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Biofuel Policies in Asia

Biofuel Policies in Asia. Tatsuji Koizumi. Senior Economist, Policy Research Institute, Ministry of Agriculture, Forestry and Fisheries, Japan. FAO Expert Meetings 5 and 6, 18 February 2008, Rome, Italy.

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Biofuel Policies in Asia

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  1. Biofuel Policies in Asia Tatsuji Koizumi Senior Economist, Policy Research Institute, Ministry of Agriculture, Forestry and Fisheries, Japan FAO Expert Meetings 5 and 6, 18 February 2008, Rome, Italy The Opinions expressed in this material belong to the author and doesn’t necessarily reflect those of Japanese government.

  2. Biofuel Production and Raw Materials in Asia Source: Chinese ethanol production data were derived from Law Concering Testing for the extensive Use of Ethanol Blended Gasoline for Automobiles and the Regulations Concering the Conduct of Testing for the Extensive Use of Ethanol Blended Gasoline for Automobiles, Japanese biofuel production data were derived from Executive Committee on Biomass Nippon Strategy (2006), Indian and Thailand’s biofuel data were derived from F.O.Licht (2007) and other production data were derived from PECC(2007). Note: Chinese, Indian and Thailand’s ethanol production data is 2005, other biofuel data is 2006.

  3. The Chinese Bioethanol Program (1) ・In order to deal with energy security and air pollution problems, the Chinese government is promoting the National bioethanol program ・In 2004, the government introduced the compulsory use of a 10% ethanol blended in gasoline (E10) in provinces of Helongjiang, Jilin, Liaoning, Henan, and Anhui ・The government expands the E10 program to 27 cities in the provinces of Shandong, Jiangsu, Hebei, and Hubei in 2006 ・The bioethanol production was approximately 1.0 million MT in 2005 ・ 80 % of bioethanol is made from corn in China

  4. Chinese corn production, consumption and ending stocks Regulation for corn-based ethanol production(2006.12) Bioethanol test plan started (2002) E10 Programs in 27 cities (2006～） (103 tons) E10 Programs in 5 states (2004.10～） Source: FAS, USDA, “PS&D”(2008).

  5. Chinese Bioethanol Program (2) • ・　Chinese government wants to regulate corn-based ethanol production • ・　Chinese government wants to diversify the sources of bioethanol production, especially to cassava • ・　Technological innovation is required for developing cassava-based bioethanol production

  6. Bioethanol Program in Japan ・ Japanese government will promote the use of rice straw and wooden biomass for bioethanol production, which will not compete with food consumption ・ Securing raw materials for bioethanol, reduction of production cost are needed to expand bioethanol utilization and production in Japan ・ Further technical innovation is the key factor to promote domestic bioethanol production from rice straw and wooden biomass (Second generation biofuels)

  7. Biofuel programs in India, Thailand and other countries ・　Molasses is the raw material for bioethanol production in Inida ・　The raw materials for bioethanol production are cassava and molasses in Thailand ・　Securing raw materials for bioethanol is a crucial problem in India and Thailand ・　High palm oil price is the obstacle to expand biodiesel production in Malaysia and Indonesia ・　The governments of the Philippines, South Korea, and other countries are promoting their biofuels programs from various agricultural sources

  8. Biofuel production which does not depend on food resources in Asia Japan (Bioethnaol from rice straw and wooden biomass) China (Bioethanol from straws and others) Indonesia, Thailand , India and other countries (Biodiesel from Jatropha curcas) <Jatropha curcus>

  9. Concluding Remarks ・　The governments in Asian countries are promoting biofuel programs to deal with energy security and environmental problems as well as to increase farm income ・　Various sources are being used as raw materials of biofuels ・　Increasing biofuel production would reduce the availability of food and feed ・　The governments in Asian countries are working for biofuel programs that will not adversely affect food availability ・　International frameworks to develop second generation biofuels are needed to promote each country’s own programs

  10. Thank you for your attention !! For any comments and questions: Tatsuji Koizumi, Ph.D. koizu@affrc.go.jp

  11. Ⅰ. Bioethanol Program in China ・ The number of automobile in China is increasing <10 3 Cars> Source: China Statistical Yearbook 2005

  12. ・ Chinese petroleum consumption is increasing and its import of crude oil and oil products are rising too <10 3 tons> Source: China Statistical Yearbook 2005

  13. ・The increase in petroleum consumption is causing serious air pollution problems ・In order to deal with energy security and the air pollution problem, the Chinese government is strongly promoting the National bioethanol program ・In June 2002, the government started to make the use of bioethanol blended gasoline mandatory

  14. ・　Chinese Bioethanol Program High Economic Growth Motorization Promoting Industrialization Increasing petroleum consumption Surging gasoline price Concern for Environment Concern for Energy Security Bioethanol Program ( 2002～） Demand Inferior Corn

