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The clean and renewable biomass energy gets great attention in China after the severe haze in Beijing. Biomass energy is expected to help ease the haze and improve the energy structure in China. However, lacking of standards and supervision from the Chinese government, the biomass energy market is in a mess, influencing the development of the industry, according to analysts CCM.
Source: Bing
The messy biomass
energy market
Biomass
energy is listed as clean and renewable energy by the Chinese government,
however, with the messy biomass energy market, some biomass fuels are far away
from being clear or renewable, which does harm to the whole industry, according
to Xiong Jian, CEO of Wuhan, Optics Valley Bluefire New Energy Co., Ltd.
“China
is an agricultural country with rich biomass resources” said Chen Rong,
Academician of Chinese Academy of Engineering.
“If
it develops well, stalks can be avoided burning openly in the countryside,
while in the cities, burning coals can be replaced. Using the biomass resources
cannot only increase the income of farmers, but also protect the environment.”
However,
the development in the market is quite a mess.
“Take
the biomass briquette fuel as an example, it will be a real clear and renewable
energy only if the enterprises invest a lot in the process of burning. However,
some enterprises just lied to government, as to get the government subsidies
without burning the fuels in a renewable way” said Chen.
Actually,
in 2008, the Chinese government had once published a policy about the subsidies
for the enterprises that used the biomass fuels to generate electricity.
According to the policy of Temporary Measures on Subsidy Managements of
Energy-utilization of Stalk, the enterprises can get USD21.5 for every ton of
stalks to be produced into Biomass Molding Fuel (BMF).
However,
some enterprises harvested stalks just to get the subsidies, but the bio fuels
they produced didn’t meet the requirement of environment protection law by the
Chinese government, according to Xiong.
In
2014, in the inspection of Guangdong Environment Protection Bureau, it found
out that the qualities of the BMF are uneven and the boilers are not
standardized, because there were on standards from the government to guarantee
the quality of BMF, no guidance to provide the enterprises with pollution
control technology, no policies to limit the emission from the boilers of
biomass fuels. With such a result, the Bureau didn’t encourage the application
of BMF.
BMF
is even listed as high-polluted fuel in Beijing. The emission of this kind of
fuel can be even cleaner than the emission of the natural gas boilers; however,
due to the misuse and lack of supervision on the boilers, the reputation of BMF
is being affected, according to an insider from biomass industry.
The side-effect of
subsidy
Burning
the BMF together with coal to generate electricity is an open secret in some
power generation enterprises of biomass energy. They burn stalks in the daytime
while secretly burn coal at night, with the purpose of getting the subsidies
from the Chinese government.
As
mentioned above, in 2008, as to promote the development of BMF, the Chinese
government had published Temporary Measures on Subsidy Managements of
Energy-utilization of Stalk. After the implement of the policy, the output of
BMF rose to 5.5 million tonnes in 2012 from less than 1 million tonnes in 2007.
However,
many small-size enterprises without standard management got the subsidies from
the Chinese government by cheating, such as making fake invoice and cooking the
books. Thus, the government suspended the subsidy policy for using the stalk in
2013.
“It
didn’t seem surprised to me” said Ma LongLong, Analyst of Guangzhou Institute
of Energy Conversion, Chinese Academy of Sciences.
“Generating
electricity using biomass energy is a good concept; however, it is very
difficult for the enterprises to be profitable even with the fiscal subsidy and
preferential land policy.”
“The
development of biogas very much depends on the supports and subsidy from the
government. Compared with the conventional energy resources, the cost of
conversion and processing from biogas to electricity is quite expensive. ”
“With
the little investment benefit, the industry of biogas will decline if there is
no support policy from the government” added Ma.
The
sources to generate electricity are woods or even waste of the building
materials in some biomass power generation enterprises. Every year, some
enterprises just harvest the stalk as the pretence. Some even generate
electricity using coals, to deceive the government for the subsidy.
The
price of raw material of biomass rises to about USD46.1/tonnes - 53.8/tonnes
from USD30.7/tonnes at the very beginning. If it is made into BMF, the current
market price is about USD138.4/tonnes, much higher than the price of coal.
Also, the fuel value of biomass per unit weight is much lower than that of
coal, according to the data from Hubei Energy Bureau.
The persistent high
cost
The
high cost of biomass energy is one important reason to explain why its
development is so difficult. On one hand, the labor cost is high with the
expensive fee of collecting and transporting the raw material, because the raw
materials of biomass are distributed in the vast rural areas. On the other
hand, if biomass energy is used to generate electricity, compared to thermal
power, the enterprises just can break even, even with the subsidy.
Power
generation enterprises need big scale to reduce the unit costs to be price
competitive. However, it takes a lot of money to collect the raw materials of
biomass energy because its raw materials are distributed, which may put the
power generation enterprises into a dilemma of “more production with more
loss”.
With
the low price of purchasing and storage of stalk, the peasants are not
enthusiastic to sell the stalks.
“The
peasants send me a tractor of stalk. I can only buy them for 200 yuan
(USD30.7)” said Liu Changlin, General Manager of Jingmen Jiedebao Straw Co.,
LTD.
Biomass
energy is a seasonal and decentral energy, which it is contradictory to the
continuity and centrality of the utilization of biomass energy. With the price
advantage of coal, the biomass energy is not quite accepted in the market.
There
are about 20 boilers for BMF constructed and operated in Hubei, with the
thermal load of about 500t/h, only accounting for only 1% of the total boilers
in the whole province.
The
high heating price of USD43/t of BMF is the reason for the low amount of boilers
for BMF. Though it is lower than the heating price using natural gas boilers,
it is still higher than the price of using coal boilers, USD29/t. Without the
support from the Chinese government, it is difficult to for it to compete with
the cheap coal boilers.
CCM
has always been kept following up on the Biomass
Energy market. If you would like to know more information about the biomass
energy, you could contact us at 86-20-37616606 or email us at econtact@cnchemicals.com.
About CCM:
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets. Founded in 2001, CCM offers a
range of data and content solutions, from price and trade data to industry
newsletters and customized market research reports. Our clients include
Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.
For
more information about CCM, please visit www.cnchemicals.com.
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