Regulatory Landscape and Sustainability Concerns for Biofuels in China. Taotao YUE 10 October 2013

Transcription

1 Regulatory Landscape and Sustainability Concerns for Biofuels in China Taotao YUE 10 October 2013

2 Outline Biofuels in China:background and development China s biofuels regulatory landscape Sustainability concerns reflected Concluding remarks: sustainability criteria could be developed? Department 2

3 Biofuels in China: background and development 1. Diverse motives Rural economy and development gap -slow growth of rural income -energy access problem in rural area -environmental and health problems by traditional use of biomass Dependency on imported oil -oil import dependency in 2009 reaches 52.8% (IEA) -transportation use ranks the second in petroleum use Air pollution and GHG emission -air pollution from expansion of vehicle fleet -CO2 emissions larger than US since 2006 Excess Reserved Grains -food self-sufficiency strategy and national grain reserve system (17%-18%) Department 3

4 Biofuels in China: background and development 2. Biofuels industry and the State s pilot projects From 1980s small-scale production and experiments with fuel ethanol -standards set for Denatured Fuel Ethanol (GB ) and Bioethanol Gasoline for Automobiles (GB ) From State Scheme of Pilot Projects on Bioethanol Gasoline for Automobiles -Pilot projects to mandate utilization of fuel ethanol (10%) in five cities of two provinces -Fuel ethanol production plants (using stale/aged grains) and oil companies designated to implement the project From 2004 State Scheme of Extensive Pilot Projects on Bioethanol Gasoline for Automobiles -extending the pilot projects to five whole provinces and another twenty-seven cities; and production and consumption would amount to 1.02 million MT Department 4

5 Biofuels in China: background and development 3. Current situation China s fuel ethanol annual production is forecast to reach 1.92 million metric tons in 2012, 8% increase from (GAIN-USDA) -In 2011, the four grain plants produced a total of 1.66 million metric tons, among which corn 82%, and wheat was 18%; production from cassava was about 120,000 MT In 2012, China s actual production of biodiesel is estimated at 500,000 MT. (GAIN-USDA) -Private enterprises dominate biodiesel sector. The main input is used/waste kitchen oil or residue from vegetable oil crushers -In 2011, a pilot program in two counties where the blending rate for biodiesel was 2 4 percent in transportation fuel in Hainan province. The government and some state companies increase investment and research in non-grain feedstocks such as sweet sorghum, jartropha and advanced biofuels Department 5

6 China s biofuels regulatory landscape 1.Renewable Energy Law (promulgated in 2005 and revised in 2009) Providing basic principles and general legal framework for development and utilization of renewable energy, but writing in general terms Provisions on biofuels obligation on oil companies - Definition: biofuels in this law refers to liquid fuel from biomass (Art. 32(4)) -Encourage production and utilization of biofuels (Art. 16, para.1) -Obligate oil selling companies to integrate biofuels conforming to national standards into their distribution and selling system according to regulations of energy authorities of the State Council and provincial governments (Art. 16, para. 3) - Oil selling companies are to compensate or be fined for economic loss in case of noncompliance (Art. 31) Provisions about biofuels obligation on State and local authorities -compiling and implementation of renewable energy plans to meet total volume goals (Art. 8,9) -Establishment of Special Renewable Energy Fund (Art. 24) Department 6

7 China s biofuels regulatory landscape 2. The Medium and Long Term Development Plan for Renewable Energy (2007, NDRC) Confirming renewable energy share target in total energy consumption -10% by 2010 and 15% by 2020 Setting up the target for biofuels production and consumption - Increase non-grain fuel ethanol by 2 million MT by 2010; fuel ethanol annual use to reach 10 million MT by Biodiesel annual use to reach 200,000 MT by 2010 and 2 million MT by 2020 Emphasis on non-grain biofuel feedstocks - No increase of grain-based fuel ethanol production capacity - Short-term and long-term emphasis - New pilot projects based on sweet sorghum, tuber crops, and oil plants to be built and locations are designated and planned Department 7

8 China s biofuels regulatory landscape 3. Renewable Energy Five Year Plans (NDRC) 11 th Renewable Energy Five Year Plan ( ) - Reiterate volume target to be achieved by 2010: fuel ethanol 3 million MT (grain 1 m MT+non-grain 2 m MT); biodiesel 200,000 MT - Setting guidelines in bioenergy development: a) reasonably develop and utilize marginal land sources b) growth of energy crops/plants shall not compete with food crops intended for human consumption and land used for food or feed crops production (priority to food and feed) c) growth of energy crops/plants shall not damage environment 12 th Renewable Energy Five Year Plan ( ) - Overview targets achievement: fuel ethanol fall short (1.8 million MT); biodiesel excess (500,000 MT) - New targets: fuel ethanol 3.5~4 million MT; biodiesel (and bio-kerosene) 1 million MT - Continued emphasis on marginal lands, non-grain and advanced biofuel pilot projects and research, and biodiesel from waste oil and animal grease Department 8