  15. The Chinese Bioethanol Program ・In 2004, the government introduced the compulsory use of a 10% ethanol blended in gasoline (E10) in provinces of Helongjiang, Jilin, Liaoning, Henan, and Anhui ・The government expands the E10 program to 27 cities in the provinces of Shandong, Jiangsu, Hebei, and Hubei in 2006 ・The bioethanol production was approximately 1.0 million MT in 2005

  16. ・　Bioethanol Production Sites China Resources Alcohol Co, Heilongjiang (Corn) China Resources Alcohol Co, Hebei (From 2007: Sweat potato, corn etc) Jilin Fuel Ethanol Co, Jilin (Corn) Henan Tian Guan Fuel-Ethanol Co, Henan (Wheat) China Resources Alcohol Co, Guangxi (From 2007, Cassava) Anhui BBCA Biochemical Co. (Corn) Source: Law Concerning Testing of the Extensive Use of Ethanol-Blended Gasoline for Automobiles and Regulations Concerning the Conduct of Testing of the Extensive Use of Ethanol-Blended Gasoline for Automobiles (2006) Tian Guan Fuel-Ethanol Co.Hubei (From 2007, Grains)

  17. Corn is the major source of bioethanol in China • Corn • ・ 80 % of bioethanol is made from corn in China • ・ Ethanol facilities in Heilongjiang, Jilin, and Anhui use corn • 2) Wheat • ・ Wheat is used in Henan • Cassava • ・ The Guagxi Zhuang autonomous region plans to build a bioethanol plant • ・ The plant is scheduled to begin operations in October of 2007 at a • production capacity of 110,000 MT • Others • ・ Potato, sorghum, rice, sugar, and lignocellulose are on experimental stage • for bioethanol production

  18. ・　Chinese bioethanol production cost and agricultural production Production(103 tons) Production cost (Yuan/ton) Note: Production data is derived from FAS, USDA, PS&D (2006) Production cost is derived from the Chinese National Development and Reform Commission

  19. Corn use for Bioethanol production ・ Although Chinese central government ordered to use inferior corn for bioethanol production, facilities in Heilongjiang and Jilin use normal corn ・ If China continues to expand corn-based bioethanol production, corn utilization ratio for ethanol will increase ・　If Chinese government expands ethanol production from corn, corn consumption for ethanol is projected to increase and impact not only the domestic corn market but also the world corn market (Koizumi and Ohga 2007).

  20. Effect of Chinese E10 Program ( T.Koizumi and Ohga.K, Impacts of the Chinese Fuel-Ethanol on the World Corn Market : An Econometric Simulation Approach, The Japanese Journal of Rural Economics, Volume 8, 2006, pp. 26-40) ・Shandong, Jiangsu, Hebei, and Hubei will start the E10 program from 2007/08. As a result of this new program, the nine provinces are assumed to promote the bioethanol program at the provincial level from 2007/08 ・As a result of the expanded program, corn consumption for bioethanol is projected to increase from 6,240 thousand MT in 2007/08 to 9,946 thousand MT in 2014/15 ・World export of corn is projected to increase by 3.2% and world price of corn go up to 1.6% in 2014/15

  21. ・ Chinese central government stated to regulate corn-based fuel ethanol production (Statement from National Development and Reform Commission in 21/12/2006) ・　The crucial point of this regulation is whether private, unauthorized bioethanol facilities will obey it ・　The national Development and Reform Commission provide mid-long term plan of renewable fuels in September 2007 ・　The plan indicated that ethanol from non-food grade would be 2 million tons in 2010 and 10 million tons in 2020

  22. ・If China expands ethanol production from cassava, China will have to rely on imported cassava ○Chinese cassava imports Source: USDA, Grain Report, China, Peoples Republic of Bio-fuels An Alternative Future for Agriculture, CH6049 (2006).

  23. Chinese bioethanol production and target to the future Source: National Development and Reform Commission (2007).

  24. Ⅱ. Bioethanol program in Japan • ・　Biomass Nippon Strategy was formulated in December 2002, focus on biomass recycling • - Revised Biomass Nippon Strategy • ・　Kyoto Protocol was put into effect in February 2005 • ・　Revised Biomass Nippon Strategy was formulated in March 2006 • ・　Promotion of utilization of biomass for transportation fuel, particularly of domestic biomass

  25. Points of Revised “Biomass Nippon Strategy” in succeeding years March, 2006 December, 2002 New “Biomass Nippon Strategy” was decided by the cabinet. “Biomass Nippon Strategy” was decided by the cabinet . Entry into force of the Kyoto Protocol (February, 2005) Prevent Global Warming Promotion of Biofuels ・Condition ordering for leading active introduction of biofuels World wide progress of promotion of biofuels Formulate recyclable society ・Further promotion of domestic biofuels Backset of utilization of unused biomass Nurture strategic industry Promotion of the Establishment of the Biomass Town by utilizing of unused biomass Start of “Biomass Town” ( from 2005) Activate rural society ・Target: 300 cities by 2010

  26. For Further Promotion of Domestic Biofuels Response beyond framework of food production In the future Current status [ Arable land ] [ Farmland ] Food Animal food Food Mutual use as required Animal food [Abandoned arable land, etc.] Energy raw materials ○Farmland should be put to maximum use as farmland, and an all-out effort should be made to plant crops in abandoned arable land and every possible arable land in this country. ○Farmland planted with crops should be used to provide raw materials for bio fuel and, when it comes down to the crunch, serve as the main food provider.

