China Planning Nationwide Use of Biofuel by 2020

China has for the first time set a targeted timeline to roll out the use of ethanol in gasoline nationwide for cars by 2020, part of its efforts to clean up pollution and optimize the country's energy mix.

The plan was unveiled as the country is promoting the use of biofuel, an ideal alternative to fossil fuel, according to the National Energy Administration.

According to a plan jointly released by the National Development and Reform Commission, the National Energy Administration, and the Ministry of Finance, the country will implement nation-wide use of ethanol-added gasoline by 2020, while targeting the large-scale production of cellulose ethanol and advanced biofuel technologies by 2025.

It's the first time the government has set a timeline for promoting the biofuel, known as E10, referring to gasoline with an ethanol content of 10 percent.

Analyst said government support has greatly boosted confidence in the sector.

"The main advantage of ethanol fuel is that it is low carbon and environmentally friendly, which is widely used in the United States and Spain", said Zhou Dadi, former director of the energy research institute of the NDRC. The news will boost confidence in the industry, which now faces difficulties such as a high price and a low turnover rate, Zhou said, adding that without government support ethanol would likely be too expensive to survive in the market.

China is the world's third-largest bioethanol producer and uses nearly 2.6 million metric tons a year. Gasoline blended with ethanol accounts for one-fifth of its annual gasoline consumption. China launched corn-to-ethanol pilot programs in 2004, as part of efforts to cut emissions and advance new energy.

The government also said it aims to build an ethanol production base in the country's northeast, the main corn-growing region, without giving further details.

Experts have proposed expanding production and consumption of ethanol to balance grain supply and demand and efficiently dispose of surplus grain, an unnamed official from the National Energy Administration was quoted as saying by Xinhua News Agency.

According to Zhou, the reason to choose Northeast China in building the production base for fuel ethanol is that a great deal of grain is stored there every year.

However, he warned that the country should not promote the industry by using crops to produce fuel ethanol and that crop stalks should be the main material for fuel ethanol production.

"More technological breakthroughs are needed to lower the price and increase the production efficiency of fuel ethanol," he said.

Insiders said the country's plan to use ethanol gasoline across the country by 2020 will also be a blow to China's major oil producers, including China National Petroleum Corp, the nation's largest oil producer and supplier, and the world's largest refiner China Petroleum & Chemical Corp.

China said on Saturday that it has started studying when to ban the production and sale of cars using traditional fuels.

Despite oil's major and dominant role in the transportation sector for decades to come, there is room for growth in natural gas, electricity and biofuel, said Li Li, energy research director at consulting company ICIS China.

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