Friday, June 22, 2007

China blocks food for biofuel


By George Reynolds

12/06/2007 - Chinese biofuel producers should only use non-food crops,
the government said yesterday, following fears of shortages and further
price rises that could occur as demand for greener energy increases.

Biofuels are seen as a potential alternative to fossil fuels, because
they can be manufactured from sustainable crops including corn, wheat,
sugar, cassava, sweet sorghum, and oilseeds.

The moratorium will ease manufacturing concerns about competing for
ingredients being used to make ethanol and biodiesel. Corn is currently
accounts for 90 per cent of the inputs in Chinese ethanol manufacture,
and has sharply risen in price over the past few years due to subsidies
and high crude oil prices.

Moreover, last year's 43 per cent rise in the price of pork, China's
principal meat, due to increasing feed costs, has pushed officials to act.

"Food-based ethanol fuel will not be the direction for China," said Xu
Dingming, an official of the National Energy Leading Group, at a energy
seminar held this week, according to the Xinhua News Agency.

Biofuel manufacturers will now need to source non-food crops, such as
cassava and sweet sorghum used to make liquor, leaving the remainder for
consumption and processing.

Last year, responding to a rise in prices due to supply shortages,
China, the world's second largest producer after the US, banned corn
exports for a month.

Four sites across China produce about one million tons of Ethanol
annually from three million tons of corn, with another three under
construction, according to a 2006 US Department of Agriculture Foreign
Agricultural Service report. Two major biodiesel plants in operation
produce about 50,000 tons in total each year.

While biofuel production is barely noticeable compared to the 323
million tons of crude oil China used in 2005, government targets plan to
expand ethanol production to four million tons by 2010, while increasing
biodiesel to two million tons.

The anticipated rapid growth in biodiesel is attributed to China demand
for diesel doubling that for gasoline due to its use in agriculture and
haulage. By 2020, China expects 15 per cent of its transport energy
needs will be met using biofuels.

China's current cassava production is estimated at 7.5 million tons per
year. Increased planting of cassava and technological advances could
eventually add 21 million tons to cassava production. Until supply can
match demand, cavassa imports from Thailand, Vietnam, and Indonesia will
continue to grow, up from 257,000 tons in 2000 to more than 3.3 million
tons in 2005.

Sweet sorghum, which is drought-tolerant, could become an increasingly
important input for ethanol production, though more development is
needed to obtain the required efficiencies.

To counter the demand for food-crops, the first cellulosic ethanol plant
in China was announced recently. Cellulosic ethanol can be produced from
almost any organic matter, including agricultural waste, grasses,
sewage, sludge, switchgrass, plant stalks, and trees. This first
cellulosic plant should in operation by 2008, producing lignocellulose

Chinese farmers are expected to plant 27.35 million hectares of corn
this year, slightly higher than the 27.05 million hectares in 2006,
according to the China National Grain and Oils Information Center.

The center estimates that annual Chinese corn consumption for 2006 to
2007 will reach 144.5 million tons, with output at 144 million tons.

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