  27. Current Bio-Ethanol Production (Japan) Japanese bio-ethanol production is at an experimental stage Current production level is 30kl (April 2006) Tokachi area, Hokkaido (From wheat and corn unsuited to food) Tomakomai city, Hokkaido (Rice) Shimizu town, Hokkaido (Sugar beet, wheat unsuited to food) Shinjo city, Yamagata (From sorghum) Niigata (From Rice) Maniwa city, Okayama (From wasted woods) Sakai city, Osaka (From wasted woods) Kitakyushyu city, Hukuoka (From wasted foods) Ie village, Okinawa (From Molasses) Miyako Island, Okinawa (From Molasses)

  28. Production cost need to be reduced to expand bio-ethanol production in Japan JP Yen/Liters

  29. Effect of E3 Introduction ・ 　If Japan start E3 from 2012 and import bio-ethanol from Brazil, it is projected that Bio-ethanol consumption to increase at 1,756 thousand kl in 2015 ・　The expansion of Japanese bio-ethanol import from Brazil is predicted to impact on not only Brazilian but also world sugar markets （T. Koizumi, “Impacts of Japanese Bio-ethanol Import on the World Sugar Markets”; Econometric Simulation Approach, Japan Journal of Rural Economics, 2007,pp632-639.) Japanese gasoline and Bio-ethanol consumption <103 kl> Source: Authors’ estimate based on Japanese Energy Supply and Use (2006) and International Energy Outlook (2006)

  30. Ⅲ．Malaysian Biodiesel Program (1) ・　Malaysia is the world largest exporter of palm oil, and it is the second largest producer of palm oil ・ Malaysian petroleum consumption has increased rapidly since 1990 ・　The government of Malaysia is promoting palm oil based biodiesel program ・　Benefiting from more stable prices of palm oil and enhancing exports of biodiesel are main incentives to promote biodiesel program

  31. International Palm Oil price (Palm Olein RBD,Mal.cif.Rotterdam) ＜US$/Tonne＞ Source: Oil World, “Oil World Annual 2006” (2006) Oil World, “Oil World No.21, Vol.51. (2008)

  32. Biodiesel and diesel price in Malaysia Source: Koizumi (2008)

  33. Malaysian Biodiesel Program (2) ・ Biodiesel production in Malaysia is estimated 158 thousand tons in 2006 (PECC, “Pacific Food System Outlook 2006-2007”) ・ The government of Malaysia has granted licenses to 96 biodiesel plants. 3 plants are in operation in 2007 ・　As a result of high production cost, biodiesel production will not expand ・　The government of Malaysia suspended new biodiesel operations ・　High palm oil price is the obstacle to expand biodiesel production in Malaysia

  34. Ⅳ．　Biodiesel program in Indonesia ・　The government of Indonesia started biofuel program in 2006 ・　 Its main objectives are the enhancement of employment and the alleviation of poverty ・　Palm oil is used for biodiesel production in Indonesia ・　The government plans to increase biodiesel production: 2.4 million KL in 2010, 4.5 million KL in 2015, and 10.2 million KL in 2025 (Road Map for Biofuel Development 2006) ・　High palm oil price limits biodiesel production in Indonesia

  35. Biodiesel and diesel price in Indonesia <RP/L> Source: Koizumi (2008)

  36. V．Bioethanol program in India ・　Indian bioethanol production is 1.7 million kl in 2006, world’s 4 th producer ( F.O.licht 2007 ) ・　The government has promoted bioethanol utilization and production since 2003 ・　Molasses is the raw material for bioethanol production ・　The government has promoted E5 program in nationwide since October 2003 ・　Securing raw materials for bioethanol is a crucial problem in India

  37. Ⅵ．Biofuel program in Thailand and others ・　The government promoted bioethanol blended gasoline since 1996 ・　The ethanol production is 383 thousands kl in 2006 (F.O.Licht2007) ・　The raw materials for bioethanol production are cassava and molasses ・　Securing raw materials for bioethanol is a serious problem in Thailand ・　The governments of the Philippines, South Korea, and other countries are promoting their biofuels programs from various agricultural sources

  38. China will import bioethanol from Brazil? Source: Chinese bioethanol cost is derived from Koizumi (2005). Brazilian production cost is derived from Macedo (2005).

  39. Biodiesel in Indonesia and EU Source: Koizumi (2008)

  40. Biodiesel in Malaysia and EU ＜US$/L＞ Source: Koizumi (2008)

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