China to expand production and use of ethanol; 2020 E10 mandate would make China 3rd largest ethanol consumer
Xinhua reports that China’s State Administration of Grain (SAG) said that China will expand production and consumption of bioethanol fuel this year as the country seeks more channels to use corn and grain stockpiles.
Years of government support for corn farmers—paying Chinese corn producers more than twice the international price level until 2016—have left China with a substantial stockpile. To help make use of the excess stock, China in September 2017 announced a plan for nationwide use of E10 gasoline by 2020, up from 11 trial provinces. Achieving this target would require ethanol consumption in China, the largest motor vehicle market in the world, to at least quadruple within the next three years, according to an analysis by the Center for Agricultural and Rural Development (CARD) at Iowa State University.
|China’s end-of-year corn stock estimates (2017/2018 values forecasted). Source: USDA FAS. Click to enlarge.|
SAG said that it will accelerate the use of grain stockpiles and reform grain storage mechanisms to make them more market-oriented. Data from the National Bureau of Statistics showed about 618 million tonnes of grain were produced in 2017, the second highest output recorded.
In 2016, China produced more than one billion gallons of ethanol, making it the fourth-largest ethanol producing country/region in the world after the United States, Brazil, and the European Union. From 2004 to 2016, the average annual production growth rate was 16.8%, according to CARD.
2018 fuel ethanol production is forecast at 1.04 billion gallons US. If China were to meet the 2020 national mandate of E10, it would require an extra 3.6 billion gallons of ethanol, putting the country ahead of the EU to become the worldÆs third-larget ethanol consumer.
The 2017 plan also calls for China to shift renewable fuel production to commercial-scale cellulosic ethanol by 2025. If realized, this, along with China’s ongoing corn sector reform, would fundamentally transform the coarse grains, distillers’ dried grains and ethanol markets in China, according to a 2017 analysis by the US Department of Agriculture (USDA).