Ethanol use to help boost farmers' incomes
( 2002-02-20 10:07 ) (1 )

China is embarking on an ambitious programme to replace gasoline in some vehicles with ethanol to prevent a fuel shortage and help farmers through the economic downturn.

But experts said it will be a long time before ethanol replaces gasoline entirely because the alternative fuel is costlier and harder to transport.

The nation has opened two alcohol-fuel facilities in Henan and Heilongjiang provinces, both famous cereal production bases in China. The facilities are used to blend ethanol, produced from corn, with vehicle fuel so that less vehicle fuel is needed.

Another facility, in Northeast China's Jilin Province, with an investment of US$3.5 billion, will be finished by 2003.

Putting ethanol to such use is an ideal way to help increase farmers' incomes since corn prices have plunged to record lows as a result of bulging stocks.

Lu Ming, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), said that based on current gasoline consumption in China, 4 million tons of gasoline could be replaced every year.

"That means we can save US$1.5 billion every year, given that we are importing up to 70 million tons of oil every year," Lu said.

But a Shanghai Petrochemical Company official said customers are reluctant to use ethanol because it's hard to transport, 30 per cent more expensive than gasoline and less efficient. It also erodes oil containers in cars, causing vehicle owners' maintenance bills to rise.

The official said ethanol must be transported in specially designed containers and be used within five days of being produced.

The State Economic and Trade Commission said up to 30 per cent of cars will likely use ethanol within three years.

But analysts said it may take more time for ethanol to be widely accepted.

Liu Tienan, director of the industry development department at the State Development Planning Commission, said the price of ethanol could be reduced with a government subsidy as a way to promote use.

Zhang Dawei, director of the Henan Province's Development Planning Commission, said the promotion of the fuel could facilitate grain sales in the province.

Zhang said that one-fourth of the province's grain production could not be sold out and that its 25 million tons' inventory had become a heavy burden on the province.