Page 42 - Biofuels for a More Sustainable Future

36 Biofuels for a More Sustainable Future

4.3 The China, India, and Brazil frameworks
4.3.1 China
Important reasons for promoting biofuels in China include the rapid growth
of number of vehicles and air quality connected issues, energy security, and
CO2 emissions problems (Hao et al., 2018, p. 645). China did not establish
binding national targets (but there are official projections of 10 Mt. of eth-
anol and 2 Mt. of biodiesel consumption in 2020) for biofuels consumption
or national mandatory quotas for producers, distributors, and sellers. How-
ever, it introduced other support schemes, especially demonstration pro-
jects, tax instruments, subsidies, and standards (Hao et al., 2018).
Moreover, E10 blending zones were established in 10 provinces and two
municipalities in 2016 (Beckman et al., 2018, p. 259).
A demonstration program started in 2002 involving two bioethanol pro-
ducers that provided bioethanol to two cities, and which was expanded later.
It included warranted price for bioethanol petrol equal to the price of pure
petrol with the same grade and specified trade price between bioethanol
producers and petroleum companies. Food security issues lead to hold back
projects based on crop-based fuel, promoting the development of noncrop-
based biofuels projects. Biodiesel projects were also developed, but in
limited number of regions. This might be associated with a low utilization
of biodiesel production capacity, which is in turn influenced by lack of
demand and problems with feedstock. The big companies have not incen-
tives for production of biodiesel because there is a lack of mandatory regu-
lations and the regional regulations are not sufficiently implemented. At the
same time, companies are afraid of decreasing benefits from selling conven-
tional fuels. Moreover, waste oil, which is the main biodiesel feedstock, is
mainly used as cooking oil. Such use is strictly prohibited by law, but the
financial benefits of using waste oil as cooking oil than sell to fuels companies
are higher (Hao et al., 2018, pp. 649–651).
Alike demonstration programs, also tax incentives and subsidy policies,
originally introduced for all types of bioethanol production, were with-
drawn for bioethanol produced from crop-based fuels and kept only for
noncrop-based biofuels. Tax exemption mechanisms and VAT reimburse-
ment were initially introduced for bioethanol production, such incentives
were gradually withdrawn in 2015. Similarly, previously introduced subsi-
dies were phased out in 2015, but not for noncrop-based biofuels. Tax
exemption was also kept for waste oil-based biodiesel.
As far as standards are concerned, China established four standards since
2001 that are the Denatured Fuel Ethanol (GB 18350), Ethanol Gasoline for