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Biofuels refer to fuel ethanol and biodiesel produced from biological resources; they can replace gasoline and diesel derived from petroleum, and represent an important direction in the development and utilization of renewable energy. Affected by global oil resources, prices, environmental protection, and climate change, since the 1970s, many countries have **placed increasing emphasis on the development of biofuels, achieving significant results. Our country has also made significant progress in the development of biofuels; in particular, the production of fuel ethanol using grains as raw material has begun to take shape on a commercial scale. In recent years, China’s demand for oil has grown rapidly, oil imports have continued to increase, and international oil prices have kept rising. Relevant departments as well as experts and scholars have put forward many suggestions regarding the development of biofuels as alternatives to oil. In accordance with the directives of the Party leadership and the State Council, we have conducted a thorough study on the development of biofuels. The relevant information and our views are reported as follows: I. Development of international biofuels Since the oil crisis in the 1970s, some countries began to explore the use of biological resources to produce liquid fuels in order to reduce their reliance on oil imports. With the growing severity of global environmental issues and rising oil prices, biofuels have received even more attention; developing biofuels has become an important measure for developed countries to enhance energy security, reduce greenhouse gas emissions, and address climate change. Currently, biofuels have achieved large-scale production and application. In 2005, the total global production of biofuel ethanol was approximately 30 million tons, with Brazil and the United States each producing around 12 million tons ； The total biodiesel production is about 2.2 million tons, of which around 1.5 million tons comes from Germany. Brazil has a vast territory and abundant land resources; it is located in the tropics with heavy rainfall, which is suitable for the growth of sugarcane. To reduce its reliance on oil imports, Brazil launched the \"Fuel Ethanol Program\" in 1975, using sugarcane as a raw material to produce fuel ethanol as a substitute for gasoline for vehicles. The main measures included requiring that a certain percentage of fuel ethanol be added to gasoline used in vehicles ； Second, allocate funds to support the improvement of sugarcane varieties, the enhancement of ethanol production processes, and the development of fuel ethanol vehicles ； Third, tax and fee reductions are provided for the production and sales of fuel ethanol and ethanol-powered vehicles. After years of effort, Brazil’s “Fuel Ethanol Program” has achieved its intended goals. Since 1985, although fuel ethanol production has fluctuated due to oil and sugar prices as well as policy factors, the average annual production has been around 10 million tons, resulting in a total substitution of approximately 200 million tons of oil. Currently, 20%-25% fuel ethanol is added to all gasoline used in Brazil, and there are many vehicles that run on pure fuel ethanol; 70% of the cars sold in 2005 were capable of running entirely on pure fuel ethanol. In 2005, Brazil’s consumption of fuel ethanol was 12 million tons, accounting for 45% of the country’s gasoline consumption that year; it made up about one-third of total fuel used for vehicles, and created employment opportunities for over 700,000 people. Fuel ethanol has become a key industry in Brazil for ensuring energy security, promoting economic development, and creating jobs. The United States also began developing fuel ethanol in the 1970s, taking advantage of its large amount of arable land and high corn production to use corn as a raw material for producing fuel ethanol. On the one hand, it is to reduce oil imports; on the other hand, it is to increase the earnings from agricultural products and stabilize corn prices. In the late 1980s, due to low oil prices, the production and sales of fuel ethanol in the United States were suppressed. After the United States enacted the Clean Air Act in 1990, demand for ethanol as a substitute for MTBE – a gasoline additive used to increase octane levels and reduce pollution emissions, now considered carcinogenic when it seeps into groundwater – rose rapidly. Since 2002, driven by a sharp rise in oil prices, fuel ethanol has regained attention, and its production and sales have grown rapidly. The United States has implemented aggressive economic incentives to promote fuel ethanol, offering a tax rebate of 51 cents per gallon of fuel ethanol (equivalent to 13.5 cents per liter). To further expand the use of biofuels, the Energy Act of 2005 recently passed by the U.S. Congress established quotas for renewable fuel use, requiring that a certain amount of renewable fuel be included in gasoline consumption, with these amounts increasing over time. From 2006 to 2012, the annual consumption of renewable energy fuels was to increase from 4 billion gallons (12 million tons) to 7.5 billion gallons (23 million tons). At the same time, the United States is actively developing technologies for producing fuel ethanol from cellulose in order to expand the available biomass resources and replace petroleum on a larger scale. The EU also attaches great importance to biofuels. However, due to the limited arable land per capita in its member states, as well as their location in temperate regions with poor agricultural conditions, these countries do not have the capacity to use large amounts of grain or sugarcane to produce fuel ethanol. Therefore, biofuels in the EU are primarily biodiesel, which is produced either from materials such as soybeans and rapeseed or from recycled used oil from animals and plants. Currently, the 15 former EU member