Inspenet, December 2, 2023.
China will implement a series of pilot projects with the aim of boosting the production and consumption of biodiesel at the national level, as reported by the National Energy Administration (ANE). This initiative seeks to intensify the country’s environmental efforts.
The ANE has urged regional authorities to carry out biodiesel demonstration projects and coordinate the financing of other initiatives in this sector. Although the country is a prominent producer, it is estimated that it will produce 1.9 billion liters of the biofuel this year, domestic consumption only represents around 40%, according to data from the United States Department of Agriculture (USDA).
However, a lack of political support has limited the consumption of biodiesel in the country, despite it being a low-carbon alternative to conventional diesel and made from raw materials such as palm oil and used cooking oil. (UCO). This situation contrasts with the European Union and the United States, where such fuel has experienced greater support. To date, the country has not announced any biodiesel blending mandates and only the local government of Shanghai, its financial center, has provided subsidies for its production, the USDA said in a September report.
Limited domestic use of biodiesel and sustainable aviation fuel, a low-carbon alternative to kerosene, has allowed the country to export significant quantities of used cooking oil (UCO) to the United States and the European Union. In these places, subsidies and blending mandates have boosted demand. Although biodiesel produced from UCO has a slightly lower energy content than petroleum diesel, it can reduce greenhouse gas emissions by up to 83%, a study by the US Argonne National Laboratory showed in 2022.
China’s role with respect to biodiesel
Due to its high production capacity, China stands out as a major exporter of biodiesel, especially to the European Union, where mandatory blending mandates have generated high demand for this biofuel with low environmental impact. In the context of Beijing’s initiative to stimulate its domestic consumption, less UCO may be available for export, which could result in higher prices.
Notably, in a recently published document, the National Energy Administration (NEA) urges local authorities to carry out demonstration projects in various areas of the industry and advises regional governments to provide financial support. In addition, the Asian giant exports raw materials for its production to the United States, a country that strongly supports biofuel mandates and has boosted the Chinese biodiesel industry by focusing on the transformation and export of UCO as fuel.
Likewise, in the 12-month period through September, the market in the Asian country experienced notable growth, reaching $390 million. A further increase was forecast due to robust demand from Europe and the United States, the latter driven by the US Inflation Reduction Act, which generated an increase in exports. Earlier this year, the federal government also raised biofuel blending requirements for the next three years, a move that was not welcomed in the refining sector.
Surprisingly, the initiative also did not generate enthusiasm in biofuel production circles. According to the industry, the mandates were not high enough and, in particular, those related to ethanol and biodiesel were lower than those initially proposed by the Environmental Protection Agency (EPA).
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