Sky-High Oil Prices Fuel Ethanol Mania in China

Hong Kong/Beijing [Reuters] Record crude oil prices are fuelling ethanol fever in China, the world’s second-largest oil consumer, despite Beijing’s reservations in allowing more food grains to be used to run cars. Beijing is reluctant to expand ethanol production from food grains as China will face a shortage of grains like corn or wheat possibly as early as next year, due to rising domestic demand brought on by higher affluence. China began its ethanol projects in early 2000 in a bid to get rid of its surplus grain reserves and partially convert them into the biofuel. … In Jilin, China’s top corn-producing province in the northeast, deputy secretary-general Feng Wei told Reuters last week it planned to expand its ethanol capacity to 1 million tonnes a year by 2010 from 300,000 tonnes last year. Jilin Fuel Alcohol Co. Ltd., one of four government-sponsored plants and the only one in the province at present, expanded its existing production line in March to churn out 400,000 tonnes of the biofuel this year. … China is the world’s third-largest ethanol fuel producer after the United States and Brazil, which make the fuel from corn and sugar cane, respectively.
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