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An Alternative Source of Energy

Charles Tang, Chairman of the Brazil China Chamber of Industry & Commerce Comments made at the China Europe Business Meeting, Frankfurt, 7-9 November


China's recent rapid economic growth has created enormous social and economic benefits for its people. In fact, the Chinese government has made the greatest achievement in the history of human rights, lifting almost 400 million people from poverty to live with more dignity and participate in the economic success of the country.

However, this growth has also created new challenges for the government. Two of which are to clean up its pollution and resolve the energy shortage problem. Hardly a day goes by without there being some commentary in the international and Chinese press on the challenges posed by severe atmospheric conditions in major Chinese cities.

Recently, China Daily carried an article about a plan to remove more than one million automobiles in Beijing in an effort by the government to improve pollution standards for next year's Olympics.

Also, in a recent article in its Asian edition, Newsweek carried a story on the severe smog problem in Hong Kong. Chinese newspapers report that both the central government and regional authorities will now restrict industries that pollute, and consume a lot of energy.

Having lived for many years in a country that is a pioneer in using clean and renewable energy to power its motor vehicles, it is this technology that can contribute to China's adoption of a clean energy model.

The petroleum crisis of 1973, coupled with Brazil's former financial difficulties of not having enough foreign reserves to pay for petroleum imports gave birth to the development of its green renewable energy program and ethanol automobile technology.

This clean energy model has been implemented with great success for almost 35 years. All gasoline used in Brazil contains a 25 percent mix of sugar cane ethanol and about one-third of its automobiles are gasoline free - 100 percent powered by ethanol. Brazil now even requires, by law, a 5 percent vegetable oil mix in all fuel oil in the country.

Although China has instituted a program for E10 gasoline mix - 10 percent ethanol mix - in nine provinces of the country, the steep rise in the price of corn and the amount of energy it takes to produce ethanol from corn has made the task of supplying enough ethanol more difficult.

Using corn to produce ethanol utilizes large quantities of energy to produce energy. These significant corn price increases have also pressured food costs and have provoked consumer dissatisfaction.

China, like the United States, utilizes corn to produce ethanol. Not only is this a less efficient method for producing ethanol, but utilizing corn as a raw material for fuel creates unnecessary competition with the food chain.

Even before the recent sharp rise in the price of corn, the cost of producing one liter of ethanol in Brazil was about 21 cents, while the same liter of ethanol in the United States costs 48 cents and 46 cents in China.

With current corn prices, the cost for producing Brazilian ethanol is only about one-third of the US costs. One of the major savings in utilizing sugar cane is that the waste, "bagaco", leftover from the sugar cane with its juice squeezed out, is used to generate electric energy.

Not only are sugar and ethanol plants in Brazil self sufficient in energy, but they even produce excess energy that are sold to the local grid to supply neighboring power requirements.

Of course, Brazilian conditions cannot be compared to those in China. Although both are continental size countries, with China being almost one million sq km larger than Brazil, the giant of Asia has almost seven times the population of the giant of South America.

Furthermore, Brazil can easily convert another 70 million hectares of unused land into agricultural production without affecting its existing pastures that raise cattle, or even infringing upon the Amazon Rain Forest.

With foresight, Japan, through one of its trading companies, has joined with ethanol producers in Brazil and the national petroleum company to start building 40 new ethanol plants in that country for its clean energy requirements.

Of course, the new plants will not be able to substitute for all of the country's energy needs. It does, however, make a contribution and a difference, especially to the country's outlook on preserving its environment through the use of a clean energy model.

Rather than spending more of its reserves for dirty energy, China could spend less by using clean energy. With petroleum prices at almost $100 a barrel, Brazilian sugar cane ethanol is clean, renewable and cheap.

The instability of many of the fossil fuel producing countries and the competition for petroleum resources with its largest trading partners may be other advantages for China to look into ethanol imports.

Present import duty on ethanol in China makes this important energy resource prohibitively expensive to import and thus economically unfeasible. By importing ethanol, China also conserves its precious water resources. Perhaps it is time for this duty to be reviewed.

Anyhow, the import of concentrated sugar cane syrup is possible. Plants can be built in China to convert this imported syrup into sugar and ethanol. This would help create employment, reduce energy costs, and primarily, clean up pollution. Another advantage for China in using this technology would be its ability to sell, rather than buy, carbon credits for air preservation under the Kyoto Protocol.

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