The Post-Petroleum Era and Bio-Liquid Fuels

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The Post-Oil Era and Bio-based Liquid Fuels: The Depletion of Oil – Bio-based Liquid Fuels as a Replacement. In May 2003, Meze Simmons, a former assistant to the U.S. president and banker, first introduced the concept of the \"post-oil era\" at the \"World Oil and Gas Exploration Summit.\" He believes that the peak of global oil extraction is approaching, and we have every reason to explore energy sources for a \"post-oil era\" as soon as possible, and to seek alternative energies for this purpose. Currently, countries hold different views on when the world will enter a \"post-oil era\". Some believe it will take 15 to 25 years, while others think it will require more than half a century. Most scholars and experts generally agree with BP’s view that it will still take over 40 years. 　　In preparation for the arrival of the \"post-oil era,\" the United States, Russia, Europe, and Japan have long strengthened research into the use of nuclear energy, hydrogen energy, biomass energy, and other renewable energy sources, with biomass liquid fuels being listed as one of the key alternative energy sources. Europe is currently the world’s largest producer of biodiesel. Sweden is ahead of most other European countries in this regard: \"We must face a world without oil, both in terms of mentality and technology.\" Currently, Sweden relies almost entirely on nuclear and hydroelectric power for electricity generation, and its vehicles also primarily use biofuels. Sweden has proposed that it aims to become the first developed country in the West to completely rid itself of oil dependence within 15 years. Japan **has proposed** that the economy’s dependence on oil will be reduced from the current 50% to 40%, and by 2030, 20% of cars will use renewable energy fuels. Brazil **plans to replace 80% of its domestic transportation vehicles with ether fuel made from sugar cane reeds in 5 years. Brazil has developed a new type of automotive fuel – H-biodiesel. This vehicle fuel has the same properties as regular diesel; it is produced by mixing petroleum products with vegetable oils. Due to the plant oil additive used in it, sulfur emissions are low, which reduces air pollution, and its price is relatively low. Since December 2006, Brazilian petrochemical plants have begun to produce this fuel on a large scale; it is estimated that this can reduce oil imports by 15% per year, saving $145 million. 　　China **attaches great importance to the arrival of the \"post-oil era\" and has included biomass liquid fuels in its medium- to long-term development plans. On November 29, 2005, the **National Development and Reform Commission issued the \"Guiding Catalogue for the Development of Renewable Energy Industries\"; fuel ethanol and biodiesel were included in this catalogue as renewable energy sources that are encouraged for development. On January 1, 2006, China’s Renewable Energy Law came into effect. Currently, the use of renewable energy in our country is growing at a rate of over 25% per year. According to the **Medium- and Long-Term Development Plan for Renewable Energy** prepared and submitted by the National Development and Reform Commission, over the next 15 years, China will invest approximately 1.5 trillion yuan in the development of renewable energy. By 2020, biomass liquid fuels derived from energy crops will be capable of replacing 10 million tons of oil per year. 　　　　　　　　　　　　　　Fuel ethanol – it does not compete with food crops for grain, nor does it compete with land used for farming. 1. At present, grain is the main raw material used for producing fuel ethanol. Since 2000, China has been exploring the use of aged grain such as corn and wheat to produce fuel ethanol. Due to the higher price of fuel ethanol compared to gasoline at that time, its development was slow, and by 2002 the national production amounted to only 30,000 tons. However, rising global energy and oil prices in 2004 doubled the price of fuel ethanol. With the support of **a series of fiscal and tax policies, fuel ethanol went from having no market to having one, and the manufacturing companies shifted from operating at a loss to achieving profits**, and they even took on the responsibility of selling the products. Fuel ethanol projects have transformed from a former \"burden\" into a highly sought-after \"asset\". 　　