Forecast of the Development Trends of Biomass Energy in China in 2008

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2007 was an important year in the development of biomass energy in China, with significant progress being made in areas such as biogas, biofuels, biodiesel, biomass power generation, biomass gasification, and biomass pellets; the framework of China’s biomass energy industry began to take shape during this time. In light of the rapid development of biomass energy in China, the country **has given strategic importance to the development of biomass energy and introduced a series of regulations to promote the healthy growth of this industry. The scarcity of traditional energy sources, the record-high oil prices in 2007, and the holding of the Olympic Games in China in 2008 all indicate that the biomass energy industry in China and around the world is set to achieve significant progress in 2008. Based on the development of biomass energy in China in 2007, this article attempts to predict the main trends in its development in 2008. 1. The \"oil crisis\" contributed to the gradual improvement of China’s biomass energy industry chain and a more rational layout of its resources. The oil crisis was one of the hottest topics worldwide in 2007, with the price of each barrel of crude oil reaching over $99, setting a new historical high. High oil prices and tight supplies of crude oil once led to a severe \"oil crisis\" in China. What we need to be vigilant about is that oil is not only an energy source but also an important raw material for the chemical industry. Rising oil prices affect downstream sectors, leading to increases in the prices of agricultural inputs such as diesel for farm machinery, fertilizers, and plastic films. This raises the costs of food production and contributes to the rise in food prices, resulting in the current structural inflation. The fear caused by the oil crisis will distract people’s attention, and the advantages of biomass energy—such as its renewability, cleanliness, readily available raw materials, and convenient utilization—have earned it favor. Since the last century, developed countries in the West have begun to work on developing technologies for biomass energy. Thanks to progress over the past few years, biomass energy technology has seen initial applications and dissemination, and the framework of the global biomass energy industry has begun to take shape. Countries such as the United States, Brazil, and Germany have combined biomass energy technology with their own national characteristics to develop their own approaches to utilizing this type of energy. China has a vast territory, favorable climate conditions, rich plant resources, and a large population. It lacks petrochemical resources, which gives it the potential and a strong desire to develop biomass energy. Compared to developed countries, China’s research and utilization of biomass energy are not particularly backward; it holds world-leading advantages in certain fields. With the support of relevant policies, China has developed an industry structure for biomass energy that suits its national conditions, but it suffers from issues such as chaotic layout and an incomplete industrial chain. Following the initial stage of development in this industry, the structure of China’s biomass energy sector will improve and its industrial chain will be further refined. In particular, the 2008 Olympics held in Beijing, with its concepts of a \"Green Olympics, a Technology Olympics, and a Cultural Olympics,\" will also contribute to the comprehensive development of biomass energy in China. 2. The advantages of China’s non-grain biomass energy industry are becoming increasingly evident. In 2007, the National Development and Reform Commission issued the \"Guiding Opinions on Promoting the Healthy Development of Corn Deep Processing,\" ordering local authorities to suspend the approval and registration of projects for producing ethanol from corn. After conducting a thorough review of existing and planned projects, further stringent regulations were imposed on the corn deep processing industry. The introduction of the \"Opinions\" sparked a debate in China regarding \"grain-based\" and \"non-grain-based\" options, and ultimately, it was agreed that \"non-grain-based sources represent the direction for the development of bioenergy in China.\" Since then, the development of biomass energy in China has moved beyond the era in which crops such as corn were used as raw materials, ushering in a new era for the industry of non-crop biomass energy; the advantages of this industry are becoming increasingly evident. According to the China Bioenergy Network (http://www.bioenergy.cn), a fuel ethanol production facility with an annual capacity of 200,000 tons, funded by COFCO Group, has officially started operations in Beihai, Guangxi. It is the only non-grain-based fuel ethanol project to be put into production in China to date. Experts say that this move means China’s development path for biomass energy will truly move toward a model that does not rely on grain. Unlike other domestic fuel ethanol projects that use corn as a raw material, this project uses cassava as its source material. Guangxi is a major cassava-producing region in China; Beihai City has a cassava cultivation area of 150,000 mu, producing 225,000 tons of fresh cassava per year. The 200,000-ton fuel ethanol project requires 1.5 million tons of fresh cassava per year (equivalent to 610,000 tons in dried form). The Guangxi Zhuang Autonomous Region **had previously issued a directive stating that, in order to promote the development of the biomass energy industry, sales of ethanol gasoline for use in vehicles would be banned starting from February 2008, with the aim of replacing other types of gasoline with ethanol gasoline (except for use by the military, **, and for special reserve purposes). “This is a sign that the development of biomass energy in China is truly moving towards a path that does not rely on grain. ”An expert commented on the significance of the project’s commissioning in these terms. 