China Carbon Credit Platform

China's biodiesel development needs to open up internal circulation| ② Observation on the biodiesel industry

SourceCenewsComCn
Release Time3 months ago

Recently, the EU has implemented a temporary anti-dumping duty of 12.8%-36.4% on Chinese biodiesel.

"Affected by the EU's provisional anti-dumping measures, the prices of companies 'biodiesel products have continued to decline and fluctuate, and the overall operating income of the biodiesel business has experienced a relatively large decline. Therefore, companies have to adjust and reduce their export volume and sales volume accordingly." Guo Qi, general manager of the Bioenergy Division of Shenzhen Langkun Environment Group Co., Ltd., told this reporter.

"At present, accelerating the construction of biodiesel pilot projects and opening up domestic circulation are crucial to achieving high-quality industrial development." Zhang Dayong, deputy secretary-general of the China Industrial Development Promotion Association and secretary-general of the Biomass Energy Industry Branch, pointed out.

In fact, in recent years, my country has actively supported the promotion of advanced biological liquid fuels. The "2024-2025 Action Plan for Energy Conservation and Carbon Reduction" recently issued by the State Council highlights the need to rationally regulate oil consumption and promote advanced biological liquid fuels.

The "Action Plan for Large-scale Transportation Equipment Renewal" recently issued by the Ministry of Transport and other thirteen departments also proposed to vigorously support the application of new energy and clean energy, including biodiesel, in transport ships.

"Biomass energy is a neglected giant among renewable energy." Under my country's "double carbon" goal, the development of biomass energy, especially in areas where electrification is difficult to decarbonize, can play an important role. Therefore, in terms of biodiesel, the domestic market has broad prospects.

However, at present, my country's biodiesel relies heavily on foreign markets, while domestic pilots are facing problems such as insufficient economy and imperfect policy standards.

Exports to the EU are about 1.8 million tons, accounting for more than 90% of total exports

According to data from the Biomass Energy Industry Branch, by the end of 2023, my country's total biodiesel output will be approximately 2.2 million tons.

The "China Advanced Biofuels Development Report" shows that in 2023, my country's biodiesel exports will be 1.95 million tons. Statistics from the European Biodiesel Committee (EBB) show that in 2023, China exported approximately 1.8 million tons of biodiesel to the EU, accounting for approximately 92% of the total exports.

Overall, about 80% of my country's exports of biodiesel rely on the European market. This is also the reason why my country's biodiesel industry has been hit hard after the increase in anti-dumping duties.

According to the "China Advanced Biofuels Development Report", due to the earlier impact of the EU's traceability of imported biodiesel raw materials and anti-circumvention investigations, China's biodiesel exports will decline significantly in 2023, from 260,000 tons in January to December. About 120,000 tons, a drop of more than 50%. Coupled with the EU's anti-dumping investigation on imports of biodiesel from China at the end of 2023, the biodiesel industry is currently facing huge challenges.

"The development of my country's biodiesel industry is highly dependent on the international market, which is unhealthy for the industry." Shi Lishan, vice president of the China Industrial Development Promotion Association and former deputy director of the New Energy and Renewable Energy Department of the National Energy Administration, told this reporter that the domestic biodiesel market should be gradually launched.

It is understood that since 2011, my country has successively issued relevant standards, which have determined that biodiesel can be added to ordinary diesel in a corresponding proportion.

Shi Lishan said: "At present, my country's total biodiesel output is about 2.2 million tons, but the annual output of ordinary diesel is about 200 million tons. Through fuel blending, you can fully digest biodiesel yourself."

"But at present, only some regions (such as Shanghai) add biodiesel in accordance with relevant standards. Gas stations in many areas are not very motivated to use biodiesel." Deng Jinhua, chairman of Hubei Tianji Bioenergy Co., Ltd., told this reporter.

It is understood that the development and promotion of biodiesel is of particular significance to our country. In addition to the advantages of improving automobile exhaust emissions, reducing greenhouse gases, and reducing dependence on crude oil on foreign countries, it can also rationally utilize gutter oil to reduce the risk of its return to the table. Effectively protect food safety and people's health.

In order to promote the consumption of biodiesel in China, in April 2024, the National Energy Administration issued the "Notice on Publicizing Biodiesel Promotion and Application Pilot Projects", identifying 22 biodiesel promotion and application pilots to help biodiesel open up domestic market space.

The pilot has brought a turning point to the industry, and there is an urgent need to expand application channels in China

Why does the country still have relevant policy support and why does my country still need to rely on the international market for biodiesel?

According to Guo Qi, when the price of biodiesel in my country was low, it was also used in large quantities and blended into ordinary diesel to reduce the operating costs of ordinary diesel. However, its historical price is generally higher than the price of ordinary diesel, so the domestic market demand is insufficient, and my country's biodiesel will be sold at a higher price in the EU.

The National Energy Administration has used pilot projects to promote the "digestion" of biodiesel in China, which has brought a turning point for the development of biodiesel. It also faces the problem of insufficient domestic market demand.

According to the Renewable Energy Law of the People's Republic of China, the state encourages the production and utilization of biological liquid fuels. Oil sales enterprises shall include biological liquid fuels that meet national standards into their fuel sales system in accordance with the regulations of the energy authorities of the State Council or the provincial people's governments.

