Ethanol Production Subsidies/Tax Reductions

Since 2002, bioethanol producers in China have benefitted from subsidies, as well as tax reductions or exemptions of VAT or import duties. These reductions and deductions have totalled approximately CNY 190 million, and the Ministry of Finance has provided CNY 2 billion in subsidies to cover losses.

The subsidy in 2006 was CNY 1373 per MT of fuel ethanol produced. Starting in 2002, most fuel ethanol produced was grain-based. However, a moratorium on such ethanol plants was imposed as of December 2006 by the NDRC and Ministry of Finance, lasting for a year and a half.

The government's policy was to substitute non-grain ethanol for grain ethanol, and not to compete with food requirements.

The China National Cereals, Oils and Foodstuffs Corporation (COFCO), is one of the main companies that handles manufacturing and production in the Chinese ethanol industry.

Timeline:

• 1993: COFCO set up its first ethanol plant in Heilongjiang province with annual capacity of 30 000 tonnes and enlarged to 280 000 tonnes per annum.
• 2007: China's first commercialized non-grain based ethanol project plant merged and reconstructed another ethanol plant in Anhui province with a capacity of 320 000 tonnes per annum. A third plant, in Guangxi province, began trial operations in December 2007 and was designed to produce 200 000 tonnes of ethanol per annum using only cassava as its feedstock. 
• 23 July 2010: COFCO founded National Biofuel Research and Development Center in order to accelerate the cellulosic ethanol industrialisation.
• End of 2013: COFCO had a total ethanol production capacity of 960 000 tonnes accounting for 47 percent of domestic production.

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