COFCO, Sinopec and Novozymes to Build Cellulosic Biofuel Demonstration Facility in China by 2011

Enzyme company Novozymes, COFCO, a leading producer and supplier of processed agricultural products, and Sinopec, the world’s third-largest oil refiner, signed a Memorandum of Understanding covering the next steps towards commercialization of cellulosic biofuel in China.

As part of the agreement, COFCO and Sinopec will build a cellulosic ethanol demonstration plant for which Novozymes will supply the enzymes. The new plant comes online in the third quarter of 2011 and will produce three million gallons of bioethanol made from corn stover a year.

In February, Novozymes launched new Cellic CTec2, an enzyme product enabling the biofuel industry to produce cellulosic ethanol at a price competitive with gasoline and conventional ethanol. (Earlier post.)

In 2009, we forged this partnership in China to develop biofuel from agricultural waste; today, we are one step closer to producing commercial quantities. With gasoline prices hovering around $4 per gallon in China, companies across the country are reaffirming their commitment to investing in development of clean, alternative fuel sources.

—Michael Christiansen, President, Novozymes China

The new plant will be the largest demonstration facility converting agricultural waste into biofuel in China. China has an adequate supply of biomass, and agricultural residues alone exceed 700 million metric tons annually.

A 2009 study by Novozymes and McKinsey showed that by converting agricultural residues into fuel ethanol, China can reduce its gasoline consumption by 31 million tons in 2020, thereby reducing its dependence on imported petroleum by 10% and abating 90 million tons of CO₂ emissions. By doing so this industry will create 6 million direct jobs, resulting in an RMB 32 billion (around US$4.7 billion) income increase annually.

By 2020, the number of cars in China is expected to exceed 200 million, up from 130 million today, which will lead to substantial growth in the demand for vehicle fuels. To meet these rising demands, the Chinese government has launched an ambitious bioenergy development target that will boost the production of cellulosic biofuels.

COFCO and Novozymes have cooperated for the past three years and as part of that agreement, COFCO runs a small-scale pilot plant. COFCO will continue to operate the pilot plant and contribute its knowledge on grain processing and production of biofuel.

Sinopec owns around 30,000 gasoline stations and has a 60% share in China’s refined-oil market.