Technical-economic analyses and prediction of liquid biofuels in China

ZHAO Lili; CHANG Shiyan; XU Jie; ZHANG Xiliang

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Journal of Tsinghua University(Science and Technology) ›› 2015, Vol. 55 ›› Issue (9) : 1023-1035.

ENVIRONMENTAL SCIENCE AND ENGINEERING

Technical-economic analyses and prediction of liquid biofuels in China

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Abstract

A plant-gate price (PGP) estimation model was used in technical-economic analyses of 17 liquid biofuel production processes. The net present value (NPV) method was used to determine the PGPs of biofuels with a finite internal rate of return based on the costs for total investment, feedstock, operation, taxes, fees, and loans. The results will help policy makers formulate incentive policies for research and development (R&D) of liquid biofuels in China. The results indicate that the PGPs of 1.5^th generation biofuel products are highly sensitive to feedstock cost (54%-90%). Bioethanol based on non-grain starches and sugars, and biofuels based on jatropha will be competitive with fossil fuels by 2020-2025. Most of 2^nd generation biofuel PGPs will drop during 2020-2030 and will be competitive with fossil fuels around 2025. The feedstock cost, 13%-40%, and operating expenses, 21%-48%, contribute almost equally to the PGPs. In the mid-and long-terms, the priorities should be to develop 2^nd generation fuels. The PGP of 3^rd generation biofuels are the most sensitive to the feedstock cost (64%-96%) and will not be able to compete with fossil fuels until 2040-2045. Tax preferences will be critical to accelerating the growth of biofuels. Most biofuels will be competitive with fossil fuels 10-15 years earlier if the value-added tax (VAT), consumption tax and income tax are exempted. They will be competitive with fossil fuels even earlier as if a carbon tax is imposed on fossil fuels. However, the effect of the carbon tax will not be significant in the near-and mid-terms. This research suggests that the government develops a long-term plan and take action towards the sound development of biofuels by promoting feedstock breeding, helping establish a cost-effective feedstock collection, storage and transportation system, and support R&D and demonstration projects of biofuel conversion technologies. Policies including tax preference and carbon tax are also suggested to accelerate the biofuel development.

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industrial technical-economic analyses / liquid biofuels / plant-gate price (PGP) / prediction / policy / tax preference / carbon tax

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ZHAO Lili, CHANG Shiyan, XU Jie, ZHANG Xiliang. Technical-economic analyses and prediction of liquid biofuels in China[J]. Journal of Tsinghua University(Science and Technology). 2015, 55(9): 1023-1035

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