Because of the insufficient fuel supply and the requirements for energy saving and pollutants emissions reduction, China national government pays more and more attentions to research and development of bio-fuels. The People’s Republic of China Renewable Energy Law was issued in 2005.

Ethanol gasoline project started in 2001 in China. There are only four plants permitted by the government to produce food based fuel ethanol. The governments’ supports play an important role on simulating the ethanol gasoline development in China, especially at the initiation stage of the ethanol gasoline demonstration by preferential policies like incentives. The incentives include: 1) The excise tax of denatured fuel ethanol (5%) is free. 2) The value-added tax of denatured fuel ethanol is imposed first, and then given back to the ethanol provider. 3) The price of denatured fuel ethanol sold to the petroleum companies which are also the blending operators is (0.9111*manufacturer’s price of 90# gasoline). While the market prices of all kinds of E10 (90#, 93# or 97#) are the same as 90#, 93# or 97# gasoline. 4) An allowance is paid to the ethanol provider. These incentives will be executed until 2008. Now ethanol gasoline has been used in 9 provinces and the total consumption was 1.54 million tons in 2006. However, to ensure the food safety, no more food based fuel ethanol plants are permitted by the China national government any more. In the future, non-food feedstock including cassava, sweet potato, sweet sorghum and lignocellulose are potential for fuel ethanol production. A 200 000 tons/year fuel ethanol plant with cassava as feedstock in Guangxi province has been permitted by the government and is expected to start up soon. The four exiting fuel ethanol plants are encouraged to use non-food feedstock too.

There are more than 10 biodiesel plants in China. The amount of production is about 100 000 tons/year. <Biodiesel Blend Stock (BD100) for Diesel Engine Fuels> was issued in May 2007. But there is not yet regular policy for biodiesel sales like fuel ethanol. Some biodiesel are for non-engine utilization. One problem of biodiesel development in China now is the feedstock supply. China needs to import more than 6 million tons edible oil per year. It is impossible to use edible oil such as soybean oil and rape seed oil for bio-diesel production. Now most biodiesel plants in China are using waste oils as feedstock. However, with the development of biodiesel, the price of waste oils is higher and higher. Woody oils are getting more and more attentions. The “national bioenergy-directed forest construction program” and “Woody feedstock plantation plan for biodiesel during 11th Five-Year plan” were issued by State Forestry Administration of China, which indicate that 400 000 hectares of Jatropha curcas will be planted in Yunnan, Sichuan, Guizhou and Chongqing provinces; 250 000 hectares of Pistacia Chinensis will be planted in Hebei, Shanxi, Anhui and Henan Provinces; 50 000 hectares of Cornus Wilsoniana will be planted in Hunan, Hubei and Jiangxi Provinces; 133 333 hectares of Xanthoceras Sorbifolia will be planted in Inner Mongolia, Liaoning and Xinjiang provinces.

7.1.2 Conclusion

With the rapid economic development, the great insufficiency of energy supply has become the “Bottleneck” of sustainable development in China. Currently the important issue to be solved is to accelerate the development of biomass energy so as to relieve the pressure of resources and the environment. Moreover, as a responsible country, China should take the international responsibility to save energy and reduce pollution discharge. Hence, the biomass energy industry is promising with a fairly bright future in China. At present, the biomass energy consumption is 8% of the total fuel consumption. According to “Mid and Long Term Development Plan of Renewable Energies” issued on September 4th 2007, the percentages of biomass energy consumption will increase to 10% by 2010 and 15% by 2020. By 2010, annual consumption of non-grain based fuel ethanol shall reach 2 million tons, and that of biodiesel shall reach 200 000 tons in China; by 2020, annual consumption of fuel ethanol shall reach 10 million tons, and that of biodiesel shall reach 2 million tons in China.