DME can be made from natural gas, coal or biomass.

The Shanghai Coking DME project is targeted at Shanghai’s diesel bus operators. Around 15,000 of Shanghai’s 19,000 buses are diesel-powered, and DME use would save more than 300 million yuan (US$37.4 million) a year in fuel costs at current petroleum diesel prices, plus would reduce operational emissions.

The current DME production facility can produce enough DME to power hundreds of buses, and it can expand production if the market shows strong demand. The city government has listed the industrialization of DME fuel as one of its major tasks in a bid to reduce expensive oil consumption as well as to trim emission and noise.

In order to use DME fuel, we only have to redesign the engine (of each bus) and that only costs some 10,000 yuan [US$1,200] for every vehicle. The cost is not expensive at all.

—Huang Zhen, an alternative fuel expert at Jiao Tong University

Jiao Tong University has worked with Huayi Group and Shanghai Automotive Industry Corp to design the country’s first DME-powered bus, which went into trial use in Shanghai last year. (Earlier post.)

China has several large-scale DME production projects underway. Japan’s Toyo Engineering will design and build China’s first major coal-to-dimethyl ether (DME) with Ningxia Coal Group in the northwestern Ningxia Hui Autonomous Region. The Ningxia DME plant will have an initial production capacity of 210,000 tonnes of DME annually and is to be completed at the end of 2007. (Earlier post.)

Also, the Rockefeller family is taking a $100 million stake (31%) in Shandong Jiutai Chemical Co, and teaming up on the construction of a $677-million (5.6 bln yuan) DME with a targeted annual capacity of 1 million tonnes. (Earlier post.)

Some estimates see demand for DME in China reaching 5.0–10 million tonnes within five years.