China’s Biofuels Market Grows, Remains on Subsidy Life-Support

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China’s pricing controls, subsidies and cultivation policies have played a critical role in shaping this USD 2.3 Bn market, but over-regulation has made it unattractive for profit making ventures and the much needed innovation they bring.

Beijing, China, January 06, 2011 --(PR.com)-- GCiS China Strategic Research has published a study of the China market for biofuels, an emerging alternative energy. Covering both ethanol and biodiesel, this study provides an in-depth look at the trends, participants and forecasts for the industry from 2009 to 2015.

The study finds a growing, multi billion dollar market, centered around government mandated "ethanol-only" areas of northeast and central China that accounts for 20 percent of China’s automotive fuel consumption. But the biofuel supply to each of these areas is a tightly run monopoly, conferred upon three of China’s largest State-owned enterprises: Sinopec, CNPC and the Cofco group. Further, the grain used as a fuel stock in nearly two-thirds of biofuels has been banned in new projects amid concerns of domestic food price inflation.

In some ways, the biodiesel and ethanol markets sharply contrast each other. Biodiesel suppliers are mostly privately owned, whereas all but one ethanol supplier is state-owned. The ethanol fuel industry is the result of careful state planning and control, while the biodiesel industry's growth is organic, its typical supplier a chemicals producer acting on an opportunity.

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