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| Ethanol in China's 5-year energy plan |
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| Wednesday, 19 July 2006 | |
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China
is considering reforming its energy policy in order to reduce its reliance on imported oil and domestically produced, but heavily polluting, coal. The government plans instead to encourage the production and use of ethanol. Policymakers will make the decision at the end of 2006, and the decision is expected to include a
compulsory percentage of ethanol in transport fuels.
Beijing’s new interest in ethanol could lead to a new policy to raise funding through taxes on coal extraction for the necessary subsidies for investments in production,
distribution and import of biofuels.
This will have an effect on the
global price for ethanol.
At the moment, China is the third-largest ethanol producer after the USA and Brazil.
Eight
provinces are already obliged to blend 10% ethanol with traditional
fuels.
E10 is therefore available at local petrol stations in these provinces.
However,
policymakers are still having problems getting E10 into the market.
This
is due to uncertainty concerning the reliability of supplies and
the lack of social acceptance. In rural areas, drivers are conservative and stick to the product they are familiar with.
China is currently defining its environmental and energy measures of the 11th five-year plan 2006-2010.
David Smith, Singapore
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