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China's fuel ethanol industry has to consume
While the domestic fuel ethanol industry remains optimistic due to rising global crude oil prices, a recent report from Kearney, a leading global consulting firm, casts doubt on its long-term prospects. According to the "White Paper on Industry Research for China's Fuel Ethanol Industry," released on July 16, China’s fuel ethanol production is far less efficient compared to the U.S. The data reveals that producing one ton of ethanol in China consumes over five times more water than in the U.S., and raw material usage is 20% higher. This highlights high resource consumption and low efficiency as major challenges for China’s fuel ethanol sector.
The white paper notes that China requires 12 tons of water to produce one ton of ethanol, compared to just 1.8 tons in the U.S. In terms of feedstock, China uses 3.3 tons of corn per ton of ethanol, while the U.S. only needs 2.8 tons. Additionally, China’s emissions are significantly higher. With rising corn prices, China’s production costs are 17% higher than those in the U.S., and ethanol prices are 18% lower. Industry insiders warn that if government subsidies are further cut, high resource consumption could become a critical weakness for Chinese ethanol producers.
The government is expected to introduce stricter policies soon, setting strict limits on production standards. Future targets include keeping water use below 5 tons per ton of ethanol, coal consumption under 500 kg, and tighter controls on chemical emissions. These new regulations pose a significant challenge for smaller enterprises.
Currently, China’s fuel ethanol industry heavily relies on government subsidies to remain viable. Jilin Fuel Ethanol Company, for example, receives 1,370 yuan per ton in subsidies. With production costs around 4,000 yuan/ton and market prices at 3,200 yuan/ton, the industry would face losses of nearly 800 yuan per ton without support.
To adapt, key players are shifting toward non-food feedstocks, aiming to reduce costs, improve efficiency, and adopt advanced technologies. Reports indicate that top companies like Jilin Fuel Ethanol are gradually aligning with international standards, signaling a path toward sustainable development.