In recent years, the Chinese market for biofuels has been steadily growing. Energy insecurity, climate change and pollution have become top concerns for the central government. A domestic bioefuel industry has been an attractive option for Beijing. The leadership has regarded biofuels as a mean to build a “new socialist countryside” by providing alternative markets for China's impoverished rural areas. In the current five-year plan, the National Development and Reform Commission (NDRC) highlighted the need to increase China's energy efficiency, and expanding domestic supplies. To meet its target, China is set to increase the use of alternative, domestically-produced, and cleaner sources of energy. In the last months an agreement with Lanzatech, a New Zeland based biofuel company, has moved China's research into a new stage.
At the moment, two kinds of biofuels are produced and used in China.
One is ethanol, mainly produced from maize. It is a clear alcohol that can be used as a fuel in spark-ignition engines, either neat or blended with gasoline. According to the United Nations Environment Programme, more than 95% of the world’s ethanol is produced by fermenting plant-derived matter, mainly sugars and starches. The rest is produced synthetically, from petroleum or coal.
The second kind of biofuel is biodiesel, typically extracted from vegetable oil, or animal fat. In a process known as transesterification, the fat or oil is reacted with an alcohol, and a catalyst to obtain the fuel. Over 50 plant species produce extractable oils. All have potential for use as fuel, but most are prohibitively expensive. The main oils used for fuel are derived from rapeseed (canola), soybeans, oilpalm fruit or kernels, coconut, sunflower seed, and physic nut (Jatropha curcas). Compared with ethanol production, the Chinese biodiesel production is smaller in size and more scattered with much lower utilization rates.
Production from sugar, starch or generally from food feedstocks is referred to as a first-generation technology. Second-generation technologies are biofuels from cellulosic material, or non food feedstock, such as crop waste, wood and grasses, non food seed oil (like Jatropha Curcas) or microalgal.
Spurred by energy security concerns, at the beginning of this decade China started operating its first fuel ethanol plants. Thanks to the great harvests of the late nineties, China could take advantage of enormous grain stockpiles that were becoming increasingly expensive to administer and maintain.
The first ethanol project was set up in 2001, in Henan province; it was called Tianguan Ethanol Plant, and included three plants respectively in Zhangzhou, Luoyang and Nanyang. The pilot scheme was expanded in 2002 to Harbin and Zhaodong, in the Northeastern province of Heilongjiang. In 2004 seven additional provinces (Jilin, Hubei, Hebei, Anhui, Shandong, Jiangsu and Liaoning) were also included. Under the pilot program, all producers were obliged to sell their fuel ethanol either to China National Petroleum Corporation (CNPC) or Sinopec, two of the biggest petroleum companies in China, both state-owned. CNPC and Sinopec blend the ethanol with gasoline, and are then in charge of distributing the final fuel (called E10), through their quasi monopoly on petrol stations throughout China. The pilot scheme was later expanded to include the southern province of Guangxi.
In early 2006 the NDRC declared that the ethanol pilot was a success and that China was well-suited to ethanol production and use.
By the end of the same year though, different factors pushed Chinese authorities to a revaluation of ethanol projects.
Due to the fast urbanization process, cities swallowed a big amount of land originally dedicated to grain production. Food prices peaked, triggering a large public discontent. In this difficult environment, ethanol producers were struggling to find the necessary food stock to keep their operation growing.
Beijing became concerned that the existing ethanol production was consuming too much of the country's food production, and potentially endangering China's future grain reserves. To tackle the problem, the government halted new constructions of ethanol plants, and urged ethanol producers to switch to non-grain feed stocks, such as sweet potato, cassava and sweet sorghum, which could be grown on “marginal” land, land not used for maize cultivation.
The Ministry of Finance also issued policies promoting the use of non-food sources for biofuels, and gave subsidies to producers that used cellulose, sweet sorghum and cassava for their ethanol production. With an emphasis on the use of marginal land, these measures ensured that biofuel production did not affect China’s food security.
In 2007, to better adapt to the governmental framework, the China National Cereals Oils and Foodstuffs (COFCO), a leading producer and supplier of processed agricultural products, started to cooperate with Novozymes, a Denmark-based biotech company, to use genetically modified enzyme in the ethanol process.
