106
Rapid development of new-generation vehicles (hybrid, electronic vehicles, etc.)
might achieve larger changes in the consumption patterns of fuels in the sector.
8.4.4 Stakeholder Perspectives
One of the unique characteristics of China’s biofuel industry is that it is dominated
by the government through a few state-owned companies, not only for feedstock
production but also for the production and distribution of biofuels. One of the
advantages of this situation is the strong financial base of these state-owned enterprises. In general, development in the energy sector is shaped by large state-owned
companies which have much greater investment and technological capabilities compared to small- and medium-sized companies, and this is also case in the bioenergy
(Gan and Yu 2008). In 2006, PetroChina provided five million RMB to initiate four
demonstration projects in Yunnan (ICRAF China 2007). Another advantage is that
state-owned companies can manage supply chains more easily. In this sense, standard setting and implementation would be also relatively easier.
On the other hand, the biggest disadvantage is that the market is relatively closed
and dominated by a few companies, making the market more uncompetitive and
inefficient. Bioethanol for fuel is not a market-driven segment of the economy, and
there are only a few licensed companies. In addition, the pricing regime discourages
the private sector’s investment in fuel ethanol production and ensures limited competition for existing producers (GSI 2008; Huang et al. 2008; USDA 2008). This
situation may cause technological innovation by the private sector to be slow. Also,
there is a high probability that related decision-making by the central government
does not fully consider local conditions or implications for local economies. Energy
policies are under the jurisdiction of the Energy Bureau of the NDRC, which has a
higher position than other bureaus in NDRC’s internal hierarchy, but it is heavily
influenced by large energy-related state-owned companies (Takamizawa 2009).
8.4.5 Analysis
Although China’s biofuel production is relatively large on a global scale, it has
a relatively smaller role in renewable energy promotion within China itself.
Moreover, in China, biofuel promotion tends to be more closely related to agricultural policies than renewable energy or climate change policies. China, as one of the
largest grain producers in the world, made a timely policy response to address food–
fuel conflict concerns in 2007. Partially because of the government’s strong grip on
both biofuel production and distribution, a significant food–fuel conflict feared by
many researchers has been avoided. However, this has dampened the high hopes for
biofuel promotion in China.
Still, China has made advances in feedstock diversification for the first- generation
biofuels (Jatropha, cassava, sweet sorghum, etc.), invested in the development
M. Elder et al.
Rapid development of new-generation vehicles (hybrid, electronic vehicles, etc.)
might achieve larger changes in the consumption patterns of fuels in the sector.
8.4.4 Stakeholder Perspectives
One of the unique characteristics of China’s biofuel industry is that it is dominated
by the government through a few state-owned companies, not only for feedstock
production but also for the production and distribution of biofuels. One of the
advantages of this situation is the strong financial base of these state-owned enterprises. In general, development in the energy sector is shaped by large state-owned
companies which have much greater investment and technological capabilities compared to small- and medium-sized companies, and this is also case in the bioenergy
(Gan and Yu 2008). In 2006, PetroChina provided five million RMB to initiate four
demonstration projects in Yunnan (ICRAF China 2007). Another advantage is that
state-owned companies can manage supply chains more easily. In this sense, standard setting and implementation would be also relatively easier.
On the other hand, the biggest disadvantage is that the market is relatively closed
and dominated by a few companies, making the market more uncompetitive and
inefficient. Bioethanol for fuel is not a market-driven segment of the economy, and
there are only a few licensed companies. In addition, the pricing regime discourages
the private sector’s investment in fuel ethanol production and ensures limited competition for existing producers (GSI 2008; Huang et al. 2008; USDA 2008). This
situation may cause technological innovation by the private sector to be slow. Also,
there is a high probability that related decision-making by the central government
does not fully consider local conditions or implications for local economies. Energy
policies are under the jurisdiction of the Energy Bureau of the NDRC, which has a
higher position than other bureaus in NDRC’s internal hierarchy, but it is heavily
influenced by large energy-related state-owned companies (Takamizawa 2009).
8.4.5 Analysis
Although China’s biofuel production is relatively large on a global scale, it has
a relatively smaller role in renewable energy promotion within China itself.
Moreover, in China, biofuel promotion tends to be more closely related to agricultural policies than renewable energy or climate change policies. China, as one of the
largest grain producers in the world, made a timely policy response to address food–
fuel conflict concerns in 2007. Partially because of the government’s strong grip on
both biofuel production and distribution, a significant food–fuel conflict feared by
many researchers has been avoided. However, this has dampened the high hopes for
biofuel promotion in China.
Still, China has made advances in feedstock diversification for the first- generation
biofuels (Jatropha, cassava, sweet sorghum, etc.), invested in the development
M. Elder et al.