states produce around 2 million tons of biodiesel per year, accounting for 90% of the world’s total biodiesel production; Germany alone produces about 1.5 million tons of biodiesel annually. Overall, the technologies for producing fuel ethanol from sugarcane and corn, and diesel from soybeans and rapeseed, are mature; however, production costs vary significantly depending on raw materials, location, and scale. At present, aside from Brazil where fuel ethanol produced from sugarcane can compete in cost with gasoline, the costs of other biofuels remain relatively high; therefore, certain policy support is needed to promote their use, with tax reductions being one of the commonly adopted incentives. Due to the high taxes imposed by the United States and the EU on gasoline, tax incentives for biofuels are very effective. Furthermore, in order to improve energy security, protect the environment, and promote the development of biofuels, many **have set targets for the development of biofuels. The goal set by the EU is for biofuels to account for 6% of transportation fuels by 2010 ； The goal set by the United States is to have biofuels account for 20% of transportation fuels by 2020 ； Sweden has proposed that after 2020, fuel ethanol produced from cellulose should completely replace petroleum fuels, thereby eliminating reliance on oil. Therefore, biofuels will gradually become an important energy source to replace oil. However, at present, the production of fuel ethanol using food products as the main raw material is constrained by costs and land resources. II. The Development of Biofuels in China China possesses mature alcohol production technologies and large-scale production capacity for alcohol, thus having the technical foundation necessary to develop biofuel ethanol. At the end of the last century, taking advantage of the relative surplus of food, our country began to develop biofuel ethanol. “During the 11th Five-Year Plan period, fuel ethanol production plants using aged grain as raw material were established in Henan, Anhui, Jilin, and Heilongjiang, with a total capacity of 1.02 million tons per year. The sale of ethanol-blended gasoline for use in vehicles is now underway in 9 provinces (5 provinces on a full scale, and 27 cities in 4 provinces). Limited by grain production, China will no longer expand the production of fuel ethanol made from grains in the near future. To expand the sources of biofuels, our country has independently developed a technology for producing fuel ethanol using sweet sorghum stalks (referred to as sweet sorghum ethanol). Pilot projects for growing sweet sorghum and producing fuel ethanol have been carried out in regions such as Heilongjiang, Inner Mongolia, Shandong, Xinjiang, and Tianjin; the experimental project in Heilongjiang Province has achieved an annual ethanol production capacity of 5,000 tons. At the current stage, **fuel ethanol is produced at designated facilities; as a result, this sweet sorghum ethanol cannot enter the transportation fuel market and is mostly used in low-quality baijiu. In addition, our country is also carrying out research and development on technologies for producing fuel ethanol from cellulose, and experimental production capacities of 600 tons per year have already been established in enterprises such as Fengyuan in Anhui. & The raw materials for biodiesel can be various waste or recycled animal and vegetable oils, as well as oil-rich plants such as jatropha (scientific name: Carapa guianensis) and Chinese tallow tree. Currently, some companies in China are collecting used cooking oil from the food service industry to produce biodiesel in accordance with U.S. biodiesel standards, with an annual production volume of around 50,000 tons. These biodiesels are supplied directly to transportation companies or used as fuel for factories and construction machinery. Some research institutions are already studying advanced breeding techniques for energy crops, biodiesel production technologies, and processing techniques for biological products, and have carried out small-scale industrial trials. In particular, the cultivation of oil-producing tree species such as Jatropha and Caragana, along with biodiesel production techniques, have reached a relatively mature stage, providing a technical foundation for their wider application. According to experts’ estimates, crops such as sweet sorghum, cassava, and sugarcane in our country can provide the raw materials needed to produce 30 million tons of biofuel ethanol per year. Oil-producing plants like jatropha and carob can supply the raw materials required for producing tens of millions of tons of biodiesel per year, while the recycling of used animal and vegetable oils can yield approximately 5 million tons of biodiesel per year. If breakthroughs are achieved in the technology for producing fuel ethanol or synthetic diesel from cellulose in agricultural and forestry waste, the annual production of biofuels could reach hundreds of millions of tons. Therefore, theoretically, the development potential for biofuels in our country is very large. However, since the development of biofuels in our country is still in its infancy, the progress of biofuel development faces many difficulties and challenges. In summary, the main issues are: (1) The raw material resources have not yet been secured. Constrained by insufficient food resources, the production of biofuels derived from food ingredients no longer has the resource conditions to expand further. In the future, the production of biofuel ethanol should shift to using materials such as sweet sorghum, cassava, and sweet potatoes, particularly sweet sorghum, which is suitable for cultivation in poor-quality lands like saline-alkali soils and wasteland, as well as in arid regions. Although our country has large areas of saline-alkali land, wasteland and other poor-quality lands suitable for growing sweet sorghum, as well as numerous barren mountains