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Alternative Fuels in China Can Replace Up to 483 Billion Gallons of Gasoline in 2020

Lux Research

Coal-to-ethanol conversion offers the most potential, as China focuses on limiting imports today and cultivating greener fuels for tomorrow, Lux Research says

BOSTON, MA – April 14, 2015 – China’s strategic shift toward alternative fuels in order to cut its reliance on foreign oil is creating huge opportunities, notably in natural gas vehicles (NGVs) and in the conversion of coal to ethanol, according to Lux Research.

The Asian giant bids to reduce foreign oil imports from the current 50% of domestic demand. What's more, its plans to limit coal-fired power plants, on account of growing pollution, means that vast amounts of oversupplied coal are available for conversion to alternative fuels.

“While the opportunity for alternative fuels is vast, the opportunities are diverse – ranging from coal-to-ethanol and natural gas vehicles in the near-term to waste-to-liquids in the long term,” said Andrew Soare, Lux Research Senior Analyst and a contributor to the report titled, “Guiding Through the Dynamics of China’s Alternative Fuels Market.”

“Downstream partnerships with major state-owned energy heavyweights are particularly important for penetrating the transportation and fuel distribution network,” he added.

Lux Research analysts evaluated China’s alternative fuels landscape to assess opportunities and identified potential domestic partners across diverse feedstocks, technologies and fuels. Among their findings:

  • Government programs tap natural gas. China’s push toward liquefied natural gas (LNG) has brought new opportunities for players in the fast-rising natural gas vehicle (NGV) market. Initiatives aim at a target fleet of 1 million heavy-duty NGVs, creating the material and device demands for LNG storage and transportation.

  • Coal-to-ethanol is on verge of large-scale commercialization. Coal-to-ethanol is a short-term winner on account of the huge quantities of coal available in China. With Chinese energy giants and academic institutes leading research, coal-to-ethanol is poised for large-scale commercialization.

  • Renewable resources abound. China has humungous renewable foodstock resources, estimated at 123 billion gallons of gasoline equivalent per year (BGGEY) and fossil resources (coal and natural gas) worth 360 BGGEY by 2020. However, logistical barriers exist, notably in biomass and waste collection.

The report, titled “Guiding Through the Dynamics of China’s Alternative Fuels Market,” is part of the Lux Research Alternative Fuels Intelligence service.