The 4 pilot biofuel ethanol production projects approved for construction in 2006 have achieved an annual production capacity of 1.02 million tons. Among them, Heilongjiang China Resources Alcohol Co., Ltd. has a production capacity of 100,000 t/a, Jilin Fuel Ethanol Co., Ltd. has 300,000 t/a, Henan Tianguan Fuel Ethanol Co., Ltd. also has 300,000 t/a, and Anhui Fengyuan Biochemical Co., Ltd. has 320,000 t/a. The production of fuel ethanol was 680,000 tons in 2004, 810,000 tons in 2005, and exceeded 1 million tons in 2006. Since 2002, the central government has provided financial support for the pilot projects and promotion of fuel ethanol, with key measures including the allocation of 480 million yuan in state debt funds for the construction of fuel ethanol production facilities in the provinces of Henan, Anhui, and Jilin ； Tax incentives are implemented: **the 4 approved pilot units are exempt from a 5% consumption tax on fuel ethanol** ； Since the pilot program was launched, a total of 190 million yuan in taxes has been waived ； The central government allocated a total of 2 billion yuan in subsidies to cover losses. According to Henan Tianguan Group, in 2004 and 2005, the subsidies received by Tianguan Group were 2,070 yuan per ton and 1,721 yuan per ton respectively. The subsidies received by Fengyuan Biochemical in 2005 and 2006 were 1,883 yuan/t and 1,628 yuan/t respectively. Since 2006, the financial subsidy has been standardized at 1,373 yuan per ton, with the implementation period determined by when the enterprise reaches its designed production capacity. Henan Tianguan Group has already started implementing the new subsidy policy, while Anhui Fengyuan began doing so in 2007. Driven by **supportive policies, strong market demand, and substantial financial subsidies, the designated enterprises in these 4 provinces expanded their production capacity, with the total capacity reaching 1.63 million tons per year by the end of 2006. The enthusiasm for establishing fuel ethanol projects across the country has also reached an unprecedented level; many regions have included the development of fuel ethanol in their 11th Five-Year Plans. The planned production capacity for biofuel ethanol submitted to the National Development and Reform Commission exceeds 10 million tons per year, indicating a clear tendency toward overdevelopment and reckless expansion in this industry. At a critical moment in the development of the biofuel ethanol industry, the Interim Measures for the Management of Special Funds for Renewable Energy Development, issued by the Ministry of Finance at the end of May 2006, defined bioethanol fuel as that produced from sugarcane, cassava, sweet sorghum, etc., and did not include bioethanol produced from corn, wheat, rice, and their aged grains. This indicates that **the relevant authorities no longer encourage new projects for grain-based fuel ethanol and impose strict controls on them. In December 2006, departments such as the National Development and Reform Commission issued urgent notices titled \"On Strengthening the Management of Biofuel Ethanol Project Construction to Promote the Healthy Development of the Industry\" and \"On Strengthening the Management of Corn Processing Project Construction\", in an effort to cool down the rapidly expanding field of fuel ethanol projects. The notice calls for strategic planning and proper guidance in the development of the biofuel ethanol industry, in order to avoid uncontrolled growth, and suggests expanding the scale of development based on the conditions of the market ； Determine a reasonable layout and enforce strict market access rules ； Leverage key forces to improve the quality of development ； Provide stable policy support and strengthen market supervision. “During the 11th Five-Year Plan period, the approval system for biofuel ethanol projects will continue to be in place; construction projects of such kind must be approved by the competent investment authorities. Any entity that approves projects in violation of regulations or starts construction without authorization will not be eligible for fiscal and tax incentives related to fuel ethanol. Fuel ethanol production enterprises that expand their production capacity without **approval will not receive any financial subsidies. 2. The development of ethanol from non-grain crops still requires competition for land with grain crops. At present, the use of fuel ethanol is limited to 9 provinces and municipalities such as Heilongjiang; if it is to be rolled out nationwide in the future, based on China’s gasoline consumption of 55.91 million tons in 2006, 600,000 tons of fuel ethanol would be needed. Based on the fact that 3.3 tons of corn are required to produce 1 ton of fuel ethanol, 18.48 million tons of corn would be needed, which accounts for 3.8% of China’s total grain production – a figure sufficient to pose a threat to the country’s food security. In 2006, China’s grain production was 484.01 million tons, with per capita grain possession at around 370 kg, which is far below the 500 kg per capita threshold for food security estimated by the Food and Agriculture Organization. Some experts are concerned that if the trend of turning food into energy is allowed to develop unchecked, it will add an additional factor of \"excessive processing\" to the existing issues of \"reduced production\" and \"poor distribution\" that already cause fluctuations in our country’s food market, thus becoming a new catalyst for food security problems. Zhai Hucu, president of the Chinese Academy of Agricultural Sciences, said in a media interview that China’s grain supply cannot bear the burden of being used for energy production; our