9 China s biofuels regulatory landscape 4. Other departmental rules and measures 2006 Circulars to halt expansion of grain-based biofuels production and require approval by State authorities to build new fuel ethanol plants (NDRC and Ministry of Finance) 2005 Guiding Catalogue for Renewable Energy Industries ( 可再生能源产业发展指导目录 ) and 2011 Guiding Catalogue for the Adjustment of Industrial Structure ( 产业结构调整指导目录 ) both encourage non-grain based biofuels and cultivation of energy crops in marginal or degraded land (NDRC) 2008 Circular on VAT refund for biodiesel production from waste oil (70%) (Ministry of Finance and State Administration of Taxation) 2011 Development Plan and Cultivation Guidance on energy forest such as jatropha for biodiesel (State Forestry Administration); while Ministry of Agriculture leads in adopting measures in developing/funding utilization of crop stalks for energy Department 9

10 China s biofuels regulatory landscape Regulatory mode: Renewable Energy Law (NPC SC) National renewable energy plans (NDRC): Medium and long-term ->short term (FYP) More detailed departmental rules/measures/plans (State ministries and other agencies) Regulatory instruments: Target for annual consumption Pilot projects demonstration and experimentation Mandated integration/blending Ban/restriction on production Licensing and prior approval Financial incentives for producers (tax, subsidy, loan) Guiding catalogue for investment Department 10

11 Sustainability concerns reflected 1. Impact on food security Guideline: biofuels feedstock shall not compete with food crops intended for human consumption ( 不与民争粮 ) Ban expansion of grain-based fuel ethanol production Establishment of new fuel ethanol enterprises should be firstly authorized/licensed Set target for increase of non-grain based fuel ethanol Plan for non-grain based biofuel projects (location and type) Incentives (fund, tax rebate, investment) with non-grain condition However, questions remain as to: - Why fuel ethanol produced from grains (wheat and corn) still dominates production? Fuel ethanol continues to be produced from grains and the enterprises still get subsidy. - Why the non-grain fuel ethanol increase target (2m MT) was not met, and 12 th FYP target does not specify non-grain condition? - How to define non-grain? Some non-grain crops are also used for food or feed in China Department 11

12 Sustainability concerns reflected 2. Impact on land use Guideline: biofuels feedstock shall not compete with grain crops for land ( 不与粮争地 ); make use of marginal land Energy crop or forestry growing should make use of saline land, and waste land and hills; Annex to a Circular on marginal land investigation for energy crops (Ministry of Agriculture, 2007) Guidance on sustainable growth of energy forest (State Forestry Administration, 2011) Biofuel development shall not illegally occupy arable land Land Management Law ( 土地管理法 ) Regulation on arable land protection ( 基本农田保护条例 ) Criminal law (serious damage to arable land) Great emphasis on non-infringement of arable land for food crops, reflecting also concern about food security. Department 12

13 Sustainability concerns reflected 3. Impact on environment Guideline: biofuels feedstocks shall not damage environment ( 不破坏环境 ) Development of bioenergy shall make reasonable use of forestry and land resources, and prevent depletive use of natural resources General law: Environment protection law ( 环境保护法 ) Agriculture Law ( 农业法 ): chapter 8 on agro-environment Specific law: Law on prevention of water pollution ( 水污染防治法 ): Art Law on water and soil maintenance ( 水土保持法 ) Modern energy from biomass is recognized as generally beneficial to environment (social development as well): carbon emission neutral, and much less SO2, NxO and particulate matter than coal (environment impact assessment section in the 12 th RE FYP) Environmental concern is mentioned but not specified in the regulation on renewable energy or biofuels, and should depend on provisions and implementation of the other general and specific environmental law and policies. Department 13

14 Sustainability concerns reflected 4 Characteristics and problems in view of sustainability concerns Characteristics: - emphasis on food security and land for food crops in feedstock supply - Renewable Energy Law does not mention, but required in departmental plans and other normative documents - cross-cutting issues depend on provision and implementation of law in areas such as agriculture, forestry, environment, which involves different gov. agencies Problems: - many other sustainability concerns are missing: life-cycle GHG emission, carbon stock loss from land use change, indirect land use change, land right, GMOs - lack specially designed hard-core law to provide and implement (however, administrative plans and orders have their own advantages in China) - regulation and implementation depending on various authorities and legislations may need more coordination and integration Department 14

15 Concluding remarks: sustainability criteria could be developed? Sustainability criteria can be developed based on: Principle set out in Medium and Long-term Plan for Renewable Energy: renewable energy development and utilization shall coordinate with economy, society and environment ( 坚持开发利用与经济 社会和环境相协调 ) Existing guidelines on biofuels/bioenergy development already reflecting some key sustainability concerns: food, land, environment Legal system and legislation already established: environmental law, land management law, and agricultural law However, improvement to be made on: Including climate change mitigation as one main objective of Renewable Energy Law; and setting up life-cycle GHG emission calculation measures Improving implementation of law related to environment and renewable energy (weakness in implementation and enforcement of law have long existed) Due to cross-cutting feature of biofuel sustainability issue, a special agency or coordinating authority may be needed Department 15

16 Thank you for your attention!