Biofuels production and development in China

Dec 2023

Feature article in IEA Bioenergy Task 39 Newsletter Issue n.63, by Fuli Li and Yixuan Fan, Qingdao Institute of Bioenergy and Bioprocess Technology, Chinese Academy of Sciences.

The full article is available here. Below some of the highlights.

Current situation

China has the world’s largest car fleet, the second largest gasoline market and the third largest diesel market. The industrialization process in China has not yet ended, the GHG emissions in China continues to grow, and the contribution of transportation is also increasing. Prospects for China’s transportation fuel demand depend on macro-economic factors, the adoption rate of New Energy Vehicles such as electric cars and advanced fuel vehicles; and implementation of China’s ambitious new drive to reach national biofuel targets.

The 2022 national average fuel ethanol blend is estimated at 1.8% with a plan to reach a national E10 fuel ethanol target. China’s fuel ethanol production of 2.57 million tons was over 80% grain-based (i.e., corn, wheat, and rice) in 2022 and 10% cassava or sugarcane-based. Tax incentives for food crop-based fuel ethanol production were gradually phased out, while incentives for non-food crop-based fuel ethanol are retained.

Biodiesel production is challenged by the availability of feedstocks (with China being a net importer of vegetable oils, e.g. soy and palm oil), underdeveloped policies for biodiesel consumption and lack of financial support for farmers. The national average biodiesel blend has never moved above 0.2 to 0.3%. With the exception of minor tax incentives for the consumption tax and export rebates, biodiesel does not receive any subsidies nor mandate support that fuel ethanol enjoys. China’s 2022 biodiesel production is forecast at 2.4 million m³. Nearly all plants are export-oriented to take advantage of EU tax policies. Due to the double-counting provisions for UCO-based biofuels of the EU Renewable Energy Directive (REDII) and supported by a 70% VAT rebate, over 92% of UCO biodiesel exports went to the EU, of which about 73% to the Netherlands.

Developments in advanced technologies

The Chinese Action Plan for Carbon Dioxide Peaking before 2030 promotes the use of advanced biofuels, sustainable aviation fuel and other alternatives. The biofuels industry is investing resources to transition to advanced biofuels such as cellulosic bioethanol as well as coal and industrial flue gas-based synthetic ethanol.

Ethanol from non-food grain feedstocks, including cellulosic biofuel, is considered an advanced biofuel in China. In 2021, a 240,000 tons per year biomass project using enzymatic processing and fermentation to ethanol started operating. China’s efforts also include projects to convert coal and industrial waste gas into synthetic ethanol. The world’s first bio-fermentation fuel ethanol production project using steel industry tail gas as raw material is in operation since May 2018, with an annual design output of 45 000 tons of fuel ethanol per year.

As a liquid fuel for commercial aviation, sustainable aviation fuel (SAF) has attracted much attention and been taken as an important strategic reserve for industry decarbonization. In 2022, the Civil Aviation Administration of China put forward a proposal to promote the breakthrough in commercial application of SAF, and strive to achieve more than 20,000 tons of SAF consumption in 2025, as well as 50,000 tons of SAF consumption during the “14th Five-Year Plan” period. Scientific research institutions such as Guangzhou Institute of Energy Conversion, and Qingdao Institute of Bioenergy and Bioprocess Technology, parts of Chinese Academy of Sciences, are also actively studying the process route for preparing SAF from agricultural and forestry wastes.

Green methanol nowadays is the only marketable low-carbon fuel in the shipping industry. China has developed green technologies for methanol for maritime applications based on biomass gasification with a capacity, by 2024, to produce 50,000 tons annually; in 2023 a second project utilizing the by-product hydrogen in the coke oven gas and the carbon dioxide captured from the industrial tail gas to synthesize methanol, with a target to produce 110,000 tons of methanol.