The Chinese government unveiled a plan for a biodiesel pilot scheme in nearly two dozen locations, the National Energy Administration said on April 3.
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Register NowThe pilot project aims to expand domestic biodiesel application scenarios and establish replicable policy systems to gradually form demonstration and scale up effects. Following expert review and evaluation, Dezhou City in Shandong Province, among others, will receive support to promoting biodiesel application pilot work.
Biodiesel, produced from vegetable oils, animal fats or recycled restaurant cooking oils, is recognized globally as a low-carbon, sustainable fuel. In China, however, much less attention has been paid to biodiesel in its domestic decarbonization program than to electrification and renewable deployment.
"The Renewable Energy Law clearly states that the state encourages the production and utilization of bio-liquid fuels. The '14th Five-Year Plan' Modern Energy System Plan also requires vigorous development of non-grain biofuels such as biodiesel," the NEA said in a statement.
The administration has previously stated that it aimed to stimulate a variety of demonstration projects testing different pathways for biodiesel applications, identifying replicable models for broader implementation and commercialization.
For road transportation, the NEA recommended starting from administrative or industrial clusters like industrial and logistics parks, mining areas, and duty-free zones. Biodiesel supply chains could be built up within these clusters to match suppliers, retailers and buyers.
Instead of private vehicles, NEA suggested biodiesel pilots focus on commercial vehicles, such as logistic, sanitation, postal and courier vehicles, as well as public buses.
For shipping, the agency recommended test deployments of B5, B24 and other qualified biodiesels in both inland waterways and sea routes. B5 and B24 refer to the percentages of biodiesel in blended fuels, with B5 referring to blended fuels that contain up to 5% biodiesel.
Qualified pilot projects would be prioritized for medium- and long-term loans.
While China's domestic biodiesel market remains comparatively feeble, the country has developed a biodiesel export industry fed by used cooking oil. China is one of the largest global buyers and consumers of vegetable oil, leading to sizeable UCO-based biodiesel production.
In 2010, the State Council ordered better management of used cooking oil with a view to commercialization. In 2017 the General Office of the State Council identified the management of UCO as a key part of food safety for the 13th Five Year Plan period (2016-20).
Companies making use of the resource were encouraged to expand operations, with tax breaks to support research into technology and the roll-out of systems for utilization.
In 2002 China's first 200,000 mt biodiesel plant was included in national innovation plans. In the 20 years since, however, domestic demand for biodiesel has been minimal and there has never been a nationwide blend mandate for the product.
The only exception is Shanghai. Since 2013 the city has been experimenting with biodiesel use in public buses and street-cleaning vehicles. By the end of 2020, B5 biodiesel was available in all of the city's 243 filling stations.
Trade flows
EU was the top importer of Chinese biodiesel in 2023, buying 1.85 million mt, up 2.9% from 2022, data released by the General Administration of Customs China and shared by traders showed Jan. 29. China's total biodiesel exports totaled 1.95 million mt in 2023.
The uptick in EU imports slowed in the second half of 2023 due to allegations of fraud by EU biofuel trade bodies and an ongoing anti-dumping investigation on Chinese biodiesel exports by EU authorities.
Netherlands was the top EU buyer of Chinese biodiesel in 2023 at 1.51 million mt, up 14% from the previous year, followed by Belgium and Spain, according to the trade data.
In feedstock trade, the US emerged as the largest buyer of Chinese used cooking oil in 2023 at 834,004 mt, up exponentially from 47,485 mt in 2022, after the US Inflation Reduction Act in August 2022 started giving tax credits for renewable biodiesel made from the waste product.
In 2023 the EU bloc was the second-largest buyer of Chinese used cooking oil at 523,152 mt, while Singapore was the third largest buyer at 412,056 mt.
Platts, part of S&P Global, assessed Biodiesel FOB Southeast Asia at $1,110/mt April 3, up $19 on the day.