Sky-high oil prices fuel ethanol mania in China

HONG KONG/BEIJING – Record crude oil prices are fuelling ethanol fever in China, the world’s second-largest oil consumer, despite Beijing’s reservations in allowing more food grains to be used to run cars.

Beijing is reluctant to expand ethanol production from food grains as China will face a shortage of grains like corn or wheat possibly as early as next year, due to rising domestic demand brought on by higher affluence.

China began its ethanol projects in early 2000 in a bid to get rid of its surplus grain reserves and partially convert them into the biofuel.

Fuel ethanol, which is blended into gasoline for use in cars, cuts greenhouse gas emissions that are held responsible for global warming. It can be produced from grains or sugar cane.

Reuters