land is already exhausted trying to meet the food needs of 1.3 billion people. Using food as an alternative to energy can be studied, but industrialization cannot be promoted. If energy problems are addressed largely through food, it will be a disaster. We “can’t drive a car on an empty stomach”; “China’s national conditions are different from those of the United States and Brazil, so we can’t simply copy their models.” **The relevant departments have largely reached a consensus on using grain to develop energy; the strategy for developing alternative energy sources has shifted from simply using grain to produce fuel ethanol to a comprehensive approach to biomass energy development. The principle of producing fuel ethanol is to do so without competing with food supplies for grain or land. Some experts advocate for large-scale cultivation of cassava and sorghum to develop fuel ethanol production. Although using cassava and sorghum instead of corn can avoid competition with food crops for food, it does not prevent competition for land with those same food crops. 3. Developing straw ethanol technology is the fundamental solution. Utilizing crop waste—straw—to produce fuel ethanol instead of using grains is the key way to address the issue of raw materials for ethanol production. Although large-scale industrial production of ethanol from biomass has not yet been achieved, many companies are exploring this path to industrialization. BCI, in collaboration with Collin Pine Company, is developing a technology for producing ethanol from forest biomass; the facility is located at a biomass fuel power plant in Chester, California, with an ethanol production capacity of 20 million gallons per year (1 gallon = 3.785 L) ； BCI is also working on the design of an ethanol production facility using agricultural waste, to be built in Oroville, California ； Canada’s Iogen company operates a 40t/d demonstration plant in Ottawa that produces ethanol from biomass; the company has now proposed building three new plants in the United States, Canada, and Germany, with an expected annual production of 200 million liters of alcohol. According to Pasmore, vice president of administration at Iogen, “These three plants were built with an investment of $54 million by Shell Oil Company and Canadian Oil Company, and they are set to begin operations in 2007.” ”If Iogen succeeds, it will open up a new, economical and practical way to produce alcohol on a large scale using crop waste. 　　The Idaho Growers Association in the United States is studying the feasibility of producing fuel ethanol from wheat and barley straw. DuPont has included the development of biomass liquid fuels as an important part of its sustainable development strategy, and has received $38 million in funding from the U.S. Department of Energy to carry out research in this area in collaboration with American research institutions. Under the U.S. biomass energy plan, the Department of Energy will build the first large-scale integrated biorefinery based on agricultural waste by 2010. Thanks to the relentless efforts of scientists around the world, the cost of converting biomass such as corn straw into ethanol has been significantly reduced; in the late 1990s, the cost of cellulase enzymes needed to produce one gallon of ethanol was 5 dollars. 　　Our country has also made remarkable progress in exploring technologies for producing fuel ethanol from agricultural crop straws. Through years of research, Henan Tianguan Group has acquired a number of key technologies for producing ethanol from straws; on its 300 t/a cellulose ethanol pilot production line, 1 t of ethanol can be produced from 6 t of straws. In August 2006, Henan Tianguan Group began construction of a 3,000 t/a cellulose ethanol project ； Significant breakthroughs have also been achieved in the key technologies for producing fuel ethanol from straw, developed by Anhui Fengyuan Group ； COFCO Group plans to invest 45 million yuan to build a pilot plant for producing 5,000 tons per year of fuel alcohol using corn straw as raw material ； At the Global Energy Award ceremony held at the European Parliament building on April 11, 2007, the “Straw Energy” project from the Energy Research Institute of the Shandong Academy of Sciences received a nomination for the “Air” category of the 2006 Global Energy Award as well as a country-specific award. The technology for producing fuel ethanol from straw is a major global research topic. As a country with high energy demands, China should intensify its efforts in research and development related to fuel ethanol made from straw, increase investment, and enhance academic exchanges and cooperation on an international level, so as to make due contributions to the industrialization of this technology. Before this technology is put into industrial use, China’s fuel ethanol industry must, in light of the country’s reality of a large population and limited land, carry out scientific planning and rational layout. It is appropriate to maintain the scale of fuel ethanol