China to expand ethanol use in gasoline blending

22 February 2018, Week 07, Issue 681

China is set to expand the use of ethanol for blending in gasoline this year, in line with plans announced by the government last autumn.

In a statement outlining its work priorities for 2018, the country’s State Administration of Grain (SAG) said it was aiming to raise the production and consumption of ethanol as a gasoline blendstock from surplus maize and other food grains. To achieve this aim, SAG will introduce reforms to make grain storage mechanisms more market-driven and will speed up the use of grain from stockpiles for ethanol production, the statement said.

These efforts will be part of a wider effort to find new uses for grain inventories, SAG noted. Stocks have swelled in recent years because of Beijing’s efforts to support agricultural producers, it said. According to data from the US Department of Agriculture (USDA), stocks reached a high of more than 4 billion bushels as of the end of 2015, not long before Beijing ended its long-standing policy of paying Chinese corn consumers more than twice the world market rate for their production.

SAG did not explain exactly how it intended to achieve its aims. The agency had said in a separate statement dated February 13 that its drive to reform grain storage mechanisms would involve greater flexibility in pricing and guidance for farmers on meeting market demand.

China’s government unveiled plans for the sale of E10 fuel, or a gasoline blend containing 10% ethanol, across the country in September 2017. At that time, it said it wanted to see this type of fuel introduced everywhere by 2020.

This move will greatly expand the scope of an existing trial programme that targeted only 11 provinces. It may also cause China’s ethanol consumption to quadruple by the end of the decade, according to an analysis conducted by the Center for Agricultural and Rural Development (CARD) at Iowa State University.

At the same time, it will also reduce demand for methyl tert-butyl ether (MTBE), a blendstock used to raise the octane number of gasoline. Chinese authorities have indicated that they expect E10 to replace gasoline blended with MTBE gradually in the coming years.

Edited by

Andrew Kemp


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