Tianjin leads the way in ethanol mandate

  • Market: Oil products
  • 09/21/18

China will need 300,000 b/d of ethanol by 2020 to apply the E10 standard to all gasoline

Tianjin will on 1 October become the latest jurisdiction in China to mandate an ethanol component in gasoline as part of the country's latest effort to roll out fuel ethanol.

The municipality in north China will require a 10pc ethanol blend in all gasoline from next month, a policy change that will affect 874 retail stations. Tianjin completed the construction of E10 gasoline blending and delivery centres and the retrofit of a first batch of retail stations by the end of August. It completed retrofits to the rest of its retail stations and whittled down conventional gasoline inventories this month, smoothing the transition to E10 (see table). The E10 mandate has squeezed retailers around Tianjin because the government offered no subsidies, forcing retail operators to shoulder pump and tank conversion costs themselves.

The Tianjin municipal government has awarded six firms E10 blending and distribution licences — oil giants Sinopec, CNPC, CNOOC and Sinochem, state-owned jet fuel trader CAO and Shell, which has 62 retail stations in Tianjin. Gasoline demand in the municipality is 60,000 b/d (2.54mn t/yr), the local government says. Sinopec, which runs the 300,000 b/d Tianjin refinery, supplies 50pc of its fuel. PetroChina supplies 15pc of Tianjin's fuel and Shell, which is launching a major push to expand in China's retail sector, supplies 16pc. Other firms account for the remaining supply.

The move will make Tianjin the first of 15 Chinese jurisdictions to make the switch to E10 gasoline. Three municipalities — Tianjin, Beijing and Hebei — were identified as priorities for the E10 switch in a joint declaration by 15 government ministries in August last year. The heavily urbanised Beijing-Tiajnin-Hebei area, known as Jingjinji, is a priority target for government attempts to reduce airborne pollution and CO2 intensity from road fuels.

Take me to the pilot

The Bohai rim region that includes Shandong and Liaoning provinces, and the Pearl and Yangtze river delta regions in south and east China, respectively, are expected to be the next areas ordered to switch over.

China currently has pilot E10 projects active in 11 provinces. Retail stations in areas with active E10 pilot projects run by state-owned companies tend to be compliant with the standard, but private-sector retailers are less diligent and may buy conventional gasoline if it is cheaper.

Using ethanol in gasoline can help reduce CO2 emissions and other pollutants because, as an oxygenate with an octane number of around 111, it improves fuel combustion. The E10 mandate will create demand for China's ageing corn and wheat inventories, after the government's fixed-price payment guarantee for corn used to fill strategic reserves resulted in overstocking. China can produce 54,000 b/d of ethanol but will require 300,000 b/d by 2020 to apply the standard to all gasoline. The imposition of a 70pc tariff on US ethanol imports may complicate the task of meeting this target.

Tianjin will need 6,000 b/d (260,000 t/yr) of ethanol to meet projected demand for E10 fuel this year. There is no local supplier of ethanol at present. The Tianjin government held a tender for fuel suppliers this month, which was open to the six blenders.

Tianjin will monitor and analyse air quality and vehicle tailpipe gas emissions before and after the implementation of the E10 mandate. It is believed that the implementation of E10 in Tianjin will be used as an example for the Chinese capital Beijing.

E10 specifications
National VI A/B*
Octane number899295
RON number899295
(RON+MON)/2848790
Lead g/L0.0050.0050.005
Sulphur level mg/kg101010
Benzene %0.80.80.8
Aromatics %353535
Olefins %18/15*18/15*18/15*
Ethanol content %10.0±2.010.0±2.010.0±2.0
Water content wt %0.20.20.2
Oxygen content wt %0.50.50.5
Density 20°C kg/m³=720-775720-775720-775

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