GRAIN Japan The Japanese government has no mandates for agrofuel blends in gasoline. Its focuses instead on supporting the development of an agrofuels industry through subsidies to its corporations, promotional programmes, and supply deals with major agrofuel-producing countries. Some Japanese corporations are world leaders in the development of agrofuel technologies and a major source of foreign investment for agrofuels production. However, other corporations, notably Mitsubishi, Toyota, and steel giant NKK are funnelling their R&D in alternative fuels towards di-methyl ether, which is made from natural gas. Some major projects In 2005 Japanese companies agreed to invest up to US$2 billion in the Brazilian ethanol sector. This was followed by a number of corporate deals and finally a bilateral agrofuels agreement between the two countries. The investments include a joint venture between Petrobrás and state-owned Nippon Alcohol Hanbai for the export of ethanol, a joint venture between Mitsui and Petrobrás for the production, transportation and export of ethanol to Japan, a biodiesel joint venture between Marubeni and Brazil’s largest grain and oilseeds merchant Agrenco, and another Mitsui ethanol joint venture, this time with the Brazilian sugar trader, Coimex. Beyond Brazil, Mitsui is building a large jatropha biodiesel refinery in South Africa and a coconut biodiesel refinery in the Philippines. Closer to home, Itochu, one of Japan’s largest trading companies, plans to build cassava-based ethanol operations in Indonesia, Thailand and Vietnam. Honda is working with the national Research Institute of Innovative Technology for the Earth on the development of cellulosic ethanol from “soft” biomass, such as rice leaves. China The Chinese government is the world’s largest investor in the renewable energy sector. Most spending goes to hydro, solar and wind energy, with less investment in agrofuels because of concerns over impacts on domestic food supplies. Still, the government has set ambitious long-term targets for the use of biofuels and has already mandated a 10% blend of ethanol with gasoline for certain provinces and cities. State subsidies for agrofuels are mainly channeled to four large ethanol plants: Jilin Fuel Alcohol Company Ltd, Anhui Fengyuan Petrochemical Ltd, Henan Tianguan Group and Heilongjiang Huarun Jinyu Ltd. Despite public concerns expressed about impacts on domestic food supplies, an estimated 800,000–900,000 tonnes of ethanol were exported from the country in 2006, mostly to the US. PetroChina’s Jilin ethanol refinery, the largest in the world, exported all of its production that year, and a growing number of agrofuel operations are sprouting up all over the country with little government restriction, many of them backed by foreign investment and oriented towards exports. To relieve tensions with food supplies, the government is encouraging the use of imported feedstocks of crops like cassava, and is helping its major companies to secure supply agreements in countries such as Nigeria, Indonesia, Malaysia and the Philippines. Some major projects China National Cereals, Oils & Foodstuffs (COFCO) is involved in three of China’s four major state-subsidised agrofuel refineries. It owns the Heilongjiang ethanol refinery and has a 20 per cent stakes in the Jilin refinery, owned by PetroChina, and the Anhui refinery. It is also building a cassava-based ethanol factory in Guangxi and two maize- and sweet-potato-based ethanol plants in Hebei and Liaoning. China National Offshore Oil Corp is developing a biodiesel refinery and jatropha plantations covering 33,000 hectares in Sichuan. Outside China, it has a US$5.5-billion joint venture project for palm-oil biodiesel and sugar-cane or cassava ethanol in Indonesia, and a Malaysian-based joint venture with Bio Sweet (Malaysia) to build a 1.5-million-tonne-per-year palm-oil biodiesel refinery on China’s Hainan Island. South Korea In 2006 the government removed tax on biodiesel and mandated that domestic diesel should contain 0.5% biodiesel. However, as gasoline is the fuel most commonly used for transportation in the country, this has had a limited impact. Given that South Korea is a major producer of MTBE, which ethanol commonly replaces, the government has shown little interest in promoting ethanol as an agrofuel. Most investment by South Korean companies in agrofuels is targeted at supply deals outside of the country. Some major projects Ingen Company plans to build an