China to wind down 1.6 Mgy in ethanol production

The Chinese government will wind down 1.6 mln tons of ethanol production by 2010 according to the National Development and Reform Commission. The government is eliminating unproductive plants as a part of its goal to reduce energy consumption per GDP unit by 20 pct by 2010. China has recently announced abandonment of ethanol projects that use foodstocks, excepting existing plants and those already under construction. China is the third-largest ethanol producer, behind Brazil and the US.

The move is one of several in China as the government unveils its biofuels policy. Last week, the Ministry of Finance finalized a farm subsidy plan for biofuels, which will take effect in 2008. Subsidies of $403.5 per hectare per year will be provided except for plantings in forested areas, which would receive $360 per hectare. The land used can only be land not intended for food crop use.

Overall, jatropha cultivation will be expanded from 66,000 acres to 660,000 acres. The expansion is planned for Yunnan, Sichuan and Guizhou provinces, which have the most suitable climate for jatropha cultivation.

The expansion takes place under the auspices of China’s Green Poverty in Reduction program which was launched in 2006. The $8.5 billion project is a joint venture between the United Nations Development Programme (UNDP), China’s Ministry of Science and Technology and the Ministry of Commerce. The project aims to develop biofuels and other eco-friendly projects in China’s poorer western provinces.

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