China plans pilot projects to boost use of biodiesel

By Andrew Hayley

BEIJING, Nov 21 (Reuters) - China will launch a series of a pilot projects to spur domestic production and consumption of biodiesel, the National Energy Administration (NEA) has said, beefing up environmental efforts in an area where the country lags other big economies.

Sparse policy support has kept consumption of biodiesel, a low-carbon alternative to petroleum diesel made from feedstocks such as palm oil and used cooking oil (UCO), low in China, compared to the the European Union and the United States.

In a document issued on Monday, the NEA urged local authorities to carry out demonstration projects in several areas of the biodiesel industry, and advised regional governments to provide financial support.

"We will expand the application scenarios of domestic biodiesel," the NEA said, adding that it aimed to evolve a development path that could be replicated to furnish a basis for continued promotion of green liquid fuels.

Such efforts include integration of the UCO feedstock supply chain and distribution of the fuel at highway gas stations. It also pledged to promote inclusion of biodiesel in a voluntary national certified emission reduction mechanism.

The NEA did not provide details on financing and timelines, however.

Biodiesel produced from UCO has slightly lower energy content than petroleum diesel but cuts greenhouse gas pollution by as much as 83%, a study in 2022 by the Argonne National Laboratory in the United States showed.

While China is forecast to produce 1.9 billion litres of biodiesel this year, domestic demand is expected to mop up just 40% of that, data from the U.S. Department of Agriculture (USDA) shows.

China has not announced blending mandates for biodiesel, and only the local government of Shanghai, its financial hub, has offered subsidies for biodiesel production, the USDA said in a September report.

The limited domestic use of biodiesel and sustainable aviation fuel, a low-carbon alternative to kerosene, lets China export large volumes of UCO to the U.S. and European Union, where subsidies and blending mandates boost biofuel demand.

(Reporting by Andrew Hayley; Editing by Clarence Fernandez)

((Andrew.Hayley@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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