biofuel governance in china legislation as the starting point

Biofuel Governance in China

Legislation as the Starting Point

CAI Shouqiu; WANG Huanhuan

RIEL, Wuhan University

[email protected]

CONTENTS

2

4

31

33

Biofuel governance in ChinaBiofuel governance in China

Existing biofuel law and policy Existing biofuel law and policy

Overview of Biofuel in China Overview of Biofuel in China

Biofuel legislation in the future Biofuel legislation in the future

OVERVIEW OF BIOFUEL IN CHINA

Energysecurity

Rural development

Environmental protection

BiofuelBiofuel

Why should Chinadevelop biofuel?


Semi-industrialized production

Experimental production for transportation

Ethanol for industrial use

Ethanol for military use

2001 onward

1990s

1980s

1930s


A historical look at China’s fuel ethanol production

2003 2004 2005 2006 2007 2008 20090

2

4

6

8

10

12

14

16

18x 10

5

year

outp

ut


Current fuel ethanol production, 2008

China Resources Alcohol Co./ Heilongjiang/corn and rice/ 180,000 per year

Jilin Fuel Ethanol Co./ Jilin/corn / 470,000 per year

Guangxi COFCO Bioenergy Co./ Guangxi/ Cassava / 120,000 per year

Tian Guan Fuel-Ethanol Co./ Henan/Wheat/ 410,000 per year

BBCA Biochemical Co./ Anhui/ corn/ 400,000 per year


20022002 20042004 20062006

Fuel ethanol distribution

five cities of Henan and Heilongjiang province

Whole Heilongjiang, Jilin, Liaoning, Henan and Anhui provinces and 27 cities of Hebei, Shandong, Jiangsu and Hubei

Guangxi

province

joined in


Biodiesel production In earlier stage than fuel ethanol Small scale biodiesel plants only operate a few months out of a year waste oil is main feedstock Estimated output in 250,000 this year

Biodiesel distribution No national blend initiation Chongqing has pioneered to blend biodiesel in municipal

transportation this year


Three demonstration biodiesel plants under construction:

- Nanchong Refinery Biochemistry Plant of CNPC/ 60,000 tons

- Guizhou Branch Company of CPC/ 50,000 tons - Hainan Branch Company of CNOOC / 60,000 tons

A stride into industrialized biodiesel production?


2010 2 million tons of non-grain

based fuel ethanol 0.2 million tons of biodiesel

2020 10 million tons of fuel

ethanol 10 million tons of diesel

2010 Will not be achieved

Will be achieved

2020 ?

?

BIOFUEL GOVERNANCE IN CHINA

The term ‘biofuel governance’ used here refers to the rules, behavior and dynamic process that affect the way how actors including government, industries, market and social society participate and influence the production, trade, distribution, as well as use of biofuel at all levels.

others

market

Government

industry

ACTORS


Government (central) energy administration department

• National Development and Reform Commission (NDRC) • Nation Energy Administration (NEA)

relevant administration department • Ministry of Agriculture• National Forestry Bureau• Ministry of Environmental Protection• Ministry of Land and Resources• Ministry of Water Resources• Ministry of Finance• State Administration of Taxation


NDRC and NEA

MOA

NFB MOEP MOLR,

MOWR MOF, NBOT

draft or promulgate most of the policies about biofuel industry

and become more deliberate in biofuel development

Over-enthusiasm to the development of biofuel

Similar to MOA Remains slient No action on land use and water

resource management yet Relatively functional role


Market

Strict market access

Government-driven price

Defective upstream market


Industry

Fuel ethanol

• State-owed large-scale companies

Biodiesel

• Private producer more difficult situation


Others

Insufficient investments and financial assistance from international organization, foreign and other private sectors

Limited participation from NGOs, scholars and citizens


DEFECTS

1. Unclear directions for biofuel development

• conversions from grain based biofuel to non-grain based biofuel

• first-generation to second-generation biofuel


2. Negative impacts to the environment are ignored

• biodiversity loss• deforestation• water shortage• soil degradation• increased fertilizer and pesticide usage• air and water pollutions


3.Unilateral recognition of biofuel’s impact on agriculture

• Conflicts with increase of non-agricultural sectors as well as the declining resources in terms of agricultural labor, arable land and water resources in China now

• Land use change • production structure to be converted • Additional environmental degradation


4. Limited participation in biofuel governance

For a long time, the enthusiasm of participant in biofuel government is oppressed because of lacked platform.


