Head of Celanese China says product could address range of issues, but expert voices efficiency concerns

For an increasingly energy-hungry China, using coal-based ethanol as an alternative to gasoline and diesel is key to reducing dependency on imported oil and addressing energy security, the head of a chemical company says.

“China will only continue to demand more fuel products,” Celanese China President Josh Cheng said. “As it is, China already imports 52 percent of its energy.”

Clean coal technology, he said, can significantly help meet the country’s energy demands for the next two to three decades.

Last month, a joint venture between Celanese, a Fortune 500 company, and Indonesian state-owned energy company Pertamina to develop fuel ethanol projects was announced. The deal is intended to address the ever-increasing demands of Southeast Asia’s largest consumer of energy.

This was a major step forward for the company, which had run into problems in the United States, where legislation predating Celanese’s coal-to-ethanol technology requires that most ethanol made in the country be derived from corn.

In China, Celanese has only been approved to build a facility in Nanjing, capital of the eastern province of Jiangsu, for industrial ethanol, used mainly in paints, inks and pharmaceuticals, and has no presence in the potentially massive fuel ethanol market. Cheng cites the country’s regulatory environment, which limits fuel ethanol distribution to designated players, as the main reason for his company’s absence.

Last year, Celanese said Chinese consumption of industrial ethanol was 3 million tons a year in 2010, with growth expected to continue at 8 to 10 percent yearly. However, demand for fuel ethanol, at 1.5 million tons in 2010, was projected to jump to 15 million by 2020.

Celanese has touted its technology as a “game-changer” that could transform the ethanol industry. Previously, ethanol was largely derived from agricultural products such as corn and sugarcane. This had been criticized for its impact on food prices and use of arable land.

Celanese’s process uses hydrocarbon products to make ethanol. China could use coal, natural gas and shale gas to efficiently and cost-effectively produce ethanol, Cheng said.

However, Wang Tao, a resident scholar of the Energy and Climate Program at the Carnegie-Tsinghua Center for Global Policy, said increased production of coal-based ethanol, like corn-based ethanol, may not be carbon efficient.

“Using this technology to generate fuel has huge implications on China’s emission targets and on climate change globally” and this concerned the Chinese government, Wang said.

The latest five-year plan stated that the country aims to reduce carbon dioxide emissions per unit of GDP by up to 17 percent.

Furthermore, coal, which is widely considered a dirty source of power, is also expected to shrink in demand due to other directives in the plan.

By staff reporter Yonina Chan