produced from grain at the current level of 1 million tons per year. Xue Peijian, the chief engineer of Anhui Fengyuan Group Company, said that deep processing serves as a \"reservoir\" for the grain market and a \"balancer\" for food security. With processing, we can better regulate the supply and demand in the market and maintain a \"tight balance\" in the grain market. Maintaining an appropriate scale of food-grade ethanol production helps to promptly utilize aged grain, preserve farmers’ enthusiasm for growing crops, and safeguard **food security**. Apart from grains, there are many other plants and materials in our country that can be used for biomass energy production, such as cassava and sweet sorghum. It is necessary to take into account the growing conditions of these energy crops and make use of unused agricultural land to cultivate them, so as not to compete with grain crops for land. Standardization – the key to the growth of the biodiesel industry 1. The biodiesel industry is entering a period of rapid development. At present, there are dozens of biodiesel companies in China, with an annual production capacity of over 100,000 tons; notable among them are Hainan Zhenghe Bioenergy Co., Ltd., Sichuan Gushan Oil Chemistry Co., Ltd., and Fujian Zhuoyue New Energy Co., Ltd. In the past two years, biodiesel has seen rapid growth in cities such as Shanghai, Fujian, Jiangsu, Anhui, Chongqing, Xinjiang, and Guizhou, with private enterprises, state-owned enterprises, and even foreign companies quickly entering this industry. Unlike the previous two years when investments were on a small scale of less than 10,000 tons per year, there is now a trend toward large-scale investment in various regions. Examples include Anhui Guofeng Bioenergy Co., Ltd., which invested 500 million yuan in a biodiesel production facility with an annual capacity of 600,000 tons (the first phase with a capacity of 50,000 tons per year came online in November 2006), and Nanjing Qingjiang Bioenergy Technology Co., Ltd.’s biodiesel project with an annual capacity of 750,000 tons. In Jiangsu Province alone, there are three biodiesel projects with a capacity of 200,000 t/a, in Nanjing, Zhangjiagang, and Wuxi, all funded primarily by private enterprises. Recently, there have been nearly a hundred small biodiesel projects across the country; the total capacity of those under construction or planned amounts to over 3 million tons per year. The raw materials used in large-scale biodiesel projects are mainly rapeseed oil and imported palm oil. 2. Standards for biodiesel are on the horizon. At present, biodiesel production in China is still in its infancy; various aspects such as industrial policies, technical standards, technology selection, sales models, and environmental assessments are not yet well-developed or comprehensive, and there are no standardized sales channels available. For the emerging biodiesel industry, **no corresponding macro-control policies have been introduced yet to regulate it; however, the standard for biodiesel used in diesel engine fuel blending (BD100), which was issued and implemented in May this year, will have a profound impact on the development of this industry.** China’s biodiesel standards are formulated with reference to those of the United States and the European Union. The United States and the EU have a limited variety of biodiesel feedstocks, with standardized production processes. In our country, low-quality oils such as used cooking oil and waste oils from animals and plants are commonly used as raw materials. The production processes vary, and the production equipment differs in complexity; as a result, the biodiesel produced often fails to meet strict **standards**. Large-scale biodiesel production facilities that are under construction or planned, and use high-quality vegetable oils as raw materials, are capable of producing biodiesel that meets **standards; however, they will face challenges related to a shortage of raw materials and high costs. Our country faces a shortage of edible oils; approximately 10 million tons of vegetable oil must be imported each year to meet domestic demand. Currently, the market price of rapeseed oil is 7,000 yuan per ton, while the production cost of biodiesel is around 8,000 yuan per ton. The selling price of biodiesel is approximately 5,000 yuan per ton; without financial subsidies, companies would incur a loss of 3,000 yuan for each ton of biodiesel produced. Although our country has large areas of barren mountains and slopes suitable for growing oil-producing plants such as Jatropha and Caragana, which could provide abundant raw materials for the biodiesel industry, the scale of cultivation, yields, and prices of these oil-producing plants are still unclear. Moreover, the period from planting to harvest is very long, which fails to provide a quick solution to the problem; therefore, the lack of secure raw material supplies is a key factor restricting the large-scale development of biodiesel. 　　