China’s plan for nationwide use of eco fuel by 2020 is suspended, as the cost of E10, a biofuel mixture of gasoline and 10% corn-derived ethanol, has spiked.
Ethanol supply gap was triggered by corn shortage in China, as the result of which ethanol price grew by 30% this year. As Bloomberg Green points out, demand for ethanol rose significantly causing it to surpass gasoline by USD 194 per ton.
Due to the last year’s outbreak of African swine fever followed by pork reserves crisis, China was forced to introduce a 3-year recovery plan in rebuilding pig population. Amid COVID-19, China pushed for pig production recovery, leading to a rapid pig herd rebound. In consequence, the increasing demand for corn meals, along with the agricultural damage from typhoons, have led to a shortage of corn-derived ethanol in China.
Sinopec Group, China’s state-owned petroleum and chemical giant, announced it will be cutting E10 sales in East China. In addition, local gas stations are urging the government to reconsider the eco fuel program and ask to lower E10 dependence on corn.