How much potential does coal-based ethanol have in the future without an \"access permit\"?

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Starting this month, Tianjin has officially stopped selling regular gasoline, becoming the first city in the country to completely phase out traditional gasoline by restricting the sale of ethanol-based gasoline for vehicles across the entire city. Discussions within the industry regarding ethanol-blended gasoline have once again reached a \"small peak\". In fact, the promotion of ethanol-blended gasoline is not limited to Tianjin alone. According to the \"Implementation Plan on Expanding the Production of Biofuel Ethanol and Promoting the Use of Ethanol-Based Gasoline in Vehicles\", issued last year by 15 ministries and agencies including the National Development and Reform Commission and the Energy Administration, by 2020, ethanol-based gasoline for vehicles will be available almost throughout the country. Based on these calculations, due to various constraints such as raw material supply and production costs, the shortfall in fuel ethanol is likely to reach around 10 million tons by then. Ethanol-powered cars are becoming popular – where will the fuel come from? The reporter learned that in addition to the existing methods of producing ethanol from grains or non-grain materials such as cassava and sweet sorghum, coal-based ethanol production, as an emerging technological approach, is now beginning to gain prominence in China. With demand exceeding supply, how much room is there for the development of coal-based ethanol? The country leads in technology and has a clear cost advantage. In line with policy requirements, China will focus on E10 ethanol gasoline, which involves adding 10% fuel ethanol to the components used in gasoline blending. According to forecasts by S&P Global Commodity Insights, China’s apparent gasoline consumption in 2017 was approximately 120 million tons. Based on a 10% blending ratio, the demand for ethanol after full implementation of this policy is estimated at around 12 million tons. “In terms of production, China has already established a fuel ethanol production capacity of around 2.6 million tons, which is a significant gap compared to the projected demand. From a technical perspective, although the method of producing ethanol from grains is currently the most successful, its actual implementation is constrained by objective factors such as raw materials ； Ethanol produced from non-grain sources such as cellulose serves as a supplementary option; to date, its efficiency remains low and it has not truly matured. A rough calculation shows that to achieve full coverage of ethanol-blended gasoline by 2020, there is still a gap of 8 to 10 million units that needs to be addressed. ”Yao Chunde, deputy director of the **Key Laboratory of Internal Combustion Engine Combustion at Tianjin University, pointed out. Under these constraints, the idea of coal-to-ethanol production emerged. “For a long time, the use of fossil resources to produce ethanol has been a focus of attention in the industry. The most ideal approach is to produce ethanol directly from coal using syngas; however, due to issues such as high corrosivity during the reaction process and low efficiency, large-scale industrial production of ethanol from coal has not yet been achieved, making it a global challenge. ”Zhu Wenliang, a researcher at the Dalian Institute of Chemical Physics, Chinese Academy of Sciences (hereinafter referred to as the Dalian Institute), explained. The new technology independently developed by Dahuahua uses coal-based syngas as raw material, and follows a process route that involves methanol and dimethyl ether carbonylation followed by hydrogenation to produce ethanol, enabling the direct generation of anhydrous ethanol. Reporters learned that since the adoption of this technology last year, the 100,000 tons per year syngas-to-ethanol plant operated by Shaanxi Yanchang Petroleum Group was able to complete the entire production process successfully, producing qualified anhydrous ethanol. The successful first trial run of the world’s first coal-based ethanol industrial demonstration project indicates that China is at the forefront of the world in terms of technology related to ethanol production from coal. Along with technological progress, breakthroughs have also been achieved in terms of cost efficiency. According to Ren Xiaoguang, general manager of Yanchang Zhongke (Dalian) Energy Technology Co., Ltd., at a price of 400 yuan per ton for standard coal, the cost of ethanol produced from coal is now as low as 3,200 yuan per ton ； When the coal price rises to 550 yuan per ton, the production cost can also be kept at around 3500 yuan per ton. \"Compared with the current cost of around 5800 yuan per ton for ethanol produced from grains, coal-based ethanol has a clear advantage.