At the 2006 International Biofuel Conference on September 14, Liu Qun, Secretary of the Industry Department at the National Development and Reform Commission (NDRC), revealed that a new special development plan for fuel ethanol is currently under study and will be finalized by the end of the year. This plan is designed to guide the fast-growing fuel ethanol industry with four key principles: first, taking a new strategic position to promote industrial growth; second, emphasizing the sector’s economic impact and ensuring stable policy support; third, expanding production scale while setting reasonable targets; and fourth, enforcing strict market access standards to ensure high-quality development.
According to the NDRC’s official website, China has already established four pilot bases for fuel ethanol. In 2005, the country’s fuel ethanol production capacity reached 1.02 million tons, enabling the annual blending of 10.2 million tons of ethanol-gasoline. With total gasoline consumption reaching 48 million tons in 2005, the share of ethanol-blended gasoline exceeded two percent, signaling a growing role for biofuels in the energy mix.
Liu Qun, who has been leading the promotion of ethanol gasoline within the NDRC, highlighted that rising oil prices have made the biofuel industry increasingly economically viable. He noted that the current supply-demand imbalance presents significant opportunities for growth. Additionally, stricter environmental regulations are further driving the industry forward.
Looking ahead, the NDRC forecasts that China’s gasoline market will reach 66.5 million tons by 2010, with fuel ethanol accounting for 5% of the market—equivalent to over 3.3 million tons annually. However, despite existing pilot projects in four provinces, no new national projects have been approved yet.
Liu emphasized that government guidance must remain both supportive and prudent. He warned that the industry is showing signs of overheated investment and stressed that support will be carefully managed based on four key criteria: resource availability, technological capability, environmental protection, and energy efficiency.
In the upcoming plan, policy support will be more clearly defined. Fuel ethanol development must not compete with grain for land, promoting a "win-win" situation between energy and food security. The plan also encourages diversification, the development of raw material bases on saline-alkali land, and efforts to improve efficiency and technological breakthroughs. Companies that demonstrate low costs and high efficiency will receive preferential treatment.
The government plans to introduce flexible loss subsidies for the industry, along with a reference price mechanism. If production costs exceed this threshold, financial assistance will be provided. Additional incentives include subsidies for raw material base construction, support for leading enterprises operating under a farmer-based model, and tax benefits.
Furthermore, the current closed pilot programs in Heilongjiang, Jilin, Henan, and Anhui will be expanded nationwide during the “Eleventh Five-Year Plan†period. Vehicles using high-ethanol gasoline will be gradually promoted after successful trials in selected regions.
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