and slopes suitable for planting oil-producing plants such as jatropha and Chinese gallnut, there is currently a lack of reasonable assessment and scientific planning for the utilization of these lands. At present, although a certain amount of oil crops such as jatropha have been planted in the southwestern region, it is not sufficient to support the large-scale production of biodiesel. Therefore, the lack of available biofuel resources is a key factor restricting the large-scale development of biofuels. (II) The foundation for technology industrialization is weak. Although our country has achieved industrial-scale production of fuel ethanol using grains as raw materials, the production of fuel ethanol from sweet sorghum is still in the technical testing stage. To achieve large-scale production, significant efforts are needed in areas such as production processes and industrial organization. The technology for producing biodiesel from used animal and vegetable oils is relatively mature, but its potential for further development is limited. The technology for producing biodiesel from oilseed plants is still in the research and experimental stage, and large-scale production can only begin after industrial trials have been conducted. Technologies for cellulose biomass fuels such as ethanol and biosynthetic diesel, which hold great potential as backup resources, are still in the research stage and are far from industrial production. Therefore, the weak industrialization foundation for biofuel technology is also a key factor restricting the large-scale development of biofuels. : (III) The product has weak market competitiveness. Due to various factors such as the source of raw materials, production technology, and industrial structure, the production cost of fuel ethanol in China is relatively high. At present, the cost of fuel ethanol produced from aged grain is around 4,500 yuan per ton. **Financial subsidies are provided (currently, the subsidy amounts to 1,370 yuan per ton of fuel ethanol; this amount may decrease as oil prices change). According to experts’ estimates, the cost of producing fuel ethanol from materials such as sweet sorghum and cassava is around 4,000 yuan per ton. When compared on an equivalent heat value basis with gasoline, fuel ethanol can be profitable only when the price of gasoline reaches over 6 yuan per liter. Currently, **the annual financial subsidy for 1.02 million tons of fuel ethanol amounts to around 1.5 billion yuan; under the existing technical and market conditions, increasing the production of fuel ethanol requires substantial financial support. The production technologies for fuel ethanol and biodiesel using non-food crops such as sweet sorghum and jatropha are only just entering the stage of industrial pilot testing; the level of industrialization is still very low, and their competitiveness in terms of cost remains relatively weak at present. Therefore, biofuel costs and oil prices are key factors restricting the development of biofuels. (IV) The policy and market environment are imperfect. Since 2000, **pilot production and sales of fuel ethanol have been organized, and a policy framework comprising technical standards for fuel ethanol, production bases, sales channels, financial subsidies, and tax incentives has been established, enabling initial experience to be gained in the production and promotion of fuel ethanol. However, due to the limited potential for fuel ethanol produced from grain as a raw material, and in order to avoid negative impacts on food security, **strict regulations have been imposed on the production and sale of fuel ethanol. Only four designated companies are allowed to produce fuel ethanol, and they receive financial subsidies. Sinopec and CNPC are responsible for blending and selling ethanol-based gasoline. In recent years, although many companies and individuals have attempted to produce or sell fuel ethanol, they are restricted by current policies and are unable to receive financial subsidies or gain access to gasoline distribution channels. The ethanol produced by some companies and individuals using sweet sorghum stalks cannot enter the market for transportation fuels. Regarding the production of biodiesel, **no relevant policies have been established; in particular, there are no standards for biodiesel, nor are there any proper channels for its sale.** Therefore, an imperfect policy and market environment is also a significant factor affecting the development of biofuels. III. Recommendations for Promoting the Development of Biofuels in Our Country To foster the development of biofuels in our country, we have set targets in the medium- and long-term development plan for renewable energy: by 2010, biofuels should replace 2 million tons of oil per year, and by 2020, they should replace 10 million tons of oil per year. Given the current conditions in China regarding biofuel resources, technology, market, and policies, to achieve large-scale development of biofuels, it is crucial to address the issues related to the sourcing of biofuel resources, product production, and market sales. In particular, the relevant **departments need to carry out work such as variety selection, planting planning, and the establishment of technical standards. They should also formulate investment, pricing, and tax policies that support the development of biofuels, ensure proper sales channels for these products, give full play to the leading role of large energy companies, and encourage the participation of private enterprises, so as to create a complete system for the production, blending, and sale of biofuels. Given the current situation of biofuels in our country, it is advisable to make an overall plan in three phases. “The 11th Five-Year Plan period was primarily a stage for the industrialization of technologies, during which efforts were focused on technology research and development as well as resource preparation; industrial pilot