Biomass energy: three steps in the next 15 years
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China's biofuel industry is undergoing a strategic three-phase development plan proposed by the National Development and Reform Commission (NDRC). The first phase, during the "Eleventh Five-Year" period, focused on technological industrialization. The second phase, under the "Twelfth Five-Year Plan," aimed to achieve large-scale industrial production. The third phase, starting after 2015, envisions significant growth in the sector. By 2020, it is expected that biofuels will account for approximately 15% of all transportation fuels in China, with the goal of establishing an internationally competitive biofuel industry.
Biofuels, which include fuel ethanol and biodiesel derived from biological resources, are seen as a key alternative to fossil fuels. In its long-term renewable energy strategy, the NDRC previously set targets: replacing 2 million tons of oil annually by 2010 and 10 million tons by 2020 through biofuel use.
However, the global oil market faces challenges. With rising demand, traditional oil is no longer seen as a sustainable energy source. According to the U.S. Department of Energy and the World Energy Council, global petroleum reserves are estimated to last 39 years, natural gas for 60 years, and coal for 211 years. These resources are concentrated in countries like the U.S., Canada, Russia, and the Middle East. China, being relatively resource-poor in oil, faces a critical challenge. Some experts estimate that stable oil supply may not exceed 20 years, with 2020 marking a potential turning point where oil supply balance could be disrupted.
In addition, international oil prices have surged, exceeding $70 per barrel. Goldman Sachs predicts prices could reach $105, while some analysts believe developed nations may manipulate prices to limit the growth of emerging economies like China and India. This could lead to a situation similar to the iron ore market, where China faces a "price encirclement."
High oil prices have a significant economic impact. For example, in 2004, the increase in crude oil prices cost China over $8 billion in additional foreign exchange—equivalent to the annual living expenses of 20 million unemployed workers.
Biomass energy is emerging as a promising renewable resource. Wu Chuangzhi, deputy director of the Institute of Energy Research at the Chinese Academy of Sciences, states that biomass energy is China’s third-largest energy source after coal and oil, accounting for about 15% of total energy consumption. It is the only renewable energy that can be stored and transported, used for fuel or electricity. Currently, it is mainly used for power generation and conversion into “green gasoline†and “bio-oil.â€
Globally, the annual biomass energy generated through photosynthesis is around 5 billion tons, with only 1% currently used as energy. Yet, it already provides 14% of the world's energy needs and serves as the main energy source for 1.5 billion rural people. Many countries have set ambitious biofuel goals, such as the EU aiming for 6% biofuel in transport by 2010, the U.S. targeting 20% by 2020, and Sweden planning to replace all petroleum fuels with cellulose-based ethanol by 2020.
China has been researching bio-energy and bio-materials for decades, with considerable progress in biomass conversion and environmental technologies. Wu Chuangzhi believes China is well-positioned to scale up bio-energy and bio-materials industries, potentially reaching output worth trillions of yuan by 2020 and offering partial replacement for oil at the “oil depletion turning point.â€
With the International Monetary Fund predicting China’s car ownership could reach 390 million by 2030, the need for alternatives like biofuels becomes even more urgent. At current oil prices, biofuels show strong profitability. For instance, Anhui Fengyuan Group’s biomass ethylene plant in Suzhou reports profits when oil prices hit $35 per barrel, with profits increasing significantly as prices rise.
To achieve its three-step plan, the NDRC has outlined four key tasks: land resource surveys and energy crop planting plans, building large-scale non-food biofuel pilot projects, improving biofuel distribution systems and policies, and strengthening R&D and industrial infrastructure.
Wu Chuangzhi adds that future energy crops will likely be cultivated, harvested, and distributed under national policy support, much like food crops. This suggests a promising future for China’s biofuel industry, with clear benefits for energy security, economic stability, and environmental sustainability.