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Lux: alternative fuels in China could replace up to 483B GGE in 2020; coal-to-ethanol conversion offers near-term potential

China’s shift toward alternative fuels in order to cut its reliance on imported oil is creating large opportunities, notably in natural gas vehicles (NGVs) and in the conversion of coal to ethanol, according to a new report from Lux Research. China is seeking to reduce its imports of oil from the current 50% of domestic demand. Further, its plans to limit coal-fired power plants due to pollution problems, means that oversupplied coal is available for conversion to alternative fuels.

Lux Research analysts evaluated China’s alternative fuels landscape to assess opportunities and identified potential domestic partners across diverse feedstocks, technologies and fuels. Among their findings:

  • Government programs tap natural gas. China’s push toward liquefied natural gas (LNG) has brought new opportunities for players in the fast-rising natural gas vehicle (NGV) market. Initiatives aim at a target fleet of 1 million heavy-duty NGVs, creating the material and device demands for LNG storage and transportation.

  • Coal-to-ethanol is on verge of large-scale commercialization. Coal-to-ethanol is a short-term winner on account of the huge quantities of coal available in China. With Chinese energy giants and academic institutes leading research, coal-to-ethanol is poised for large-scale commercialization.

  • Renewable resources. China has tremendous renewable foodstock resources, estimated at 123 billion gallons of gasoline equivalent per year (BGGEY) and fossil resources (coal and natural gas) worth 360 BGGEY by 2020. However, logistical barriers exist, notably in biomass and waste collection.

While the opportunity for alternative fuels is vast, the opportunities are diverse, ranging from coal-to-ethanol and natural gas vehicles in the near-term to waste-to-liquids in the long term. Downstream partnerships with major state-owned energy heavyweights are particularly important for penetrating the transportation and fuel distribution network.

— Andrew Soare, Lux Research Senior Analyst

The report, titled “Guiding Through the Dynamics of China’s Alternative Fuels Market,” is part of the Lux Research Alternative Fuels Intelligence service.



Is replacing imported Oil with imported NG from Russia and imported Coal from Australia such a good deal?

What would be the NET change in pollution and GHG?

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