projects and demonstration projects were established to facilitate the industrialization of these technologies ； “The 12th Five-Year Plan period was primarily a stage of scaled development; building on the implementation of experimental and demonstration projects, efforts were made to expand the market demand for biofuels and establish a biofuel industry of appropriate scale. At the same time, research and development in technology as well as large-scale cultivation of resources were continued, with the aim of improving technical standards and resource supply capabilities and thereby reducing production costs significantly. After 2015, there was large-scale development of biofuels; by 2020, the consumption of biofuels was to account for around 15% of all transportation fuels, thereby establishing a biofuel industry with international competitiveness. It is recommended to promptly carry out the following tasks in the near future: (1) Conduct a survey and assessment of available land resources and develop plans for growing energy crops. Bioenergy resources are a prerequisite for the development of biofuels. In order to assess the potential of biomass energy resources in our country as well as the cultivation conditions for energy crops and oilseed crops, it is recommended to **allocate funds** for the National Development and Reform Commission, in conjunction with the Ministry of Agriculture and the Forestry Administration, to carry out surveys and assessments of the land resources suitable for growing energy crops such as sweet sorghum, cassava, and jatropha, as well as oilseed plants. On this basis, planting plans for such crops can be formulated. In regions such as Heilongjiang, Shandong, Xinjiang, Guangxi, Sichuan, and Guizhou, which already have a solid foundation for the cultivation of energy crops and oilseed plants and possess great resource potential, demonstration areas for the supply of biofuel raw materials are being planned and established. These areas aim to provide a reliable source of raw materials for carrying out pilot projects related to non-grain fuel ethanol and biodiesel, as well as to facilitate their large-scale development. (II) Establish pilot demonstration projects for large-scale non-food biofuels. Based on thorough technical evaluation and economic analysis, and by making use of existing resources and technological advantages, demonstration projects for fuel ethanol produced from sweet sorghum are being established in regions such as Shandong, Heilongjiang, Inner Mongolia, and Xinjiang ； Demonstration projects for fuel ethanol produced from sugarcane and cassava are being established in Guangxi, Hainan, and other regions, with each project having an annual production capacity of 50,000 to 100,000 tons of fuel ethanol. Pilots for biodiesel production using oil-rich plants such as Jatropha are being carried out in Sichuan, Guizhou, Yunnan and other regions, with initial plans to establish 2-3 demonstration projects capable of producing around 50,000 tons of biodiesel per year. Pilot demonstration projects can be carried out by **organizing the provision of raw material resources and a market sales system, and selecting investors through public bidding. (III) Establish and improve the biofuel procurement and distribution system as well as relevant policies. The existing fuel ethanol sales system, which uses grain as a raw material, should be expanded to include the sale of liquid fuels made from non-grain crops such as sweet sorghum, sugarcane, and jatropha. CNPC and Sinopec should establish systems for the procurement, distribution, and sale of non-grain biofuels across the country as needed, and all non-grain biofuels that meet the quality standards should be purchased at **specified prices. The purchase price of non-food fuel ethanol is determined and announced by the price regulatory authority under the State Council in accordance with the principles that facilitate the development of non-food biofuels. At the same time, drawing on the existing financial and tax incentives for ethanol produced from aged grain as fuel, financial and tax incentives will be established for the production and sale of ethanol from non-grain sources and biodiesel. The regulations regarding the production and sales of non-food biofuels, as well as price and fiscal tax policies, are formulated by the **Development and Reform Commission in conjunction with relevant departments. (IV) Strengthen the research and development of biofuel technologies and the construction of industrial systems. Biomass fuels are important alternatives to petroleum, playing a crucial role in ensuring energy security, protecting the environment, and achieving sustainable development. Although biofuels have developed rapidly in recent years, overall they remain emerging new energy technologies. Strengthening research and development in biofuel technology is an important foundation for promoting the development of biofuels. It is recommended to allocate funds to support the research, development, and commercialization of biofuel technologies, including the selection of biological resource varieties as well as production and processing techniques; in particular, more support should be provided for the research and development of technologies for converting cellulose biomass into liquid fuels. It is recommended that the Ministry of Agriculture and the **Forestry Bureau establish a technical service system for the breeding and cultivation of energy crops and oil-bearing plants. Efforts should be made to select, improve these crops and trees, as well as to enhance cultivation techniques. Corresponding bases for breeding high-quality seeds and raising seedlings should be set up to provide seeds, seedlings, and technical support for the large-scale cultivation of energy crops and oil-bearing plants, thereby helping to establish and improve China’s biofuel industry framework as soon as possible. Source: NDRC website