China’s quest for renewable energy options has opened new avenues for its biofuel market, according to a report from Frost & Sullivan. The country has been intensifying efforts to find suitable solutions to address its energy concerns, and biofuels have emerged as an obvious solution, as they do not exhibit the detrimental climate changing effects associated with fossil fuels.

New analysis from Frost & Sullivan, Strategic Analysis of the Chinese Biofuel Market, finds that the market earned revenues of $1.26 billion in 2007 and estimates this to reach $4.02 billion in 2014.

China is crafting an environmental-centric economy, sparing no efforts to progress in this direction. Since 2005, the government has formulated various plans, strategies, and guidelines pertaining to the biofuel industry, particularly feedstock.

“Under China’s long-term development plans for renewable energy, tax exemption and financial subsidies were offered to encourage biofuel production, since the market is currently constrained by the shortage of feedstock and the lack of a complete regulatory system,” says Frost & Sullivan Consulting Analyst Frank Xie.

China has revolutionized its biofuel market by picking up cues from the United States and Brazil, the world leaders in biofuel production. For instance, a series of policies and regulations have been mapped out to support the development of bioethanol. Meanwhile, China is also reviewing the first national biodiesel standard, which will streamline market conditions.

These measures emerged in the aftermath of the realization that biofuel is vital to secure the country’s energy supply stability. However, since the Chinese biofuel market took its shape only in 2000, biofuel feedstock cultivation is still in the experimental stage and large-scale supply of feedstock is not available at the moment.

Keeping in mind the security status of food in China, a ban has been imposed on the use of food crops for the manufacture of biofuels. A fallout of this move is the reduction in the availability of land for biofuel cultivation, making feedstock supply fall short of production demand.

“The government is looking to remedy this situation by encouraging rural residents to cultivate biofuel energy crops by offering subsidies,” observes Xie. “Not only does it provide cleaner fuel, but also creates more job opportunities and increases income levels in the rural sector.”

Factors such as the availability of land for energy crop and the status of food security in China will determine whether feedstock supply can meet the requirements of China’s highly potent biofuel industry. China is continuing to explore pragmatic solutions to scale up production in the short term and investing a great deal of effort on the implementation of tactical strategies, such as technological advancement, subsidies allocation, tax exemption, and reorientation of government policies.

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