Dissemination of Gasohol Is at Crossroads


Eight ministries and commissions of the Central Government
including the National Development and Reform Commission have
made the decision that besides Heilongjiang, Jilin, Liaoning,
Henan and Anhui provinces that have already started the use of
gasohol in all areas, the application dissemination of gasohol
should be conducted in partial prefectures and cities of Jiangsu,
Shandong, Hebei and Hubei provinces before the end of 2005.
   Nevertheless, energy strategy, environmental protection
requirements, farmers' income increase, grain safety, financial
subsidies and sharing of interests between the two oil giants
(CNPC and Sinopec) have once again pushed the application
dissemination of gasohol to the crossroads.


I ncreasing investment in fuel ethanol


Ethanol is produced from corn, wheat or tuber crops through
fermentation and distillation. Ethanol can be processed into
modified fuel ethanol after further dehydration and adding an
appropriate amount of gasoline. Vehicle gasohol is produced
through the mixing of modified fuel ethanol and gasoline at a
certain ratio. Experts point out that the technology for the
production and utilization of gasohol in foreign countries was
already well developed long time ago. Brazil and the United
States are the major fuel ethanol producers and consumers in the
world.
   Starting from June 30, 2002, relevant departments in China
launched a one-year trial application dissemination of gasohol
in 5 cities including Nanyang, Zhengzhou and Luoyang of Henan
province and Harbin and Zhaodong of Heilongjiang province.
   The application dissemination of gasohol has provided a way
for the commercial utilization of some grain varieties and
offered another chance for increasing farmers' income. What is
more important, it helps protect the environment. Tests prove
that after the use of gasohol carbon monoxide and hydrocarbons
contained in automobile tail gas can be reduced by 3.08% and
13.4%.
   Does the use of gasohol cause damages to vehicles? Is the
power sufficient? Why is it at the same price with gasoline? Many
such questions have however been raised in the application
dissemination of gasohol.
   Experts say that gasohol only contains 10% fuel ethanol,
corrosion inhibitors are also added and therefore it will not
cause any corrosion to metal components. Experts from China
Automobile Technology Research Center also point out that the
power loss caused by the use of gasohol is very small and totally
undetectable.
   Worries in vehicle owners can not stop the compulsory
application dissemination of gasohol made by the state.
   Jilin province took the lead and started to use gasohol in
all areas in November 2003. With the approval of the State
Council, eight ministries and commissions including the
National Development and Reform Commission, the Ministry of
Public Security and the Ministry of Agriculture issued the
“Scheme for Enlarging the Trial Application Dissemination of
Vehicle Gasohol” and the “Rules for the Implementation of the
Trial Application Dissemination of Vehicle Gasohol” in February
2004. It was requested that all areas of Heilongjiang, Jilin,
Liaoning, Henan and Anhui provinces and partial prefectures and
cities of Hebei, Shandong, Jiangsu and Hubei provinces should
actively conduct the trial application dissemination of gasohol
according to the overall arrangements and requirements of the
state.
   According to the overall arrangements of the state, partial
prefectures and cities of Hebei, Shandong, Jiangsu and Hubei
provinces achieved the replacement of gasoline with gasohol at
end of 2005.
   The further application dissemination of gasohol needs huge
amounts of investment. The 4 enterprises that have been approved
to produce fuel ethanol include Jilin Fuel Ethanol Co., Ltd.,
Heilongjiang China Resources Alcohol Co., Ltd., Henan Tianguan
Fuel Ethanol Co., Ltd. and Anhui BBCA Biochemical Co., Ltd. The
total capacity has reached 900 000 t/a. When the 300 000 t/a unit
under construction in Jilin Fuel Ethanol Co., Ltd. and the 320
000 t/a unit under construction in Anhui BBCA Biochemical Co.,
Ltd. are considered, the capacity of fuel ethanol in China will
reach 1.52 million t/a. Based on the defined mixing ratio of 10%
in gasohol, the consumption of gasohol will account for more than
a quarter of the total gasoline consumption in China.
   An official from the National Development and Reform
Commission says that many enterprises in the central region and
the central-southern region have submitted applications for
launching new fuel ethanol projects and the capital involved
amounts to several dozen billion RMB. In BBCA Group that has
already put an investment of RMB1.2 billion in fuel ethanol, a
space at the side of the 320 000 t/a new fuel ethanol project
has already been reserved for the capacity expansion of another
300 000 t/a. The company is waiting for the approval of the
National Development and Reform Commission.
   The existing 4 fuel ethanol producers all use corn as raw
material. There are reports that Guangxi province that has
abundant molasses and cassava resources also plan to establish
two fuel ethanol production bases in Nanning and Guigang. The
National Development and Reform Commission is said to be
planning the expansion of cassava production in the south of
China and the increase of investments in the fuel ethanol
production using cassava as raw material.
   New fuel ethanol projects need to be approved by the state,
otherwise there will be no subsidies and favors from the state.
CNPC and Sinopec will also not allow their enterprises to produce
fuel ethanol against the law.


Safety of grain and oil


According to persons doing the application dissemination of
gasohol in Jilin, Henan and Heilongjiang provinces, with the
extension of the dissemination scope in the past two years, the
stored grain in heavy inventory at the end of the 20th century
has already been used up by the 4 fuel ethanol producers. A great
proportion of the fuel ethanol production is using new grain
today. If the raw material for fuel ethanol is limited to farm
crops such as corn and wheat, the grain safety in China may be
endangered.
   Experts say that the grain shortage in China in the past two
or three years is 40 - 50 million tons a year. The use of gasohol
in all areas of Anhui province only started on April 1 2005. One
reason is to summarize the experience gained in the three
provinces in Northeast China and Henan province. The other
reason lies in the hot-debated problem of grain safety.
   Data show that 3.3 tons of corn can produce one ton of fuel
ethanol and also 0.95 tons of protein feed and 67 kilograms of
corn oil. Corn has one harvest in most areas of China and two
harvests in some areas. Unlike oil resources, corn is a
regenerative resource. According to research reports published
by the Energy Department of the United States, the valued
production period in the world is around 43 years for crude oil,
66 years for natural gas and 160 years for coal. The
contradiction between the shortage of resources and the need in
development has resulted in a sustained high oil price in the
world.
   Besides corn, potat