ethanol plant in Indonesia’s Lampung province, that will be supplied by cassava from a 200,000-hectare plantation. In this same part of Indonesia, Samsung plans to invest US$1 billion in agrofuel projects through a joint venture with palm-oil producer Mapoli Raya and chemical manufacturer Cho Yang Fine Chemical, which will establish an ethanol refinery and large-scale cassava plantations. Samsung also plans to set up a 200,000-tonnes per year jatropha biodiesel plant in the Philippines with the Philippine National Oil Co. Philippines The Biofuels Act of 2005 mandates an ethanol blend of 5% in gasoline with an option to increase to 10% after the first two years, and a 1% blend of coconut-based biodiesel with a similar option to increase to 2%. It also provides the agrofuel industry with a range of tax and financial incentives and funding programmes. Some major projects State-owned Philippine National Oil Co has a number of joint-venture projects under way with foreign companies, such as Sumitomo and Samsung of Japan. Recently it signed a US$1-billion biofuel deal with Biogreen Energy (Malaysia) for an agrofuel refinery and 1 million hectare jatropha plantation, as well as a US$1.3-billion deal with NRG Chemical Engineering Pte (UK), for the construction of a biodiesel refinery and two ethanol distilleries, and a US$600-million investment in jatropha plantations, which will cover over 1 million hectares, mainly in Palawan and Mindanao. Saudi Aramco’s subsidiary in the Philippines, Petron, the country’s largest oil refiner, has an exclusive ethanol supply agreement with San Carlos Bioenergy, a joint venture between UK-based Bronzeoak and Zabaleta & Co, which is controlled by the president of the Philippines Sugar Millers’ Association. In January 2007, the Philippines government signed several agrofuel deals with Chinese corporations, including a US$3.83-billion deal with the Fuhua Group to set aside over 1 million hectares of lands for the production of ethanol feedstocks for export to China. Thailand In 2003 the government mandated a 5% blend in five states and fixed the price of ethanol below that of gasoline. A nationwide mandate for a biodiesel blend of 2% is to come into effect in 2008. National ethanol production uses sugar cane and cassava, while biodiesel largely uses palm oil. Thai ethanol companies complain that the profit margin is tight, with low ethanol prices and high feedstock prices. Some major projects Thailand and Brazil have agreed on an ethanol technology transfer deal that involves the import of 300,000 litres of Brazilian ethanol Khon Kaen Alcohol, Thailand’s only publicly traded sugar company and one of its top ethanol producers, recently expanded into Laos, where wages are only a quarter of the level in Thailand, through a joint-venture sugar plantation and ethanol refinery that will export to Thailand. State-owned gas company PTT is the largest biodiesel producer in the country. It plans to expand its capacity to 1.2 million litres per day through three joint ventures with local palm-oil companies, including a joint venture with agribusiness giant Charoen Pokphand to open new palm-oil lands in the south of the country and to develop a “downstream to upstream” fully integrated biodiesel project, from the planting of seed to the final sales of agrofuels. India India is Asia’s second-largest producer of ethanol. In January 2003, the Ethanol Blending Progamme mandated the blending of 5% ethanol in petrol. With limitations to the expansion of sugar-cane production in India, the mandate encouraged Indian sugar companies to expand into Brazil. India has become the world’s largest importer of Brazilian ethanol. Most of the auto fuel consumed in India is diesel. The National Mission on Biodiesel has set the ambitious goal of a 20 per cent biodiesel blend by 2013. The government is looking to jatropha as the main feedstock, with a goal of bringing into production by 2012 13.5 million of the 39 million hectares deemed available for jatropha production in the country. Some major projects Reliance Industries, India’s largest private sector company, is planning to build a large ethanol refinery in Brazil. It also has a US$500-million jatropha refinery under construction in Andhra Pradesh. In 2006, both Bajaj Hindusthan, India’s largest sugar and ethanol manufacturing company, and Indian oil major Bharat Petroleum announced their plans for multi-million dollar acquisitions and expansions into Brazil’s sugar and ethanol sector.