A new technology, which extracts diesel oil from used or waste edible vegetable and animal oil, could potentially help to ease China's oil supply worries.

The resultant biodiesel, Fatty Acid Methyl Ester or FAME, is touted as a clean fuel because it burns completely, thereby reducing the emission of particulates, carbon monoxide and nitrogen oxide. According to a technical appraisal by Shanghai Internal-Combustion Engine Research Center, this oil contains only one-tenth the amount of sulfur found in fossil diesel, and it contains neither aromatic hydrocarbon nor heavy metals.

Further, it has a higher cetane number and flash point than regular diesel, which makes it a much more efficient fuel.

According to statistics, China's dependence on oil imports had increased to 57 percent by 2005. It is projected that consumption will reach 400 million tons by 2010, but domestic output will continue to hover around 160 and 170 million tons.

"More than 26 million tons of used oil is produced by the catering trade. And about 80-90 million tons of used cottonseed oil, rapeseed oil and lard cannot be sold on the market, which means there are about 100 million tons of waste vegetable oil or animal fat?that could be used to produce more than 80 million tons of biodiesel," according to Ye Yongcheng, director of the energy department of the Economy and Trade Commission of Fujian Province.

It's a low-cost oil with a bright future, insiders observe. Used edible oil sells for about 2,300 yuan (US$286) per ton. Refining brings the cost up to 3,600 yuan (US$448) per ton. Despite this, the final sale price of biodiesel is 4,400 yuan (US$547) per ton, more than 1,000 yuan (US$124) less than fossil diesel.

As promising as it sounds, the industry needs to be developed and policies regulating it need to be implemented.

For instance, there is currently no effective system of management or supervision of oil collection. In Europe and the US, used oil is collected as a matter of course by designated companies and processed as a raw material before it is refined into biodiesel. Some European companies use vegetable oil and animal fat directly. But this drives costs up as compared to using waste oil.?

Industry players have also called for favorable tax policies for emerging recycling energy technologies. "At present, most of the biodiesel producers are small companies that don't have the capital to engage in large-scale production because of the high taxes, which also discourage investment," said Ye Huodong, CEO of Fujian Longyan Zhuoyue New Energy Development Co Ltd, a biodiesel manufacturer.

(China.org.cn by Li Shen, March 10, 2006)