GCiS China Strategic Research
GCiS China Strategic Research

China’s Biofuels Market Grows, Remains on Subsidy Life-Support

China’s pricing controls, subsidies and cultivation policies have played a critical role in shaping this USD 2.3 Bn market, but over-regulation has made it unattractive for profit making ventures and the much needed innovation they bring.

Beijing, China, January 06, 2011 --(PR.com)-- GCiS China Strategic Research has published a study of the China market for biofuels, an emerging alternative energy. Covering both ethanol and biodiesel, this study provides an in-depth look at the trends, participants and forecasts for the industry from 2009 to 2015.

The study finds a growing, multi billion dollar market, centered around government mandated "ethanol-only" areas of northeast and central China that accounts for 20 percent of China’s automotive fuel consumption. But the biofuel supply to each of these areas is a tightly run monopoly, conferred upon three of China’s largest State-owned enterprises: Sinopec, CNPC and the Cofco group. Further, the grain used as a fuel stock in nearly two-thirds of biofuels has been banned in new projects amid concerns of domestic food price inflation.

In some ways, the biodiesel and ethanol markets sharply contrast each other. Biodiesel suppliers are mostly privately owned, whereas all but one ethanol supplier is state-owned. The ethanol fuel industry is the result of careful state planning and control, while the biodiesel industry's growth is organic, its typical supplier a chemicals producer acting on an opportunity.

But both types of biofuels are caught between rising raw material pricing and restrictions, and the fixed (and artificially low) pricing of diesel and gasoline to which biofuels must be pegged. The Chinese government has made subsidies and tax breaks available to suppliers of both fuels, although anecdotally, state owned ethanol enterprises are favored. Many admit that without such support, biofuels would be a loss-making venture.

Biofuels are officially recognized as a part of China’s long term energy security. Opportunities exist for those with the technology to wean China off grain-based ethanol and onto more sustainable feedstocks like cellulosic fiber. Those with the insights into which trends will shape the industry will benefit too. But patience will be required. This embryonic, yet potent market has yet to come of age.


About the GCIS China Centrifugal Pumps Study
This GCiS market study draws on a three month, in-depth primary survey of over 90 of the market’s supply side, channel players and end-users. It is essential reading for any professional needing accurate and detailed strategic information on this market. Major areas covered include: market size and shares, five-year projections, market structure, pricing trends, distribution, consumption, an assessment of key suppliers and more.

About GCiS China Strategic Research
GCiS (www.GCiS.com.cn) is a China-based market research and advisory firm focused on business to business markets. Since 1997, GCiS has been working with leading multinationals such as Siemens and GE in sectors ranging from technology to industrial markets, medical, chemicals, resources, and a few others.

For more information please contact:
Beijing: Ed Barlow 86-10-5978-9958 (ext. 124) ebarlow@gcis.com.cn
GCiS China Strategic Research
Edward Barlow
+86 (0) 10 59789950