In order to realize such a target, non-fossil fuel consumption is expected to account for 15 percent of the country's annual energy consumption, up from the current 3 percent level.

"China has tremendous resources and could be a very important player in the world's research and commercialization of biofuels," David Wang, president of Boeing China, said at the World Route Conference in Beijing in mid-September.

Wang said that if China could achieve the target of turning 75 million mu (5 million hectares) of wasteland into jatropha plantation by 2020, biofuel produced by China could replace 40 percent of the current global aviation jet fuel demand. Currently the global aviation industry consumes 1.5 to 1.7 billion barrels of jet fuel annually.

"But such an ambitious target cannot be achieved by the government alone. We have to encourage enterprises to take an important role," said Wang from the Yunnan provincial government.

Hong Kong-invested Shenyu New Energy had planted 300,000 mu (20,010 hectares) of jatropha in Yunnan by 2008 and plans to develop 500,000 mu (33,350 hectares) of jatropha plantation in the province by 2010, Gou said.

Shenyu is also building a jatropha oil processing factory with a total investment of 65 million yuan.

The first production line will start operation in mid-2010 and be able to produce 3,000 tons of biodiesel a year, Gou said. "The factory will be capable of producing 100,000 tons of biodiesel annually at full capacity. But the problem is we don't have enough jatropha to process at the moment," he added.

Major problems

Cultivating good quality jatropha and the commercialization of biodiesel are two major problems to be tackled. Yields of jatropha are variable as the plant has not yet been domesticated or improved by plant breeders. Currently one mu (0.0667 hectare) of jatropha can produce 50 to 100 kg of seeds.

Local scientists in Yunnan are breeding two jatropha species that could yield 150 km of seeds per mu at the Xishuangbanna Tropical Botanical Garden of the Chinese Academy of Sciences.

It will also take a few years to develop a mass production and distribution system for the commercial application of biofuels, analysts said.

China has neither mandated the use of biodiesel in cars nor published standards for blending it into fossil fuel.

That means big petrol stations run by State-owned PetroChina and Sinopec can refuse to offer the fuel.

Some small biodiesel companies in Yunnan are using waste oil from restaurants to produce biodiesel.

But their products are mainly used on tractors in the countryside.

"Jatropha seeds are very expensive and hard to find. We have to use waste oil from restaurants. But the biggest problem is Sinopec and PetroChina don't accept our diesel," said Yang Xinzhong, general manager of Yunnan Yingding Biofuel Technology Co Ltd.

Yingding produces 40,000 to 50,000 tons of diesel per year.

Gou from Shenyu New Energy said that Yunnan has about 20 companies involved with jatropha plantations and associated processing businesses, but most of them are small in size.

"It takes at least three years for jatropha to start generating a return. Many companies are plagued by financing problems and the lack of technologies in processing and quality control," Gou said.