China National Cereals, Oils and Foodstuffs Corporation (COFCO), the country's main fuel ethanol producer, said yesterday that it will invest more than US$1 billion in ethanol projects in line with the nation's plan to develop clean energy.

"In the next three to five years we will spend 10 billion yuan (US$1.26 billion) in the ethanol sector so as to increase the production capacity to 3 million tons," said Yue Guojun, general manager of COFCO's bio-chemical and bio-energy division.

The company yesterday officially began construction of a cassava ethanol plant in south China's Guangxi Zhuang Autonomous Region, which has an annual production capacity of 400,000 tons.

The plant will be one of the world's biggest fuel ethanol plants using cassava root, with a total investment of 1.46 billion yuan (US$185 million), said Yue.

It will take 12 to 14 months to build the first of two production lines in Guangxi. COFCO will begin construction of a second line late in 2007 or early in 2008.

"As a new business, we will attach great importance to the development of bio-energy in the future," Ning Gaoning, president of COFCO, told reporters during a press conference for the company to change its logo.

"We estimate a net profit of 1 billion yuan (US$126.6 million) a year after all the ethanol capacity is put into operation," said Yue, who is in charge of the company's bio-energy business.

Ning told reporters that COFCO was in talks to buy into the 440,000-ton-per-year ethanol plant in East China's Anhui Province. And it is also awaiting government approval to build a 300,000-ton-per-year ethanol plant in North China's Hebei Province and another plant in Northeast China's Liaoning Province of a similar size.

The Hebei plant will convert corn and sweet potatoes into bio-fuel, while the Liaoning plant will use only sweet potato, he said.

The firm already owns an ethanol plant in Northeast China's Heilongjiang Province and has a 20 percent stake in another plant in Jilin Province, both with total annual capacity of 800,000 tons and using corn as feedstock.

China has become the world's third-largest ethanol producer after Brazil and the United States, said the National Development and Reform Commission (NDRC).

The government will continue offering subsidies to fuel ethanol producers. It currently provides the four plants 1,373 yuan (US$173.8) in subsidies for every ton of ethanol.

The nation plans to double its domestic ethanol gasoline production figure in the 11th Five-Year Plan period (2006-10), said the NDRC.

Bio-energy has been developing rapidly in China. According to statistics, by the end of 2005 more than 18.07 million households were using methane gas for fuel.

More than 3,550 bio-energy projects produce nearly 7 billion cubic metres of methane each year, according to the statistics.

Bio-energy will account for 1 percent of China's renewable energy consumption by 2010, and 4 percent by 2020, said sources with the Ministry of Agriculture (MOA).

Analysts said that developing bio-energy in rural China will promote the development of China's agricultural industry.

According to the MOA, China's installed capacity of bio-energy electricity will reach 5.5 million kilowatts by 2010, and 30 million kilowatts by 2020.

(China Daily October 19, 2006)