Ethanol Gasoline Promotion to Stagnate in 2020

SCI99

2020-01-10

Ethanol Gasoline Promotion to Stagnate in 2020

In September 2017, NDRC, National Energy Administration, Finance Ministry of China and other 12 departments announced that the expanded production of biofuel ethanol and the promotion of ethanol gasoline for motor vehicles. According to the project, ethanol gasoline will cover all over the country in 2020. But for now, the promotion speed is not as good as expected. Up to end-December 2019, only 14 provinces, municipalities and autonomous regions entirely or partly promoted the use of ethanol gasoline.

Since 2018, only Tianjin started the promotion of ethanol gasoline. The cities in Shanxi except Taiyuan, Yangquan, Changzhi and Jincheng totally-enclosed promoted ethanol gasoline in January 2020. Moreover, the cities in Heibei except Shijiazhuang, Baoding, Xingtai, Handan, Cangzhou and Hengshui totally-enclosed promoted ethanol gasoline in January 2020. From 2017 to 2019, China’s fuel ethanol output growth was 31.69%. Additionally, from 2017 to now, the demand for fuel ethanol increased by 13.03%. The demand for fuel ethanol could not raise fast enough to keep up with the supply growth. On the whole, the promotion of ethanol gasoline was slow.

The new fuel ethanol projects were proposed, while most projects didn’t start the constructions. On the one hand, the projects didn’t go through the formalities with the short capital. On the other hand, the promotion of ethanol gasoline didn’t get the policy support. The new entrants in fuel ethanol industry were concerned that the recovery of capital flow was influenced by the lagging sales after the units put into operation.

According to sources, the designed capacity of fuel ethanol may cut by half, and the proposed projects may not see constructions. Accordingly, ethanol gasoline may not be promoted rapidly. If the promotion scope of ethanol gasoline narrows, the development of fuel ethanol industry will not see improvements. In the long term, SDIC Biotechnology Investment and COFCO Biochemical Energy occupy the important position in the supply structure. However, the private enterprises may face more difficulties in the fuel ethanol industry.

As for the fuel ethanol industry, the slow promotion of ethanol gasoline may influence the demand for fuel ethanol. However, the proposed projects cut by half, which greatly reduced the excess pressure of fuel ethanol. According to SCI, among the producers in fuel ethanol industry, SDIC Biotechnology Investment and COFCO Biochemical Energy occupies the main market areas, and their sales targets are the state-owned refineries. The slow promotion of ethanol gasoline has slight impact on the above two enterprises, while it has significant influence on the private fuel ethanol producers. In the future, the capacity will enter the edible and industrial ethanol industry.

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