Ethanol

According to GTZ, a German company that advises on energy management on behalf of the German government, total bio-ethanol production is around 4 million tons. The government appears ready to expand ethanol usage. Four Bio-ethanol plants, with production capacity ranging from 200,000 to 500,000 million tons per year have been developed. In the Jilin province, China possesses what is believed to be the world ‘s largest fuel ethanol facility, with a capacity of 600,000 tons about per annum.

The situation is complicated by the high priority China attaches to the food security. If it is a choice between corn for food and corn for ethanol, food wins hands down. Three of the four large scale ethanol facilities will use sugar-based energy crops or sorghum. However, the mounting pressure being placed on China’s farmland by the growing food demands of an increasingly affluent population means that land use is a sensitive issue.

To some, though, ethanol can serve a valuable purpose in the agricultural process- as a means of insurance for farmers in the form of recycling. Much like in the US, surplus corn that decays before it can be transported elsewhere, or grain that fails to make the grade for human consumption or cattle feed can simply be used to produce ethanol.

Ultimately, the rise of ethanol as a viable alternative fuels hinges on the price of oil. A rise in global crude prices together with petrol price liberalization could drive the fuel ethanol bandwagon onwards. Until these things happen, though, it remains a question of how much Beijing is willing to spend to find the key to cost-effective ethanol production.