3. “Giants” help to shape a more rational structure for China’s biodiesel industry. According to China Bioenergy Network (http://www.bioenergy.cn), the domestic biodiesel producer Gushan Group (NYSE: GU) listed on the NYSE, becoming the 39th Chinese company to do so. The company issued 18 million American trust certificates for the first time, at $9.60 each. Founded in 2001, the Kosugi Group’s products fall into two main categories: one is biodiesel, and the other are by-products generated during the biodiesel production process that can be used as raw materials in the chemical industry, including vegetable pitch, methyl erucate, glycerin, and erucamide. The group currently has a production capacity of 190,000 tons of biodiesel per year, with manufacturing facilities located in Sichuan, Hebei, and Fujian. Kusugi Group states that by using inexpensive raw materials such as vegetable oil residues and gutter oil to produce biodiesel, the company has significantly reduced the production costs of biodiesel ； At the same time, through the further processing of biodiesel by-products, two product lines were developed: biodiesel and chemical intermediates, thereby increasing the company’s overall profits. The company plans to add production facilities in Beijing, Shanghai, Hunan, and Chongqing by the end of 2008, thereby achieving an annual production capacity of 400,000 tons. In 2006, another Chinese biodiesel industry giant, Longyan Zhuoyue Company from Fujian, successfully listed in London, UK. Excellence and Kosugi Biotech entered the market by relying on biodiesel, which is a real boost for the domestic biodiesel industry! Especially for those companies with substantial financial resources, they will persevere on this path, thereby driving progress and development in the industry. The rapid development of the biodiesel industry will attract more capital investment. In 2008, a large number of biodiesel companies are set to emerge in China, and the leading biodiesel firms among those already existing will go public to raise funds. The structure of the biodiesel industry will gradually stabilize, but there will be a painful process before that happens. The intensity of industrial competition will lead to the survival of the fittest among enterprises, and the development of this industry will also prompt domestic **regulatory bodies to accelerate industry oversight and consolidation of biodiesel companies. 2008 will be a period of consolidation and development for China’s biodiesel industry, with its industrial structure gradually becoming more rational. 4. China’s new energy vehicles will see breakthrough development. Technical research, mass production, and market promotion of new energy vehicles have become a strategic consensus among major automobile manufacturers around the world. In 2007, international oil prices were near $100 per barrel, reaching a new historical high ； On November 1, China’s \"Rules on the Administration of Access to New Energy Vehicle Production\" came into effect officially. High oil prices are raising the barriers to traditional automobile production, while the introduction of relevant regulations provides an institutional framework that facilitates the sales of new energy vehicles in the Chinese market. Various factors will surely accelerate the industrialization of new energy vehicles in China; it has become a common understanding in the industry that \"whoever controls new energy technologies controls the future of the automotive industry.\" 2008 is highly likely to become a period of rapid development for new energy vehicles both in China and abroad. Whether at this year’s Shanghai Auto Show or the Frankfurt Motor Show, new energy vehicles have become the stars of the events. According to Cheemaowang, the development of new energy vehicles has evolved from individual efforts by a few companies to a collective effort involving most companies; technological advancement has shifted from the conceptual development of individual vehicle models to the commercialization of mass-produced models ； Moreover, many component manufacturers have also joined in the industrial chain. New energy vehicles are developing at a rapid pace, but technology and the market remain obstacles to their swift progress. China attaches great importance to the technical research and product application of energy vehicles, which is seen as an opportunity for China to catch up with the developed automotive industries. Qin Lihong, deputy general manager of China’s Chery Automobile Company, said, “(New energy vehicles) represent the trend in the development of the automotive industry; if you don’t keep up with this trend, the industry will leave you far behind.” Chinese domestic brands such as Chery, SAIC, Lifan, and Brilliance have made the development of new energy vehicles an important strategic focus for their companies, and these sectors are set to see good progress in 2008. 