5.3 Discussions on results on Peoplefs Republic of China

5.3.1 Cost analysis

The technology is a common technology, and nothing is new, or they did not provide us with the innovative technology.  The production cost is higher than gasoline price even in China.  The production of protein and DDGS helps increase in income, but its contribution is limited.  The income is as follows for 1 Mg of ethanol.

Table 5.3.1-1.  The income by the production of 1 Mg of ethanol

Item

Amount

Unit selling price

Selling price

Ethanol

1 Mg

4600 RMB/Mg

4600 RMB

(Governmental support)

 

1300 RMB/Mg

1300 RMB

DDGS

0.5 Mg

1000 RMB/Mg

500 RMB

Protein

0.2 Mg

7500 RMB/Mg

1500 RMB

   On the other hand, the price for feedstock and coal is as follows for 1 Mg of ethanol.

Table 5.3.1-2.  The price of feedstock and coal for the production of 1 Mg of ethanol

item

Amount

Unit price

Price [RMB/Mg-EtOH]

Wheat

3.3 Mg

1500 RMB/Mg

4950 RMB

Coal

0.2 Mg

270 RMB/Mg

50 RMB

Enzymes

0.01 Mg

20000 RMB/Mg

200 RMB

Labor

600 persons

20000 RMB/person yr

40 RMB

Initial cost depreciation

   

3260 RMB

In the above calculation, the selling price of ethanol is determined by the government to be 0.9111 of the gasoline price for the same volume.  The production cost is higher than the selling price, and thus the government supports 1300 RMB per Mg of ethanol.  The price of wheat was assumed to be the same as that of corn, 1500 RMB/Mg.  The cost for coal and enzymes are negligible.  The labor cost was estimated from the information that the average income of the people in rural area is 20,000 RMB/year while the company employs 600 people and produces 300,000 Mg of ethanol per year.  The economic balance allows 3260 RMB for the initial cost depreciation, which corresponds to only 1.3 years of depreciation period since the initial cost is 1.3 billion RMB..

The fact that the government supports fuel ethanol by 1300 RMB/Mg means that uncontrollable production of ethanol will give a bad impact to the governmental budget.  So, the government gives approval to the factories for production of fuel ethanol.  Now, there are only 4 plants that is approved, and due to the increasing price of the crops, the government showed the attitude that they will not approve the ethanol production from food crop such as corn and wheat any more.

5.3.2 Competition of the use of corn and wheat among food, ethanol, animal feed, and so on

In China, the current annual production of ethanol is about 1.2 million t/y as mentioned in 4.3.3.  The targets on bioethanol production that the government sets are 5 million t/y in 2010 and 15-20 million t/y in 2020.  There must be competition of the use of grain among food, ethanol, animal feed, and so on.  But the arable agricultural land is already at the upper limit.  At the present moment, the changeover from animal feed to ethanol has occurred.  The central government wants to control the market prices of corn and wheat.

Due to the ethanol production, the unit price of wheat has increased 4 RMB/kg in Henan Province.  Although the higher market price of food is a problem, the local governments are strongly going to increase the ethanol production.  One reason is that the annual income of farmers has increased from 800 RMB/y in 2002 to 1,500 RMB/y in 2006, and other is that young people in rural areas are expected to stay there; after all, the ethanol production will make farmers and rural areas happy.

In China, the annual income of people living in cities is about 10 times more than that of people living in rural areas.  The steep rise of the market price of corn and wheat is not good.  But when the rise is gentle, people in cities will pay a little bit more and people in rural areas will earn a little bit more, that is, gredistribution of wealthh may happen.

5.3.3 Sustainable agriculture

Although there is the changeover of the use of grain from animal feed to ethanol as mentioned above, solid residues from ethanol production, which are rich in nutrition, are utilized for animal feed instead in the Nanyang plant.  Methane is produced from waste water at the plant, and utilized as heat and power.  Compost is used in part.  Trucks for transporting the feedstock to the plant use E10 for fuel.  Agricultural residues are sold as raw material for pulp production.

As mentioned in the discussion on the ethanol production in Thailand (5.1.2), a complete waste recycling within a region may be impossible.  But the efforts to increase the recycling, in and around the Nanyang plant, like the case in Thailand, are being made.

5.3.4 Discussion at the Institute of Energy and Environmental Protection (IEEP), CAAE

At the Institute of Energy and Environmental Protection, CAAE, ethanol production from lignocellulose was discussed from the point of view of sustainability.

Production cost of fuel ethanol from lignocellulose is expensive even in China.  Prof. Xin said that that would improve the income of farmers.  But the potential amount has not been estimated yet, so the available amount is unknown.  Chinese Ministry of Agriculturefs intention is not only energy production but also the increase of farmersf income.  Seventy per cent of the Chinese population are farmers and live in rural areas, where there are power distribution grids but they do not have sufficient money to buy the electricity.  The government plans that 10% of farmers would have biogas facilities, and the government support subsidies for the construction of digester.  1,000-1,200 RMB is paid for one facility, and the annual budget is 2.5 billion RMB (Average annual income of farmers in North-west China is 2,000 RMB for one family (four persons)).

As the application of lignocellulose, pellet production for heat will make farmers happy, and the government supports this principle.  From the point of view of conversion efficiency, pellet production is the highest and ethanol production is the lowest, but pellets cannot drive cars.

With regard to other agricultural products for bioenergy, power-generation by gasification of straws was developed, and the technology is also exported to Thailand.  Now the logistics of raw material, e.g., how long the straws can be transported, and how much amount and price farmers will sell, is examined.  PetroChina, China's biggest producer of oil, imports Jatropha oil and palm oil from Indonesia.  Chinese Ministry of Forestry plans Jatropha plantation in south-west of China, and six million t/y of bio-diesel production is planned.  In China, another 50 million hectare of land can be used for agriculture, most of which are in bad conditions.  Sweet sorghum, which grows even on oligotrophic soils, can be cultivated 7.73 million hectare in the year 2010 and 18.65 million hectare in the year 2020.  Switchgrass can be also utilized for bioenergy.  However, in the cultivation of all agricultural products as mentioned above, the water resource management will be the most important problem.

Consequently, which kind of energy is necessary for farmers, biogas, pellet, ethanol, or diesel?  Prof. Dehua Liu of Tsinghua University said that the current situation was which energy farmers could access.