The project was a new cellulosic facility that worked with agricultural waste, a typical example of second generation biofuels. Corn and maize manufacturing create a big amount of waste: leaves, racemes, stales and part of cobs. Nozozymes began using its modified enzymes to accelerate fermentation of waste, especially from maize to obtain alcohol, the base for ethanol fuel. After three years of trials and experiments, the project was completed.
Last May, Novizymes, COFCO and Sinopec signed an agreement to start the new plant. The new facility will be the largest demonstration facility converting agricultural waste into biofuel in China, according to Novozymes. It will be based upon engineering optimization results from COFCO’s pilot plant in Zhaodong, Heilongjiang Province, which has been operating since 2006. COFCO and Sinopec will build the plant, Novozymes will supply the enzymes. The new plant is set to come online in the third quarter of 2011, it will use new Cellic Ctec2, a super modified enzyme presented for the first time last February by Novozymes.
Though this experimental production has been baptized the new generation of biofuels, it utilizes maize, though it is waste from working process, and still runs the risk of driving up its price.
In 2008, a jump in food prices, which increased of 21 per cent in a year, was considered partly responsible for the worst inflation in 12 years. While there were a number of other factors behind the price hike, the Food and Agriculture Organization (FAO) clearly put the blame on biofuel production. According to the Centre for Agricultural and Rural Development of the Iowa State University, in the nine months preceding June 2007, domestic maize prices on the Dalian Commodities Exchange increased of 30% as a result of more maize converted into ethanol by the Chinese fuel-ethanol plants.
The risk of fuel-ethanol production to put upward pressure on food prices is still felt today. Cassava reserves is scarse in China, and expensive if imported. The same is true for sweet sorghum, and sweet potato.
A solution seems to shift from this massive use of ethanol from food or agricultural waste, to a real non food feedstock biofuel.
The New Zealand based biotechnology company, Lanzatech, has invested in creating biofuels without the use of food.
A deal between Lanzatech and the Chinese Quiming Ventures, with funds also from Softbank China Venture, US-based Khosla Ventures, and the new Zealand K1W1, has ensured US$ 18 million for the start up of a new project.
The money raised will be used to build a pre-commercial plant operational in 2011. The plan, according to the company’s website, is to quickly scale to a commercial facility producing over 200 million litres of ethanol per year.
The company's technology uses bacteria to convert industrial waste gasses into fuels and chemicals.
The bacteria will react with the low-hydrogen, carbon monoxide-rich waste gas streams from steel mills. Lanzatech promises to deliver energy from the worst industrial waste.
This process follows the old good gasification process, developed in the 1800s, to produce town gas for lighting and cooking. Gasification is a process in which the principal chemical components, carbon and hydrogen, are converted to carbon monoxide and hydrogen gas. Carbon monoxide gas is produced in high volumes by the steel industry. A technology to harness this gas resource for fuel manufacture not only reduces the carbon footprint of industrial processes, but also displaces oil derived transport fuels.
At the beginning, the main source of energy will be steel waste gasses. According to World Steel Association, with 500 million tons of steel production, representing more than 35 % of global production, China is the first steel producer in the world and will be “the holy land” for Lanzatech's technology.
This kind of production is still on a trial stage, but China seems like the best laboratory, with vast resources and the political flexibility to try new things. If the results will meet the company’s announcement, then China will be able to produce energy with the worst waste ever, for the benefit of its environment, and the world at large.
To learn more about biocombustibles check out Assening Biofuels by the United Nations Environment Programme, Liquid Transport Biofuels by the UK's Rational Centre for Renewable Fuels. Extensive reports can also be found on the BBC, Biofuels look to the next generation. For an interesting historical take read Historical perspectives on vegetable oil-based diesel fuels by Gerhard Knothe of the U.S. Department of Agriculture. In 2007 a series of movies were realized about biofuels Fueling Change, Revolution Green, and in 2008 Fuel.
About the Chinese legal reference for biofuels check the Renewable Energy Law of the People's Republic of China (English version), the National Development and Reform Commission, China Climate Change Info-Net, China National Cereals, Oils and Foodstuffs Corporation. Check also Lanzatech's web site and Novozymes in reference to their news.
Valuables publications are also the People's Republic of China Bio-Fuels: An Alternative Future for Agriculture 2006 by the USDA Foreign Agricultural Service. Environmental and Social Impact Analysis: Stora Enso Plantation project in Guangxi, China from the United Nations Development Programme. Rethinking China’s bioenergy future by Chinadialogue, and China Biofuels Subsidies by IISD.