BIOFUELS - AT WHAT COST ?

The report analyzes China's biofuels sector, focusing on the transition from grain-based ethanol to non-grain feedstocks grown on marginal land. It finds that government subsidies, including direct payments and tax exemptions, are essential for the industry's viability but may undermine food security, increase food prices, and cause environmental degradation. The authors conclude that biofuels have a negligible impact on China's energy security and recommend eliminating direct production subsidies.

• China provided RMB 780 million (US$ 115 million) in biofuel subsidies in 2006, consisting of direct output-linked subsidies to five licensed producers, tax exemptions, and low-interest loans.
• The Chinese government shifted its ethanol policy away from grain-based production after the depletion of stale grain reserves led to record-high domestic maize prices and threatened food security.
• Biofuel production in China is not profitable without government support due to high feedstock costs and state-controlled fuel prices.
• The expansion of biofuels has contributed to food-price inflation in China, with domestic maize prices increasing 30 per cent in the nine months before June 2007 due to ethanol processing.
• The use of 'marginal land' for biofuel feedstocks poses significant risks, including the potential displacement of poor farmers through illegal land acquisitions and the conversion of ecologically sensitive forests and grasslands.
• Biofuel production has a negligible effect on China's overall energy security; by 2020, the target of 12 million tonnes of production would represent less than 2 per cent of total oil consumption.
• Environmental benefits of biofuels are marginal; while E10 reduces some tailpipe emissions, life cycle analyses show that some pollutants actually increase compared to pure gasoline.
• High subsidies for biofuel crops on marginal land (RMB 2700–3000 per hectare) may incentivize farmers to withdraw from the 'Grain for Green' conservation program, which pays significantly less (RMB 300 per hectare).
• The biodiesel industry is largely unregulated and dominated by small-scale operators using waste cooking oil, though the government plans to introduce direct subsidies and a comprehensive development plan.

APA

International Institute for Sustainable Development (2008). BIOFUELS - AT WHAT COST ? https://www.iisd.org/system/files/publications/china_biofuels_subsidies.pdf

Chicago

International Institute for Sustainable Development. BIOFUELS - AT WHAT COST ? 2008. https://www.iisd.org/system/files/publications/china_biofuels_subsidies.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=BIOFUELS - AT WHAT COST ? |date=November 2008 |url=https://www.iisd.org/system/files/publications/china_biofuels_subsidies.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2008biofuels, author = {{International Institute for Sustainable Development}}, title = {{BIOFUELS - AT WHAT COST ?}}, institution = {International Institute for Sustainable Development}, year = {2008}, month = nov, url = {https://www.iisd.org/system/files/publications/china_biofuels_subsidies.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }