China's top oil company has taken over a major ethanol maker as
it tries to expand in the renewable energy sector.
China National Petroleum Corp (CNPC) has signed a deal with
Tianguan Group, based in Henan Province, to invest in the ethanol
producer, Tianguan said yesterday.
Tianguan did not disclose the size of CNPC's stake. But
according to China Business News, CNPC has taken a 55 percent share
of Tianguan to become the controlling stakeholder.
"To further expand the production capacity of ethanol based on
non-grain raw materials, large investments are needed. That's why
CNPC's investment is important for Tianguan," an anonymous Tianguan
source said.
Han Xiaoping, a senior analyst at energy website China5e.com,
agreed.
"Producing ethanol from non-grain materials demands more
complicated technology and more investment, which CNPC can offer.
With CNPC's investment, Tianguan can overcome technology obstacles
or conduct mergers and acquisitions to obtain the technology
needed," said Han.
The deal also benefits CNPC, as the nation pushes energy
efficiency and emissions reduction, Han said.
Traditional energy producers like CNPC could be told to roll out
a percentage of renewable energy in the future, or a "green energy
quota", which could be a factor behind the takeover, Han said.
CNPC said in September it would invest 10 billion yuan (US$1.34
billion) in renewable energy by 2020.
CNPC has built 88 ethanol-gasoline combining centers in nine
provinces and autonomous regions. The firm also operates a
300,000-ton ethanol plant.
Combined with gasoline at a rate of 5 to 10 percent, ethanol can
be burned at lower emission levels.
But the nation has issued stringent rules on ethanol
production.
The National Development and Reform Commission, China's top
economic planner, stipulates that ethanol fuel should be developed
without occupying arable land, large-scale consumption of grain or
causing damage to the environment.
The country will not approve new projects of food-based ethanol,
and plants currently making ethanol from corn have been urged to
switch to new sources.
Tianguan has already shifted 20 percent of its production from
corn to cassava.
But producing ethanol from non-grain materials requires higher
technology and more investment, as does capacity expansion of
existing facilities, Han said.
(China Daily November 1, 2007)