2008 was also an important period for the promotion of new energy vehicles and their acceptance by the market. The Olympics were held in China, and the concepts of a \"Green Olympics, Cultural Olympics, and Technological Olympics\" promoted there would contribute to the promotion of new energy vehicles; the introduction of these new concepts also helped more people to accept them. 5. China’s Energy Law will come into effect, and biomass energy will be incorporated into the **energy strategy framework. In December 2007, a draft of the Energy Law was made public; in 2008, the official **Energy Law is likely to be enacted. Article 36 of the draft Energy Law: **It is encouraged to develop clean and low-carbon energy sources such as hydropower, nuclear energy, natural gas, coalbed methane, wind power, biomass energy, solar energy, geothermal energy, and ocean energy, on the basis of protecting the ecological environment, in order to increase the proportion of clean energy in the overall energy mix. The Energy Law explicitly includes provisions to support the development of new energy sources such as biomass energy, which also determines the future approach toward such new energy sources. In 2007, high international oil prices and the scarcity of traditional petrochemical energy sources led all ** to place great emphasis on the development and utilization of new energy sources, and China was no exception. The utilization of new energy sources such as wind energy, hydroenergy, solar energy, and geothermal energy is subject to various constraints such as geographical location and the manner of utilization, resulting in limits on their potential application areas. The development and utilization of biomass energy are not restricted by geographical conditions. Its mode of use is similar to that of traditional energy sources, and existing machinery and equipment can be used after minor modifications, making it highly valuable for promotion. Biorenergy technology is relatively mature on an international scale. The route to replacing petroleum involves grains, straw, other plants, etc. – fermentation – ethanol – vehicle fuel, ethylene, non-toxic solvents, and hundreds of chemical and raw material products ； Another approach is to use low-quality cooking oil, jatropha seeds, and similar materials to directly produce high-quality diesel fuel for vehicles. Regardless of the type of biomass conversion, it represents a valuable asset for our country’s resources. Developing bioenergy represents the best opportunity for agricultural countries to turn their current resource situation of lacking oil but having abundant coal into an advantage. Biomass energy is of strategic significance for alleviating China’s energy shortage and ensuring energy security; it is therefore imperative to include the development of biomass energy in the Energy Law. **Priority will be given to supporting the biomass energy industry in terms of policies, subsidies, and research. 2008 is likely to be the first year in which the Energy Law comes into effect; we will wait to see its impact on the development of biomass energy in China. 6. More attention will be paid to the research and application of non-grain crops. The development of China’s non-grain biomass energy industry will surely drive research and application of such crops in China. In addition to traditional crops such as corn, sugarcane, and rapeseed, the research and development of oil-producing plants like jatropha, Xanthoceras, palms, cassava, sweet potatoes, water hyacinth, Sophora flavescens, Elaeocarpus, and Albizia have been put on the agenda. Various regions have formulated biomass energy strategies suited to their local conditions, taking into account factors such as terrain, climate, and plant resources. Cassava is easy to grow and has a high conversion rate, making it an ideal raw material for biomass energy. Guangxi has a large area dedicated to cassava cultivation, thus boasting abundant cassava resources; using cassava as the main raw material for biomass energy has become a strategy for Guangxi’s development in this field. Yunnan is adjacent to Guangxi and shares similar geographical and climatic conditions. Yunnan has decided to focus on the research and application of Castanopsis sclerophylla, building on its overall advantages in order to avoid homogeneous competition. China has also made breakthrough advances in research on the utilization of biomass energy crops. According to China Oil Network, researchers at the Wuhan Oil Crops Research Institute of the Chinese Academy of Agricultural Sciences have developed the core technology for converting palm oil into biodiesel – a condensation improvement technique. Using this technology, the freezing point of palm oil can be effectively increased, preventing crystallization at low temperatures during the conversion of palm oil into biodiesel. Compared to rapeseed, soybeans, and others, oil palm trees, which produce palm oil, have a higher oil content and are thus known as the \"king of oils\". The palm oil it produces uses a wider range of raw materials and is cheaper. However, palm oil solidifies into crystals at normal temperatures below 27 degrees Celsius; therefore, this related technology is referred to in Southeast Asia, Africa, and other regions where palm oil is produced abundantly as an \"extreme technology\" for converting palm oil into biodiesel. The condensation improvement technology developed by researchers such as Huang Fenghong from the Wuhan Oil Crops Research Institute of the Chinese Academy of Agricultural Sciences effectively overcomes the limitation that palm oil can only be converted into biodiesel at high temperatures, expanding the raw material sources for \"green bio-oil fields\" from fields to forests. In 2008, with the overall development of China’s biomass energy industry and the establishment of the use of \"non-grain\" crops, research and application of such crops in China will reach a new level.