JILIN, China, October
21, 2003 -- CropChoice news-- Reuters, 10/17/03: Jilin
province, home to China's first car factory and also its biggest
corn producer, is putting corn and cars together in a project to
ease the country's exploding pollution ahead of the 2008 Beijing
Like many other agriculture giants such as Brazil, the United States,
and India, the northeast province is using its huge farm surplus
to make organic fuel that cuts pollution, and reduces dependency
on petroleum imports at the same time.
Industry sources say, China, which is the world's fastest growing
car and energy market, could extend the use of ethanol gasoline
throughout the country by 2005 if initial exploratory steps are
An Olympics shrouded in smog is not a scene China wants to show
the world, but that is what it will look like, unless the traffic
pollution in major cities is brought under control.
Turning grains into fuel also happens to allow the government to
continue to subsidize agriculture outside its obligations under
the World Trade Organization (WTO), avoiding more social unrest
from farmers who are now exposed to global competition.
In Jilin, not far from the provincial capital Changchun, one of
the world's largest fuel ethanol plants is currently gearing up
for full operation.
From October 18, all car, truck and bus drivers in the province
must blend into their gasoline 10 percent of the biofuel distilled
from corn. A similar policy nationwide would make a significant
dent in regular gasoline consumption, which totaled more than 37
million tons last year.
Fuel ethanol cuts greenhouse gas emissions that are held responsible
for global warming. It can be produced also from wheat, sugar, rapeseed,
palm oil, cassava or even recycled food oil, such as old frying
oil collected from fast food restaurants.
Jilin Fuel plant is one of four Chinese ethanol plants under construction,
including one in neighboring Heilongjiang, one in the eastern province
Anhui, and another in wheat-producing Henan.
"Such projects are viable only in grain-producing areas,"
Liu Yi, technical department manager told Reuters at the plant in
the outskirts of Jilin city, from where the hills of the province's
vast corn fields roll off far away and out of sight.
Jilin, which is three times the size of Austria, accounts for more
than 10 percent of China's annual corn output of about 120 million
tons, the second biggest after the United States. It takes about
three tons of corn to produce one ton of ethanol.
Jilin Fuel will purchase corn from farmers and store it in silos
at the sprawling complex. The air here is filled with a sweet smell,
similar to a brewery, as it conducts test runs.
The plant cost 1.94 billion yuan (about $235 million) and is equipped
with its own power generators as well as water treatment facilities,
still a rarity for China.
Along with Beijing, the local government has provided favorable
taxes and low-interest loans to the company. It has also promised
subsidies to make up for the difference between gasoline and ethanol
Liu calculated ethanol to cost about 4,000 yuan ($484) per ton,
compared with gasoline at 2,700 yuan ($327) a ton.
With car sales doubling this year to over two million, the International
Energy Agency forecast that China would overtake Japan next year
as the second largest oil consumer after the United States.
Jilin Fuel Ethanol, a joint venture between the China National
Petroleum Corp (CNPC), China Resources Enterprises Ltd and Jilin
Grain Group (JGG), is to convert 900,000 tons of corn into 300,000
tons of fuel ethanol each year. It plans to double its capacity
to 600,000 tons after that.
Ethanol equals happy farmers
China has recently been trying to pull back from grain export markets
because it cannot continue to pay out the export subsidies it used
to under WTO trade rules.
"To help the fuel ethanol company is to help improve farmers
income, restructure the old agriculture system and help maintain
social stability," Hong Hu, governor of Jilin province, said.
"It's a top government agenda item."
Over the past decade, China accumulated massive grains stocks as
results of its policy of food security but these are now costing
a fortune in storage fees, and are depressing prices of new crop,
which hurts farmers.
Jilin alone is estimated to have over 20 million tons of corn in
"Maybe they are willing to say 'Okay this is in the name of
fuel security and environmental protection ... we'll do this',"
said one source in Beijing, who declined to be named. "And
if the prices of grains go too high, that's good for the farmers."