China is working on fiscal policies to encourage production of
biological energy as substitutes for oil, a move experts say would
help China reduce its reliance on oil and build an environmentally
friendly society.
Zhu Zhigang, vice minister of finance, told Xinhua in an
exclusive interview on April 29 that the ministry is working on
policies that will enable the government as well as energy
consumers to share the cost and risks of bio-energy production in
case oil prices are too low for bio-energy business to be
profitable.
Zhu said that the ministry is considering a plan to provide
subsidies to a few selected companies specializing in bio-energy
production as demonstration projects before the cost and risk
sharing mechanism is created.
But he declined to say how much money the Chinese government
will spend in the coming years on bio-energy project.
Bio-energy mainly refers to ethanol made from grain and stems of
plants and methane, which are environmentally friendly and
renewable.
China has increased its annual production capacity of fuel
ethanol to 1.02 million tons thanks to direct funding from the
ministry, preferential tax policies and subsidies, he said.
The fuel ethanol has been produced in northeast China, central
China's Henan Province, north China's Hebei Province and east
China's Anhui, Shandong and Jiangsu provinces.
The raw material for the fuel ethanol includes corn and wheat,
and the ethanol has been purchased and mixed with gasoline by the
country's state-owned oil producers, including Sinopec.
Zhu said the ministry has allocated 2 billion yuan (US$250
million) for those ethanol projects in the past five years, which
were launched mainly to solve the problem of corn surplus in
northeast China, the country's major corn-producing area.
The corn-for-ethanol projects increase market demand for corn
and the prices of corn have been increasing gradually in the past
several years, the vice minister said.
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Shi Yuanchun, an academician of the Chinese Academy of Sciences,
said China should do more to increase production of bio-energy to
catch up with the United States, the European Union, Brazil and
India.
China should study ways to manufacture ethanol using stalks and
plants produced from wasteland and low-quality land not suitable
for grain production, said Shi, former president of China
Agriculture University.
The plants include sugar grass, which is suitable for salina and
other low-quality land in 18 provinces north of China's Yellow
River and Huaihe River basins.
Those land totals 33.34 million hectares, and one fifth of them
would be enough to produce 20 million tons of ethanol, said
Shi.
China produces annually 1.5 billion tons of stalk as by-products
of grain production, which can be used to produce 370 million tons
of ethanol.
Bio-energy is environmentally friendly and renewable, and fast
growing bio-energy sector will create enormous job opportunities
for farmers, he said.
Qiao Yingbing, an expert with China's oil giant Sinopec, said
China's consumption of crude oil totaled 323 million tons. The net
import of crude oil stood at 119 million tons and that of process
oil at 17 million tons.
(Xinhua News Agency May 2, 2006)