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Nation supports bio-energy to reduce dependency on oil
Last Updated(Beijing Time):2006-05-03 10:32

China will use fiscal policies to encourage the production of energy from natural sources as substitutes for oil in building an environmentally friendly society.

Zhu Zhigang, vice-minister of finance, told the Xinhua News Agency that the ministry is working on policies that will enable the government as well as consumers to share the costs and risks of bio-energy production.

The ministry is considering a plan to provide subsidies to a few selected companies that specialize in bio-energy production before the cost- and risk-sharing mechanism is set up.

Bio-energy mainly refers to ethanol made from grain and stems of plants and methane, which are environmentally friendly and renewable.

China has increased its annual production capacity of ethanol used for fuel to 1.02 million tons thanks to direct funding from the ministry, preferential tax policies and subsidies, Zhu said.

Fuel ethanol is produced in Northeast, Central and East China.

The raw material for fuel ethanol includes corn and wheat, and the ethanol is purchased and mixed with petrol by the country's State-owned oil producers.

Zhu said the ministry has allocated 2 billion yuan (US$250 million) for ethanol projects in the past five years, which were launched mainly to solve the problem of a corn surplus in Northeast China, the country's major corn-producing area.

The corn-for-ethanol projects increased market demand for corn, and corn prices have been increasing gradually in the past several years, the vice-minister said.

Shi Yuanchun, an academician at the Chinese Academy of Sciences, said China should do more to increase bio-energy production to catch up with the United States, the European Union, Brazil and India.

China should study ways to manufacture ethanol by using stalks and plants produced from wasteland and low-quality land unsuitable for grain production, said Shi, former president of China Agricultural University.

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