How do the defects come out?

The root of the defects underlined above is the absence of complete biofuel legal system. Biofuel have a large range of implications to agriculture, food safety, environmental protection, energy security to name a few. A large number of participants and public or private interests are involved. The backwards can not be overcome without diverse regulatory tools and strong legal liability.

EXISTING BIOFUEL LAW & POLICY

Law Renewable Energy Law of the P. R. China, 2005

• Article 2: “bioenergy except utilization of straw, firewood, excrement etc. through direct burning in low-efficiency stove is regulated by the law. ”

• Article 16: “the state encourages clean and efficient exploitation of biofuel and the development of energy plants. Also, the State encourages production and utilization of biological liquid fuel. Petroleum sales enterprises shall, in compliance with the regulations of energy administration department under the State Council or people’s governments at the provincial level, include biological liquid fuel that conforms to State standards in their fuel-selling system. ”

• Article 31: liability provision


Regulation and other legal rules Directory List for Renewable Energy Industry, 2005; Notice concerning Taxation Policy to Fuel Ethanol Licensed

Producer, 2005; Rules for Financial Assistance on Bioenergy and

Biochemistry Development, 2006; Interim Measure for Administrating Renewable Energy

Development Fund , 2006; Interim Measure for Subsidy to Biomass Base of Bioenergy

and Biochemistry, 2007; Interim Measure for Administrating Encouragement Fund for

Non-grain Bioenergy and Biofuel, 2007; Policies for Products Generated from Comprehensive

Utilization of Resources, 2008.


Policy support for biofuel in China

Subsidy to biofuel producer Tax reduction Specific area payment for crops used for energy

plants 13 percent export VAT rebate to ethanol trade


Plan 11th Five-year Plan for National Economic and Social Development of

the P. R. China, 2006; the 11th Five-year Plan for Energy Development, 2007; Long and Mid-term Planning for Renewable Energy, 2007; 11th Five-year Plan for Renewable Energy, 2008;

The 10th Five-year Plan Specifically for Fuel Ethanol and Ethanol Blended Gasoline for Automobiles, 2004;

11th Five-year Plan Specifically for Fuel Ethanol and Ethanol Blended Gasoline for Automobiles as well as Development Policy for Fuel Ethanol Industry, 2006

11th Plan for Bio-industry; Plan for Agricultural Bioenergy; Whitepaper on China’s Energy Situation and Policy; China’s National Program on Climate Change


Deficiencies of existing biofuel law and policy

Guideline for biofuel development hasn’t been clarified There is a lack of effective legal rules to regulate biofuel

governance. Liability provision is insufficient to ensure full implementation

of law and policies.

HOW TO IMPROVE?

Legal hierarchy of new biofuel legislation

comprehensive legislation specifically on biofuel is better to be enacted by NDRC and relevant administration departments in the form of joint departmental rules and becomes the third layer of national energy legal system which is under construction.

HOW TO IMPROVE?

Guideline energy security sustainable development

Basic principles principle of deliberation principle of diversification Enhanced policy supports Life-cycle assessment tools

HOW TO IMPROVE?

Institutional structure

A cross-sector approach is needed in biofuel governance. A Coordination Commission or Board on Biofuel as a special branch of National Energy Commission could be established in which all concerned ministries and outside organizations, industry groups and NGOs are represented.

HOW TO IMPROVE?

Legal regime related to biofuel governance

Biofuel planning Biofuel standards Environmental impact assessment Land investigation and land use change prohibition regulated purchase, blend and retail

Thanks for your attention!

biofuel governance in china legislation as the starting point

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