CHINESE GOVERNMENT THROWS COLD WATER ON BIOFUEL

Earlier this month we ran a piece on the possible emergence of coal-based methanol in China and on government statements to the effect that land devoted to food crop cultivation would not be diverted to biofuels such as ethanol. Subsequent statements from government officials have been much more emphatic and illuminating.

This week China published rules apparently aimed at regulating biofuel production by restricting arable land that can be devoted to bio-ethanol. From hence forth anyone seeking to cultivate farmland to produce fuel feedstocks must first secure the permission of the government. “Some regions are overheated with investments in this sector,” the National Development and Reform Commission noted on December 18.

The rules are part of a much larger policy initiative that would establish a five year plan for China’s bio-fuel industries. A draft of the plan was completed in September but has yet to be published.

One wonders what to make of this in the light of recent announcements by China National Petroleum to develop large bio-ethanol and bio-diesel plants in Sichuan Province. Most analysts see conflicting impulses manifesting themselves in the recent statements of the government—the urgent need for copious new sources of liquid fuel on the one hand, and, on the other, a still living memory of famines and food shortages from the Maoist epoch and a determination to avoid similar hardships in the future. Read our own analysis in the Commentary and Analysis section of this journal.