China plans to implement a nationwide E10 ethanol mandate by 2020, according to a document published on the National Energy Administration's website Wednesday.
This has been expected by the ethanol market since early this year. E10 is a mixture of 10% fuel ethanol and 90% gasoline.
The E10 mandate is currently implemented in 11 provinces and cities. China is the third largest fuel ethanol consumer worldwide, with an annual consumption of around 2.6 million mt, according to the NEA.
"According to my sources, Beijing, Tianjin and Hebei will start to implement the mandate by the end of the year, followed by Jiangsu, Zhejiang and Shanghai," a Chinese trader said.
Demand in Beijing, Tianjin and Hebei is estimated to be around 2 million-3 million mt/year after the E10 ethanol implementation, which is almost the same as the total fuel ethanol demand in the country currently, a Chinese producer said.
According to NEA, the pricing mechanism for E10 ethanol is one of the key issues the government needs to work on going forward.
The price of fuel ethanol is closely linked to that of gasoline in China, as it is equal to the price of No. 93 gasoline multiplied by 0.9111.
In keeping with the plans for the nationwide implementation of the E10 mandate, China is eying large-scale production of cellulosic biofuels by 2025.
China hopes to produce 4 million mt of fuel ethanol by 2020, according to the 13th Five Year Plan issued late last year.