\" ” Multiple factors constrain market promotion. With technological superiority, controllable costs, and a large market gap, can coal-based ethanol catch up and succeed? “From a purely technical perspective, there are no major obstacles to the development of coal-based ethanol; however, it still has a long way to go before it can truly enter the market. ”Several industry insiders, including Yao Chunde, have issued warnings. Firstly, there are constraints at the policy level. Although current policies have boosted ethanol gasoline, they primarily focus on \"expanding the production of biofuel ethanol,\" with not even a word mentioned about ethanol produced from coal. “Due to the lack of relevant policies, coal-based ethanol has not yet obtained an ‘approval permit’, which inevitably limits its adoption and promotion. ”A senior analyst at Yaha Consulting said frankly. Another industry insider also said that as a new technology, coal-based ethanol currently lacks corresponding policy standards in terms of production and processing, promotion and application, as well as entry requirements. “Since large-scale production has not yet been achieved, there are currently no sales policies for coal-based ethanol. Through what channel? How to add it? For controlled products such as refined oil, the lack of policy support can mean that their implementation is halted right from the start. ” Secondly, it lies in the market selection factors. “What kind of ethanol can be added to oil products? ”The industry experts mentioned above noted that abroad, as long as the product components are clearly defined, any product that meets the quality requirements can compete ； In our country, it is even necessary to specify the exact method used to produce ethanol in order for it to be allowed on the market; this effectively creates a form of monopoly over production methods, and does not truly leave the choice to the market. \"The product of those with greater advantages should have more opportunities.\" ” Third, there is also competition from other fuels. In Yao Chunde’s view, developing coal-based ethanol fuel requires a longer-term perspective; “aside from bioethanol, there is actually a more competitive alternative – methanol fuel.” ” As another type of new automotive fuel, methanol fuel has also seen accelerated development in recent years. Yao Chunde pointed out that, in terms of both **policy support and energy-saving and emission-reduction outcomes, methanol fuel is competitive, with production costs expected to be between 2,000 and 2,500 yuan per ton. “More importantly, the existing coal-to-ethanol technology also starts with producing methanol from coal, which is then converted into ethanol. Since there’s already a usable and cheap ‘Option A’, why do we need ‘Option B’? ” Downstream products need to be further diversified; opportunities and challenges coexist – is it truly difficult to find a way forward for coal-based ethanol? Following these technological breakthroughs, will it be possible to build on strengths and address weaknesses to make further progress in application areas? Looking at the current market situation, the analyst from Ya Hua Consulting said that it may be too early to draw any conclusions regarding the prospects for using coal-based ethanol. However, it is certain that once policies are relaxed, investors will surely be attracted to this sector, leading to rapid growth in it. From the perspective of the industry itself, taking advantage of the widespread adoption of ethanol-blended gasoline and in order to avoid problems such as competition with food production for land resources that arise from traditional production methods, Zhu Wenliang believes that coal-based ethanol still has its place, especially in the central and western regions of China, where coal resources are abundant while food resources are limited. “Furthermore, with technological advancements and upgrades, particularly the effects of scale in industry, the production cost of coal-based ethanol is expected to decline further. ” “In addition to ethanol-blended gasoline, coal-based ethanol actually has many other diverse downstream derivatives, offering flexible possibilities for further application. For this reason, there is a consensus in the industry that coal-to-ethanol is likely to become the next key area of development in coal chemical manufacturing, following projects such as coal-to-oil, coal-to-gas, and coal-to-olefins. ”Ren Xiaoguang said with confidence. On the one hand, there is also a huge shortage at present in downstream products such as ethylene, polyvinyl chloride, and styrene, a shortage that is sufficient to support the development and growth of coal-to-ethanol technology ； On the other hand, by expanding downward, it is also possible to avoid bottlenecks such as product diversity shortages and redundant production that are common in the coal chemical industry. Taking ethylene, a basic chemical raw material, as an example, Ren Xiaoguang told reporters that as the core of the petrochemical industry, ethylene products account for over 75% of all petrochemical products. Statistics show that by 2020, China’s apparent consumption of ethylene is expected to reach 19.5–20 million tons, with an equivalent demand of around 45 million tons. “Based on the forecast that the operating rate of domestic ethylene plants will remain at 92% in the future, there is still a supply-demand gap of approximately 15 million tons in the ethylene market in 2020. And from ethanol to ethylene, only a simple dehydration process is required. ”