Novozymes, the world's largest industrial enzyme maker, is in discussions to supply enzymes to projects on the mainland which use agricultural waste to produce ethanol, a clean-burning fuel that can be a substitute for petrol.
The projects are in addition to the Denmark-based firm's partnership with Cofco, the mainland's largest food processor, manufacturer and trader, and China Petroleum & Chemical (Sinopec), the mainland's largest motor fuel refiner and distributor, on a project to make ethanol from corn leaves and stalks.
The plant, to be built in Heilongjiang province, was expected to be fully operational in 2014 with a capacity to make 50,000 tonnes of ethanol annually, Michael Christiansen, Novozymes' president of China operations, told the South China Morning Post on the sidelines of the Asia Future Energy Forum.
Christiansen said it was difficult to tell the exact break-even point for biofuel projects since it depended on various factors such as feedstock, logistics and ethanol prices, but he believes a plant size bigger than 50,000 tonnes of annual output capacity is generally needed to achieve optimal profitability.
Novozymes has an exclusive agreement with Cofco and Sinopec to jointly research and commercialise technologies to turn corn leaves and stalks into ethanol. Novozymes is the technology and enzyme supplier, Cofco is the plant investor and Sinopec is the distribution partner and ethanol buyer in such projects.
The parties are free to work with other partners on ethanol projects using different feedstock, such as sorghum, forestry residue, household waste and cassava.
"Sinopec's rich crude oil refining expertise and knowledge in optimising fuel production process also play a role in the project's success," Christiansen said.
Besides the co-operation with Cofco, Novozymes entered into an agreement in April to supply enzymes to Shandong province-based chemicals producer Shengquan Group, which plans to build a plant to convert corn leaves and stalks into ethanol. Details of the plant's scale and completion schedule were not available.
Christiansen said Novozymes was also in similar collaboration with a few other firms to produce biofuel and biochemicals, including Dacheng Group, the parent of Hong Kong-listed Global Bio-chem Technology, the mainland's largest corn processor.
Since the use of food crops to produce clean fuel has been criticised for its role in raising food prices through reduced supply, Beijing in 2007 stopped approving new plants that use wide-acre grain crops as feedstock for ethanol production.
The use of non-food plants and agricultural waste is supported. But the collection of such materials is costly since no logistics firm specialises in this business, and the chemical conversion of such materials into fuel is still in the development stage.
Cofco's Heilongjiang plant is the mainland's first commercial-scale factory that uses agricultural waste as raw material. Globally, a plant being built in Italy by chemicals group Mossi & Ghisolfi Group, with annual ethanol output capacity of 50 million litres, could be the first industrial-scale ethanol plant using non-food plant material if it is completed this year as planned.
Novozymes is the enzyme supplier to the project. It agreed late last month to pay €90 million (HK$886.4 million) for a 10 per cent stake in Beta Renewables, Mossi's subsidiary that is building the Italian project.
In its development blueprint for the nation's renewable energy, Beijing wants to lift ethanol production to 4 million tonnes in 2015 from last year's 1.69 million tonnes - 1.54 million from corn and 150,000 from cassava.