"Companies that produce biodiesel are not qualified to sell. Just as power generation companies need to sell through power grids, biodiesel can only be sold through companies with terminal sales channels to blend biodiesel into B5 and B24 products." Deng Jinhua explained,"Due to the periodic fluctuations in the sales price of biodiesel that are higher than the wholesale price of diesel, companies with terminal sales believe that the use of biodiesel affects their profits, and purchasing biodiesel is based on deployment, transportation, application, promotion, User acceptance and other aspects will increase costs and affect profits, so the willingness to purchase is not strong."

Even though the "Renewable Energy Law of the People's Republic of China" stipulates that if oil sales companies fail to incorporate bioliquid fuels that meet national standards into their fuel sales system in accordance with regulations, causing economic losses to bioliquid fuel production companies, they should be liable for compensation, we must see that my country's terminal consumption oil prices are regulated by the state. After adding biodiesel, the cost of front-end raw materials will increase, but the back-end price will be relatively fixed. In the context that the benefits of carbon reduction have not yet been reflected, domestic circulation is relatively difficult.

According to reports, at present, Shanghai City adopts subsidy policies to promote the development of biodiesel. In accordance with the corresponding requirements of the "Shanghai City Administrative Measures for Supporting the Promotion and Application of Biodiesel Made from Kitchen Waste Oils", subsidies will be provided to B5 biodiesel preparation and sales enterprises in different amounts such as 0.15 yuan per liter and no more than 0.24 yuan to adjust the price market.

At the same time, relevant departments are studying and formulating a methodology for carbon emission reduction of biodiesel, with the aim of opening up CCER to reflect the green premium of biodiesel and enable it to better enter the market.

It should be noted that many people also question the hidden dangers of corrosion in biodiesel. This is also one of the reasons why previous relevant standards stipulated that the amount of biodiesel added to ordinary diesel was relatively low (the amount added to one ton of ordinary diesel should not exceed 1%).

However, Shanghai City, which uses a large amount of biodiesel, has supplied 1.4 million liters of B5 biodiesel per day in the petroleum road transportation sector. The cumulative use of B5 biodiesel has reached more than 2 million tons, reducing carbon emissions by more than 200,000 tons. There are no failures and application hazards caused by the use of biodiesel in any vehicle.

Recently, the national standard plan "Bio-based Combined Vehicle Diesel"(hereinafter referred to as the standard plan) announced by the National Standards Information Public Service Platform pointed out that when promoting the use of biodiesel in some areas in China, the national standard for B5 diesel limits the amount added. It cannot be vigorously promoted, resulting in poor operation of the entire link of biodiesel. It is urgent to increase the blending ratio of biodiesel in diesel and increase the variety of hydrocarbon-based biodiesel. Therefore, this standard plan will be revised based on previous corresponding standards.

"Based on the minimum addition of 1% of my country's diesel consumption in 2023, approximately 2 million tons of biodiesel can be used. If the standard plan can further expand the blending ratio, it will help the development of the domestic biodiesel industry." Deng Jinhua said.

Pilot promotion faces difficulties and requires coordination and resolution by relevant departments

What needs to be noted is that it has been nearly five months since the pilot promotion and application of biodiesel. During the implementation process, pilot companies are facing difficulties.

It is reported that the use of biodiesel is exempt from consumption tax. However, after being processed into biodiesel blended fuel, consumption tax will still need to be paid.

"Relevant departments believe that reconciliation means processing, and after processing, it does not meet the requirements for exemption from consumption tax on biodiesel. Therefore, the consumption tax exempted at the biomass diesel stage will be paid back when it is used at the end." A person in charge of a pilot enterprise to promote and apply biodiesel said that the consumption tax on one ton of biodiesel is about 1400 yuan, and the economy of implementing biodiesel is greatly reduced."

Enterprises that have set up pilot units in the county also pointed out: "Currently, there are no oil depots and deployment facilities in the entire county to blend biodiesel. They must go to the municipal deployment station, and the entire process is costly."

"Pilot projects to promote and apply biodiesel require adding B5 biodiesel storage tanks and related facilities at gas stations." Some industry insiders said,"If we support bringing biodiesel to refineries and blending it in proportion, it may save a lot of energy and equipment waste. After future pilots, companies hope to adopt this sales method when biodiesel is promoted nationwide."

According to reports, according to technical classification, my country's biodiesel is divided into first-generation ester-based biodiesel and second-generation hydrocarbon-based biodiesel. Most of the biodiesel specified in my country's current standards, policies, and documents refer to fatty acid methyl esters, that is, the first generation of ester-based biodiesel.

"Our countryhydrocarbonBasic second-generation biodiesel has only industry standards and no national standards. There is no corresponding national standards for reference in the current system, resulting in no reference for diesel-related policies and indicator requirements. During the pilot application process, when communicating with end users, the standard support was insufficient, resulting in the obstruction of many work at this stage. Although the company has also invited a third-party organization to conduct testing, analysis reports and experiments, the recognition from end users is not high, and the vehicle users cannot obtain the basis for the corresponding use of vehicle diesel." The above-mentioned industry insiders pointed out that there is no national standard, no commodity code or tax code,hydrocarbonThere is no way to bill basic biodiesel, which leads to the inability to form a supply chain and industrial chain when goods are circulated.

Based on this, many pilot companies believe that, regardless of the pilot or the work model, the above problems faced by biodiesel companies cannot be solved by one company and require communication and coordination at the national level or various ministries and commissions.

RegionChina,Shanghai,Hubei
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