- JILIN, China (Reuters) --
Jilin province, home to China's first car factory and also its biggest
corn producer, is putting corn and cars together in a project to ease the
country's exploding pollution ahead of the 2008 Beijing Olympic Games.
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- Like many other agriculture giants such as Brazil, the
United States, and India, the northeast province is using its huge farm
surplus to make organic fuel that cuts pollution, and reduces dependency
on petroleum imports at the same time.
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- Industry sources say, China, which is the world's fastest
growing car and energy market, could extend the use of ethanol gasoline
throughout the country by 2005 if initial exploratory steps are successful.
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- An Olympics shrouded in smog is not a scene China wants
to show the world, but that is what it will look like, unless the traffic
pollution in major cities is brought under control.
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- Turning grains into fuel also happens to allow the government
to continue to subsidize agriculture outside its obligations under the
World Trade Organization (WTO), avoiding more social unrest from farmers
who are now exposed to global competition.
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- In Jilin, not far from the provincial capital Changchun,
one of the world's largest fuel ethanol plants is currently gearing up
for full operation.
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- From October 18, all car, truck and bus drivers in the
province must blend into their gasoline 10 percent of the biofuel distilled
from corn. A similar policy nationwide would make a significant dent in
regular gasoline consumption, which totaled more than 37 million tonnes
last year.
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- Fuel ethanol cuts greenhouse gas emissions that are held
responsible for global warming. It can be produced also from wheat, sugar,
rapeseed, palm oil, cassava or even recycled food oil, such as old frying
oil collected from fast food restaurants.
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- SUBSIDIES
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- Jilin Fuel plant is one of four Chinese ethanol plants
under construction, including one in neighboring Heilongjiang, one in the
eastern province Anhui, and another in wheat-producing Henan.
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- "Such projects are viable only in grain-producing
areas," Liu Yi, technical department manager told Reuters at the plant
in the outskirts of Jilin city, from where the hills of the province's
vast corn fields roll off far away and out of sight.
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- Jilin, which is three times the size of Austria, accounts
for more than 10 percent of China's annual corn output of about 120 million
tonnes, the second biggest after the United States. It takes about three
tonnes of corn to produce one ton of ethanol.
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- Jilin Fuel will purchase corn from farmers and store
it in silos at the sprawling complex. The air here is filled with a sweet
smell, similar to a brewery, as it conducts test runs.
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- The plant cost 1.94 billion yuan (about $235 million)
and is equipped with its own power generators as well as water treatment
facilities, still a rarity for China.
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- Along with Beijing, the local government has provided
favorable taxes and low-interest loans to the company. It has also promised
subsidies to make up for the difference between gasoline and ethanol prices.
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- Liu calculated ethanol to cost about 4,000 yuan ($484)
per tonne, compared with gasoline at 2,700 yuan ($327) a tonne.
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- With car sales doubling this year to over two million,
the International Energy Agency forecast that China would overtake Japan
next year as the second largest oil consumer after the United States.
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- Jilin Fuel Ethanol, a joint venture between the China
National Petroleum Corp (CNPC), China Resources Enterprises Ltd and Jilin
Grain Group (JGG), is to convert 900,000 tonnes of corn into 300,000 tonnes
of fuel ethanol each year. It plans to double its capacity to 600,000 tonnes
after that.
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- ETHANOL EQUALS HAPPY FARMERS
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- China has recently been trying to pull back from grain
export markets because it cannot continue to pay out the export subsidies
it used to under WTO trade rules.
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- "To help the fuel ethanol company is to help improve
farmers income, restructure the old agriculture system and help maintain
social stability," Hong Hu, governor of Jilin province, said. "It's
a top government agenda item."
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- Over the past decade, China accumulated massive grains
stocks as results of its policy of food security but these are now costing
a fortune in storage fees, and are depressing prices of new crop, which
hurts farmers.
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- Jilin alone is estimated to have over 20 million tonnes
of corn in stock.
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- "Maybe they are willing to say 'Okay this is in
the name of fuel security and environmental protection ... we'll do this',"
said one source in Beijing, who declined to be named. "And if the
prices of grains go too high, that's good for the farmers."
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20031017/sc_nm/environment_china_ethanol_dc
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