Currently, used cooking oil is the main raw material for biodiesel in China; due to its low cost, companies can make profits even without financial subsidies. Biodiesel produced from used cooking oil may not meet **standards**, but it can still be used as fuel oil and for agricultural machinery. It is recommended that **the relevant authorities, guided by the concept of building a harmonious society through environmental protection, food hygiene and safety, and the reuse of waste resources, formulate standards for biofuel oils** in order to find a proper use for used cooking oil, thereby preventing it from polluting the environment and ending up back on dining tables. 　　The standard issued this time is still a recommended standard, not a mandatory one, and only the BD100 standard has been issued. For biodiesel to be available at gas stations, the issuance of B5 or B10 standards is also necessary. According to the Sinopec Academy of Sciences, the standards for biodiesel B5 and B10 have begun to be drafted, with implementation expected to take place after 2008. 　　3. Standardization is key to the development of China’s biodiesel industry. Since diesel derived from petroleum can operate at different external temperatures, a series of standards have been established for various petroleum grades; however, at present there is only one standard for biodiesel. Taking advantage of their abundant palm oil resources, countries in Southeast Asia have formulated ambitious plans for biodiesel production. Malaysia’s biodiesel production capacity is set to reach 1.15 million tons per year by 2007, and it is expected to reach 5 million tons per year by that time. There are also several projects under construction; once all of them are operational, the total production capacity will amount to 8.6 million tons per year. In mid-2007, Singapore will build its first biodiesel plant on Jurong Island, with a production capacity of 100,000 tons per year. Singapore’s Wilmar International has invested $20 million to build a biodiesel plant with a capacity of 250,000 tons per year in Sumatra, with operations expected to begin in 2007. On November 8, 2006, Australian Natural Oils announced an investment of $130 million to build a biodiesel production facility with an annual capacity of 1.8 million tons on Jurong Island in Singapore. Since the main component of palm oil is a 16-carbon saturated fatty acid, its cold filter point is relatively high; however, due to the high temperatures in Southeast Asia, this high cold filter point has no impact on the operation of engines. If the U.S. biodiesel standards are adopted, this criterion will not be met. 　　It is not possible for our country to develop biodiesel using a single raw material; it is recommended that **the relevant authorities establish a set of standards for biodiesel based on the country’s conditions (such as the diversity of oil sources and climate), and study the quality requirements for biodiesel when it is used in low proportions (such as BD2, BD5, BD10). To promote rather than restrict the healthy development of China’s biodiesel industry through standards. 　　Before the issuance of the biodiesel series of standards, biodiesel producers in China can consider using biodiesel that does not meet the standards to produce oleochemical products. The main component of biodiesel is fatty acid methyl esters, which can be used to replace animal and plant oils in the production of various oil-based chemical products, such as soaps, fatty acids, fatty alcohols, and fatty amines. It can also be used to produce industrial surfactants with higher added value; for example, fatty acid methyl esters can be converted into fatty acid methyl ester sulfonates (MES) by sulfonation with SO3 followed by neutralization with an alkali. Research and development in this area have been ongoing in China for many years, but industrialization has progressed slowly due to unsatisfactory product quality. MES produced in the United States, Japan, and Germany has better quality, with the largest plant capacity reaching 140,000 t/a. By carrying out an addition reaction between fatty acid methyl esters and ethylene oxide, it is possible to produce fatty acid methyl ester ethoxylates (MEE) with excellent cleaning properties and environmental benefits. The technology developed by the China Research Institute of Daily Chemicals is now ready for industrial application; a 3,000 t/year industrial demonstration plant built at Fushun Cleaning Products Factory has been in operation successfully for nearly 2 years, and an industrial production facility with a capacity of 10,000 tons is currently under construction. Producing various types of surfactants from biodiesel not only brings substantial economic benefits to enterprises, but it also eliminates the environmental pollution associated with surfactants manufactured from petrochemical raw materials. Using renewable biomass as a substitute for petrochemical raw materials in surfactant production helps reduce oil consumption, achieving three benefits at once – why wouldn’t enterprises take advantage of this?