At the 2006 International Biofuel Conference on September 14, Liu Qun, Secretary of the Industry Department at the National Development and Reform Commission (NDRC), highlighted that a new special development plan for fuel ethanol is currently being formulated. This plan is expected to be finalized by the end of the year. The strategy outlines four core principles: first, taking a new position to promote industrial growth; second, emphasizing the industry's role in driving economic development while ensuring stable policy support; third, expanding production scale with reasonable planning; and fourth, enforcing strict market access to ensure high-quality development. According to the NDRC’s official website, China has already set up four pilot bases for fuel ethanol. In 2005, the country’s production capacity reached 1.02 million tons, enabling the annual blending of 10.2 million tons of ethanol-gasoline. With total gasoline consumption at 48 million tons that year, fuel ethanol accounted for over two percent of the market. Liu Qun, who has long been responsible for promoting ethanol gasoline, noted that rising oil prices have made the biofuel industry more economically viable. He pointed out that the current supply-demand imbalance presents significant opportunities for growth. Additionally, stricter environmental regulations are further encouraging the sector’s expansion. By 2010, China’s gasoline market is projected to reach 66.5 million tons, with fuel ethanol expected to hold a 5% market share—equivalent to over 3.3 million tons annually. However, aside from the existing four national pilot projects, no new projects have been approved yet. Liu emphasized that government guidance must remain both supportive and prudent. He warned that there are signs of excessive investment in the sector and stressed that support will be controlled based on four key indicators: resource availability, technological capability, environmental protection, and energy efficiency. The upcoming plan will clarify policy support, ensuring that fuel ethanol development does not compete with grain for land, aiming for a “win-win” scenario between energy and food security. It also promotes diversification in raw material sources, especially through saline-alkali land cultivation. Companies that improve efficiency and develop key technologies will receive preferential treatment. Low-cost, high-efficiency enterprises will be prioritized for government support. In the future, the state plans to implement flexible loss subsidies and establish a reference price for ethanol. If market prices fall below this level, financial support will be provided. Additionally, subsidies will be given for the construction of raw material bases and for leading enterprises operating under a farmer-based model. Incentives will also include model subsidies and tax breaks. During the "Eleventh Five-Year Plan" period, the current closed pilot programs in Heilongjiang, Jilin, Henan, and Anhui will be expanded to other provinces. Vehicles using high-blend ethanol gasoline will be selected and promoted after successful regional trials.

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