China’s Ethanol Industry Facing Opportunity on Gasohol Promotion

China will promote the use of the ethanol gasoline across the country, achieving full coverage by 2020, according to a document released by authoritative departments on Sep 13. This document was jointly issued by National Development and Reform Commission (NDRC), National Energy Administration, the Ministry of Finance and other 12 ministries and commissions.

China’s gasoline consumption reached 120 mn t in 2016, and the gasohol consumption reached 27.5 mn t, taking up 22.9% of the total gasoline consumption. As estimated by SCI, the gasoline consumption will reach 160 mn t in 2020, and the potential demand for biofuel ethanol will reach 16 mn t if mandated.

China has great ethanol capacity at 12.16 mn t for edible and industrial ethanol and 2.75 mn t for fuel ethanol. It is clear that the current ethanol capacity will not fulfill the potential demand from the nationwide promotion, with no doubt, and the ethanol production will be sharply boosted, especially the fuel ethanol and anhydrous ethanol production.

Meanwhile, there are a huge plans in China. According to statistics, the newly-added capacity in plans and construction reaches 2.9 mn t, and over 1.05 mn t capacity is likely to be put into use within 2017, including the 300kt/a at Jilin Boda Biochemical, the 150kt/a at Heilongjiang Sunlong Alcohol, the 300kt/a at Jixian Hongzhan Energy and the 300kt/a at Nehe Hongzhan Energy. There are also many newly-added anhydrous ethanol plants which capacity reached 1.9 mn t. Those anhydrous ethanol capacity will also benefit from the gasohol promotion policy.

In general, China’s gasohol pilot promotion initiated from 2001, and the development in all those years was unsatisfactory. The nationwide promotion is more like a pre-announcement of the government, and it is considered that more detailed policies and implementation regulations will come in succession, such as the opening the fuel ethanol production certification, the marketization of the fuel ethanol and gasohol pricing, etc., and China’s ethanol industry will enter a fast lane to a brighter future.