China is considering a change in energy policy to encourage the wider use of
ethanol in a bid to allievate the nation's worsening air
pollution, the website of Financial Times reported on Monday.
The Chinese government policymakers may set a target by the end of this year
for the share of ethanol in the nation's energy mix, Fabrizio Zichichi, head of
ethanol at Noble Group, one of the world's largest commodities traders, was
qouted as saying by the report.
Ethanol, a clean fuel made from agricultural products, not only could help
the country wean itself off its dependence on oil and coal, but a large
ethanol market in China could help spread wealth to the rural poor, as Brazil
has shown, he said.
Zichichi also brushed off criticism that a programme to encourage
farmers to sell their products to ethanol plants would cause food shortages.
"A higher profit margin could only encourage farmers to raise their yield,"
he said. "And the benefits in Brazil have shown that there is little to fear."
Beijing's move to look closely at ethanol could indicate crucial political
support for investment in the production, import and distribution of the biofuel
in China and could have an impact on world ethanol prices, according to
China is already the third-largest ethanol producer in the world behind the
US and Brazil, using mainly corn, cassava and sweet potatoes. Currently, eight
of its provinces have made E10, a 10 per cent ethanol and petroleum blend,
mandatory at local petrol pumps.
China's central government has tried for years to popularise the use
environment-friendly fuels, such as natural gas. However, its
efforts have been curtailed by the difficulty of securing supplies and
developing a substantial local market.
Analysts say it is easier to implement an ethanol policy in China by making
E10 mandatory at petrol stations and by encouraging local production, Financial
"There is talk of the National Development and Reform Commission introducing
E10 in three key cities - Beijing, Shanghai and Tianjin," Christine Pu, a
researcher at Deutsche Securities Asia was quoted as saying.
She added that there remained a number of barriers to the production of
ethanol in China. Owing to pricing regulations, ethanol producers are dependent
on government subsidies to avoid losses.