The Place of Biodiesel as China Eyes Carbon Neutrality

by Kong Lingyu (China Dialogue/Eco Business) China has developed a biodiesel export industry fed by used cooking oil, but a domestic market remains elusive. ... Biodiesel stocks have also done well on China’s own markets.

The main reasons for this are the global trend towards low-carbon development and the Russo–Ukrainian war pushing oil prices higher. Yet biodiesel has long been linked with cutting carbon and with energy security. Malaysia started researching palm-based biodiesel in the 1980s to reduce reliance on imported crude oil.

Today, the country mandates that fuel for its transport sector must have a 15 per cent biodiesel component. This is set to increase to 20 per cent at the end of the year. Indonesia, meanwhile, is already at 30 per cent, far more than any other country.

Countries worldwide are taking different approaches to biodiesel, depending on their motivations and available resources. Brazil and the US produce it from soy because they grow so much. In the EU, the main feedstock is locally grown rapeseed.

In order to meet targets on transport emissions, the bloc also imports palm oil, soybean oil and used cooking oil as feedstocks, as well as biodiesel that has already been made from those oils. The EU is currently the world’s biggest importer and user of biodiesel.

In China, used cooking oil is often called “gutter oil”. From the late 1990s onwards, China saw a number of scandals where such oil was crudely recycled and returned to diners’ tables. In 2010, the State Council ordered better management of used cooking oil and for routes to commercial resource recovery to be explored.

In 2017, the General Office of the State Council identified the management of used cooking oil as a key part of food safety work for the 13th Five Year Plan (FYP) period (2016–2020). Firms making use of the resource were to be encouraged to expand operations, with tax breaks where appropriate to support research into technology and roll-out of systems for utilisation.

In 2002, China’s first 200,000-tonne biodiesel plant was included in national innovation plans, marking the start of its biodiesel sector. But in the 20 years since, no domestic market for biodiesel has appeared. Efforts by some local governments and companies to break into the vehicle fuel market have largely failed, and most of the biodiesel produced in China is exported to the EU.

Put simply, the high costs of transportation and processing mean that biodiesel made from used cooking oil costs more than standard diesel. If the government does not subsidise it, there is no incentive for fuel makers to buy it.

According to research by the consultancy CE Delft, that figure would mean the EU burning 6.1 to 6.4 million tonnes of biodiesel from used cooking oil every year by 2030. As it is, in 2019 the EU (including the UK) used only 2.8 million tonnes, of which half was imported. Those imports came from China (34 per cent), the US (12 per cent), Malaysia (12 per cent), Indonesia (7 per cent), Saudi Arabia (6 per cent) and Russia (4 per cent).

If those countries start using more biodiesel at home to meet their own climate commitments, what will fuel the EU’s ambitions?

But the availability of feedstocks is hampering China’s biodiesel industry. Liu Jianguo, a professor at Tsinghua University’s School of Environment and head of its Solid Waste Control and Resource Recovery Institute, told China Dialogue that industry insiders differentiate between waste from restaurant and household kitchens.

He explained that to make resource recovery from household kitchens feasible would require oil recovery points to be positioned in every apartment complex. Even if that were done, there would not be enough to make the trip to the recycling plant worthwhile.

So if there are no engines to burn it, what need is there for biodiesel? Situations where electricity or hydrogen is not practical, such as aviation and shipping, could be one possibility.

A report from the Energy Transitions Commission and the Rocky Mountain Institute predicts that land transport in China will be entirely electric by 2050, with hydrogen fuel cells used only for heavy duty road transport. Long-distance aviation and shipping, meanwhile, will rely on biofuels, synthetic fuels, hydrogen or ammonia. The report also points out that it will be difficult to use biofuels to decarbonise aviation, as it will be more expensive, and in short supply.

Gong Huiming, senior program director at the Energy Foundation China’s Transportation Program, explained: “After all, we’re not talking about millions or even tens of millions of tonnes of fuel, but hundreds of millions.”

He thinks biodiesel has a limited role to play in decarbonising transport. Instead, he suggests transport should look to synthetic fuels. He told China Dialogue: “There are a range of technologies for zero-carbon aviation under development. It is not yet clear which will be best.”

He added that large-scale and cheap supplies of hydrogen, if developed, would allow for the synthesis of ammonia and methanol at lower prices. Although synthetic fuels and biofuels are currently both more expensive than the traditional fossil fuels, synthetic fuels are at least less restricted in terms of scale than biofuels. And as scale increases, unit costs will fall.

He also points out that new technology isn’t the only solution to the “last mile” of carbon neutrality – carbon markets could also work. READ MORE