Biofuels is a type of energy derived biologically from carbon fixation with fewer emissions, thereby proving less detrimental to the surrounding environment. In recent years, biofuels in China are gaining vital importance in the market due to factors such as government support, low carbon emissions, volatility, energy sustainability, rising crude oil prices, and growing automobile industry.
The major concern for development of biofuel in China is its competition with animal feedstuff and human food. As a result of which, China has been promoting oil based fuel such as sweet sorghum, cassava and cellulosic fuels. Development of biofuel in China is highly reliant on policies framework. Rising concerns over the development of a clean fuel sustained by large amount of investments globally has led to widespread research and development (R&D) in China biofuels market.
Companies in China are investing in production of biomass as a reserve to produce more biofuels to keep abreast of the increasing energy demand. Growing demand in emerging nations such as China has triggered high growth in its base market of biofuels, which is biomass. Owing to the expansion of application range in biofuels and implementation of national standard for biodiesel (B5) blend, Chinese biofuels market is expected to increase in the coming four to five years.
Implementation of consumption tax at the biodiesel import links, coupled with policies support, followed by optimism of enterprises about the biodiesel market are some of the factors that is expected to propel Chinese biofuel market. Apart from this, there are still many proposed biodiesel projects while few are under construction.
Some of the key segments of Chinese biofuel market are first generation and second generation biofuels. First generation biofuels are from food crops such as ethanol from corn and sugar, and biodiesel from vegetable oils. In addition, second generation biofuels are from non food crops such as synthetic diesel, methanol and ethanol. Increasing public and private investments in the development of second generation biofuels and increasing inputs and efforts on research and development in first generation biofuels are some of the benefits that are projected to augment the growth of China biofuels market.
China is expected to be the one of the leading national producers of biofuels. Demand for biodiesel is growing in China, although production using oil crops is more widely spread and likely to be smaller in scale. Furthermore, in China’s ethanol industry is heavily regulated along with licensed production and limited operation management. Chinese marketis majorly dominated by big producers and large oil companies as compared to small industries.
Need for economic development, stringent environmental regulations that promote use of biofuels, concerns related to energy security, and rising energy import bills are some of the factors that tend to support growth of the Chinese biofuels market. On the other hand, food versus fuel consumption leading to surge in food prices and barrier in terms of distribution, development and retailing of biofuels hamper the growth of China biofuels market.
Some of the major players in China biofuels market are Ninbo Tech-Bank Co. Ltd., Xinjiang International Industry Co. Ltd., Jiangsu Yueda Investment Co. Ltd., Qingdao Century Longlive International Trade Co., Ltd. and Henan Tianguan Enterprise Group Co., Ltd. among others. Additionally, government in China encourages foreign companies to participate in the development of biofuel industry such as Sinopec & Airbus that collaborated on the production of bio-jet fuel. Feedstock trading, advanced technology transfer, biofuel trading and research collaboration are some of the potential international collaborations in China biofuels market.