On Energy Independence Day, India, China Surge as Leaders in Clean Fuels

July 11, 2018

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by Jim Lane (Biofuels Digest) ... Because if you want it, here it is, come and get it, biofuels that is, and especially of the advanced type. If you like it from waste, even better. Out of the east, the dual and sometimes dueling engines of biofuels growth are changing the pace and scope of investment not only in their own land, but they’re shaking up the feedstock mix and the pace of development around the globe.

And even more broadly at Asia-Pac, where the coverage is usually about palm oil but the story on the ground is a broadening regional commitment to investment that you can see in Thailand, Vietnam, Australia and out of the financing engines of Japan. The technology might be coming out of the US and the EU, but deployment is headed east. Never mind, everyone benefits from cleaner skies.

Yet, the course of clean fuels never did run smooth, and the scourge of advancement has been policy in India and the US-China trade war. It’s looking brighter in India, and you don’t need a weatherman to know that it’s gloomier these days on the trade front and agri-energy is at the heart of it.

Who’s in the lead right now? Probably India, for all its starts and stops and soaring ambitions and shortfalls. The type and number of specific projects in development there is reasonably breathtaking, and leads our coverage on Energy Independence Day. Let’s look at the key developments.

India

The highlights? National policy approval and major investments announced by Indian Oil, Bharat Petroleum, Hindustan Petroleums and others. Lowlights? The never-ending saga of missed biofuels targets.

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This week, we reported that the new used cooking oil regulations that came into effect on July 1 are the first step in creating an ecosystem for eventually producing biodiesel from UCO at scale. The national biodiesel producers association is working with the Food Safety and Standards Authority of India on a 3E strategy that combines education with enforcement and building the ecosystem with the aim of eventually producing 3 million metric tons of UCO biodiesel annually at commercial scale.

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Last month we reported that the government agreed to boost heavy molasses-based ethanol prices by 4 cents per liter in an effort to help shore up the poor finances of sugarcane mills suffering from high cane prices, also imposed by the government.

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In June, we reported that as part of a wider package to bailout the flailing sugarcane industry, LiveMint reports that a whopping $655.25 million will be destined to helping sugarcane mills invest in ethanol production capacity that will allow them to reduce sugar production surpluses.

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In March, we reported that Aemetis, Inc. announced that its Universal Biofuels subsidiary in India has completed the construction of an advanced biodiesel pre-treatment unit to process the low-cost feedstocks to be provided to the plant under the BP Singapore Pte Limited (BPS) supply agreement into low carbon high-quality distilled biodiesel.

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China

The highlights? Biofuels demand surging and a major waste-to-fuels investment focus. Lowlights? Trade wars, trade wars, trade wars.

Market development

In June, we reported that Archer Daniels Midland expects China will need to import 11.4 billion liters of ethanol annually from 2020 in order to meet its 10% ethanol-blending mandate because it can only double to its current production to around 7.6 billion liters.

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In March, we reported that ethanol production could increase by half a million metric tons this year as part of the country’s ramp up to an E10 blending mandate in 2020 with an eye on 5 million tons of production within the next five years.

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Trade Activity

In May, we reported that Platts reports that with the ethanol arbitrage window tightly shut against the US after imposition of an additional 15% import tariff, importers are instead looking towards origins in Central and South America to source needed supplies. Shipments heard include a likely one-off duty-free shipment of up to 17,000 metric tons from Costa Rica to a Chinese oil refiner for prompt loading. Other Central American origins who would traditionally ship to Europe but have hit a weak market there are courting China instead.

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Trade Wars

In April, we reported that U.S. Secretary of Agriculture Sonny Perdue expressed extreme disappointment regarding China’s announcement of duties of almost 179 percent on U.S. sorghum imports.

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In April, we reported that China has proposed a 25 percent tariff on US soybeans in response to a list of 1300 Chinese products that may be subject to a 25 percent tariff. China purchases 61 percent of total U.S. soybean exports, and more than 30 percent of overall U.S. soybean production.

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In April, we reported that that the additional 15% tax added on to ethanol on Sunday, bringing the total import tariff to 45%, as part of retaliation for the US increasing import tariffs on steel will have immediate impacts on ethanol imports but analysts expect the country to have to return to foreign ethanol consumption at some point in the near future in order to achieve its blending mandate.

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Investment

In April, we reported that China Beidahuang Industry Group announced it would invest $153.04 million in an ethanol plant in Inner Mongolia that would use 924,000 metric tons of corn and around 350,000 tons of straw and sweet sorghum each year in an effort to achieve the 10% ethanol-blending mandate recently set for 2020. The facility is set to produce 350,000 tons of ethanol annually.

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In January, we reported that Enerkem announced it has signed an agreement with Sinobioway Group worth over C$125 million in the form of equity investment in Enerkem Inc., future licenses, equipment manufacturing and sales, as well as for the creation of a major joint venture that will lead the construction of over 100 Enerkem state-of-the-art facilities in China by 2035.

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Elsewhere in Asia-Pac: Thailand, Vietnam, Australia and Japan on the move READ MORE

GST ministerial panel against sugar cess to compensate cane farmers (Business Standard)

New regulations for ‘used cooking oil’ come into effect (The Hindu Business Line)