diesel from forest products, so as to make it easier to
get bank loans for construction, according to Zeng.
Projects that are up to industrial standards would receive
rewards ranging from 20 percent to 40 percent of the total
investment, he said.
"Government subsidies are a small proportion of the total
investment of a bio-diesel project; however, we are confident of
the long-term prospects for bio-diesel production," said Liu
Jianbo.
Liu runs a company, Hunan Rivers Bioengineering Co. Ltd, which
sets up a bio-diesel plant with an annual capacity of 20,000 tons,
one of several such small plants in China. There is no reliable
figure for the nation's bio-diesel output, but it is believed that
there are fewer than 10 plants, all small-scale.
Chinese officials have said that the country would increase
bio-diesel output to 200,000 tons by 2010 and 2 million tons by
2020.
In 2006, China's four ethanol projects produced about 1.3
million tons of fuel, which was blended with gasoline in some
provinces, including Shandong.
All four projects mainly produce corn-based ethanol. However,
earlier this year, China banned the further use of grain for
ethanol production, to ensure that grain was available for
food.
China has set a target of an annual production capacity of 2
million tons of ethanol by 2010 and 10 million tons by 2020.
The energy-thirsty country has also sought to use its abundant
coal reserves to produce synthetic fuel, with the goal of reducing
reliance on imported petroleum. But support policies for such
projects are still being debated, because there are concerns over
the environmental impact of coal-based synfuels, Zeng said.
The production of coal-derived fuels, such as methanol and
dimethyl ether (DME), is usually accompanied by abundant carbon
dioxide emissions, contrary to the country's efforts to cut
emissions.
"We are still doing research and will publish specific support
policies for such projects as soon as possible," Zeng said.
(Xinhua News Agency December 7, 2007)
