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China Clean Energy halts biofuels

9th May, 2008

China Clean Energy has halted production of biodiesel after rising feedstock prices.

In March, the company, which makes biodiesel from waste cooking oil, shut its 10,000 tonnes a year biodiesel plant after waste grease, cottonseed and rapeseed oil prices increased more than 40% from last year.

Beijing has capped domestic diesel prices. It has not raised fuel prices since November, even though international oil prices have climbed 28% since to over $120 (€78) a barrel.

'With such high feedstock prices, none of the producers can make money,' Gary Zhao, the company's chief financial officer, says.

Record cooking oils prices mean small restaurants are buying cheaper waste oils to remain profitable and competitive.

Due to concerns that the use of biofuels using grains could reduce food, China is promoting jatropha and other woody plants as feedstock. Other biodiesel producers include Gushan Environmental Energy, the country's largest biodiesel producer, and China Biodiesel International Holdings. All three firms are based in the southern province of Fujian.

China aims to use 200,000 tonnes of biodiesel by 2010 and 2 million tonnes by 2020 to reduce its dependence on imported crude oil, but has not yet set a timetable for mandated use of biodiesel.

China Clean Energy is also planning to equip its 100,000 tonnes a year biodiesel plant, which is still under construction, with facilities to make specialty chemicals.