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Beijing halt new ethanol projects with corn
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ozone2002
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26-Dec-2006 11:02
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Beijing has ordered a halt to new ethanol projects involving corn, a sign it wants to closely-regulate production of the environmental fuel at a time of rising grain prices.
The National Development and Reform Commission (NDRC), the main economic planning body, has told local governments to stop approving new projects that process corn for "industrial use", Xinhua reported yesterday. Ethanol, often derived from corn, is used as a clean-burning petrol additive. It is common in countries such as the US and Brazil but production and use in many Chinese provinces is still in an experimental phase. The Chinese government's reluctance to allow its ethanol industry to develop too quickly is evidence of the premium it places on "food security" and its desire to restrict overzealous development in new energy sectors. Beijing has been wary of grain prices rising too fast and of the excessive use of basic agricultural commodities for non-food purposes. Chinese grain product prices have risen in recent months, climbing 4.7 per cent last month alone, according to official data. Corn prices and supplies have been under careful watch by Beijing. But James Brock, a Beijing-based energy consultant, said the corn from the country's north-east that is being converted into ethanol is usually low-quality, such as that used as livestock feed or to make corn starch. He said the latest warning to local governments is aimed at limiting the number of new projects that will start after the current five-year plan, which ends in 2010. Projects already approved are unlikely to be affected. China is not the only country to feel the impact of increased ethanol production on grain prices. The growth in US ethanol production is a key factor behind the 75 per cent rise in US corn futures this year to a near 10 year high of $3.76 a bushel yesterday. |
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