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Here Comes BioChina: Amyris, Others Bypass the 4 Myths of Business in the Middle Kingdom

Submitted by on April 19, 2017 – 12:06 pmNo Comment

by Jim Lane (Biofuels Digest)  From California arrives the very interesting news that Amyris has entered into an agreement with Blue California whereby its affiliates will provide access to its fermentation manufacturing in China and provide the necessary capital to produce No Compromise ingredients for Amyris.  Turns out that China sales have been doubling.

 

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The news prompts us to address the 4 Myths of BioBusiness in the Middle Kingdom. Here they are.

  • the focus is on exports
  • investment is tough from a cultural, regulatory and IP safety basis,
  • it’s all about money, reducing fossil fuel emissions — just look at Beijing’s pollution
  • a chronic worry about food supplies prohibits the diversion of any food feedstocks into renewable fuels

Turns out, that’s old thinking, and there’s a new China.

Restating the goals

First of all, with the Paris Climate Change Agreement, the country has pivoted to leadership on reducing emissions.

Specific to renewable fuels, as we reported in December, China is looking to double ethanol production to 4 million metric tons by 2020 as it aims to work through its untenable grain stocks. The country had aimed for 4 million tons of ethanol production by 2015 but its tight hold on grain kept that from happening. Second-generation from crop waste associated with grain production, like corn stover, is seen as key for meeting the 2020 targets despite acknowledgment that the technology is not ready for prime time. Feedstocks such as cassava and other non-grain feedstocks will be prioritized as well as grain not fit for human consumption.

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Now, China has a glut of aging corn grain that’s inedible. So, there’s been an effort on to boost consumption of its spoiled corn stocks for use in bioplastics and ethanol among other industrial uses.

The bad news, as we reported in March, the demand for these cheap inventories have not picked up nor have the industries grown significantly as a result of feedstock availability. Now China will be pressured further by farmers who are again suffering from low corn prices despite $5.7 billion in subsidies last year. One of the main corn-growing regions is calling for more ethanol blending and to deregulate ethanol production so private companies can also produce fuel rather than just public companies as is currently the case.

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Owing in part to the glut, China’s ethanol imports fell 98% between December and January to just 2,415 cubic meters, after China slapped a 30% import tariff which has US producers howling.

The tariff had been 5% since 2010. Platts reported seven cargos totaling between 260,000 and 440,000 cubic meters of ethanol scheduled for delivery during the first quarter were cancelled due to the tariff increase. Vietnam supplied 2,381 cu m of the imports, all of which were denatured.

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The story is mostly about ethanol — but there’s also a significant move on to tap the country’s waste stream of used cooking oil. For one, making biodiesel.

We reported last November that Bahrain-based ASB Biodiesel was looking to set up a UCO biodiesel facility in the Pearl River Delta on the Chinese mainland following its successful 2014 launch of a 100,000 ton per year facility in Hong Kong. The current facility collects UCO from Hong Kong, Singapore and Guangdong province, and expects to operate at a profitable 80% production capacity in 2017, sparking its search for expansion plans. Policy means that only a small amount of the biodiesel produced in Hong Kong is consumed in Hong Kong despite producing enough to supply a B5 for the region, so instead it is mostly sent to China and Europe.

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As NexSteppe CEO Anna Rath told The Digest, “The Chinese government has measured 19% of China’s arable land to be polluted, with the most common inorganic pollutants being the heavy metals cadmium, arsenic and nickel.  NexSteppe products offer a unique solution to this environmental and human health challenge.  As they develop, Palo Alto biomass sorghums, with their robust root systems and fast growth, extract heavy metals from the soil while also providing a cost-effective, low-moisture biomass feedstock for biopower. These optimized sorghum hybrids offer the opportunity to continue using contaminated land while the soil is remediated back to safe levels for healthy food and feed supply in China.”

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The other feedstock in demand? Er, that would be “capital” and China has taken steps to make it easier to invest in the country. In December, we reported that the central government published draft guidelines for foreign investment to help “increase openness with the outside world,” with industries such as corn processing and fuel ethanol seen as target sectors for foreign investment. It includes cutting the list of prohibited sectors where foreign investment is allowed to 62 from 93. The US and Germany have both been attempting to negotiate more open investment relationships with the country but have hit roadblocks. The new policy is open for public comment.

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In March, we reported that China New Energy won a number of contracts with Supercare Group Limited of Ghana and CNBM General Machinery Co., Ltd in China to construct a cassava-to-ethanol plant in Ghana that will have a production capacity of 45 million liters of ethanol per annum. The ethanol will primarily be used by the food industry.     READ MORE

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