Energy

Enterprises propose to halt corn ethanol project

(Crienglish.com)
Updated: 2010-08-10 15:27

China's biggest membership association of private petroleum enterprises has made a proposal to the National Development and Reform Commission (NDRC), the country's top economic planner, to halt the corn-to-ethanol project of producing alcoholic gasoline, the Beijing Times reports.

"Our suggestion, now under research by the NDRC, calls for a lull in the corn-to-ethanol project and to divert the subsidy into other biofuel projects such as using cassava or wheat straw as raw materials" Zhao Youshan, president of the Petroleum Flow Committee of China General Chamber of Commerce (PFCGCC), told the Beijing Times.

Zhao said the project of using corn ethanol as a low-carbon renewable fuel has led to the rise of corn prices in China, turning the corn-exporting country into a corn-importer this year. Even so, the output of corn ethanol appears tiny when compared with the domestic demand for petrol.

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The PFCGCC said that to enjoy the subsidy of 1,880 yuan ($277) per ton of alcoholic gasoline for vehicles and the tax-exemption policy for the corn-to-ethanol project, some plants in China began a wave of buying corn, causing the severe shortage of corn for animal feed and the rapid increase of corn prices.

"In the first half year of this year, China imported 78 million tons of corn, mainly due to the higher domestic corn price than overseas. In July, the average corn price in northeast China was 1,845 yuan per ton, rising by 15.7 percent year-on-year" said Zhang Jianbo, a market analyst with Distribution Productivity Promotion Center of China Commerce.

In 2004, to advocate the development of new and renewable energy, the NDRC and the Ministry of Finance issued preferential policies to promote the corn-to-ethanol project in pilot zones of northeast China. However, as a result of the decrease of stored grain, China later demanded a stop to the uncontrolled production of ethanol from corn throughout the country.