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BEIJING, July 21 – In order to ensure the steady development of sawdust pellet machinery and biomass energy industry, China has issued a series of laws, regulations and policies to encourage and promote the development and utilization of biomass energy.

1. Industry standards and relevant laws and regulations

At the beginning of this century, in order to alleviate the fiscal pressure from growing graining inventory and develop new energy to substitute fossil energy, China started to produce fuel ethanol with aged grains. In 2001, the State Planning Commission issued a notice on mixing ethanol into vehicle gasoline, and relevant ministries issued detailed plans and measures to assist its application. In March 2002, eight ministries and commission, including the State Economic and Trade Commission issued the Plan on the Use of Ethanol Gasoline for Vehicles and Implementation Rules on the Experiment of Ethanol Gasoline for Vehicles, which clearly defined the regions for the experiment, policies and basic principles on finance, taxation and prices during the experimental period, and preferential fiscal and price policies for the production and use of ethanol gasoline. In February 2004, on the basis of the experiment, eight ministries and commissions including the National Development and Reform Commission jointly issued the Plan for Expansion of the Ethanol Gasoline Experiment and detailed rules for implementation of the plan, and under this plan, ethanol gasoline was used in a wider area of the country. In order to standardize the production of fuel ethanol gasoline, the State Bureau of Quality and Technical Supervision issued national compulsory standards – the GBl8350-2001 Fuel Ethanol and GBl8351-2001 Ethanol Gasoline for Vehicles in April 2001, and GBl835l-2004 New Standard on Ethanol Gasoline for Vehicles in April 2004. The experimental provinces and regions also issued local regulations to strengthen market access standards and market supervision. These standards and regulations played an important role in the development of biomass ethanol fuel and the use of such fuel for vehicles.

Relevant laws and regulations also help promote the development of biomass energy in China. The Renewable Energy Law adopted in 2005 states: the government encourages the development and utilization of biomass fuels, encourages the development of biomass plants, and will incorporate the biomass liquid fuels up to the national standards into the fuel marketing system. The national 11th five-year plan also stated: to speed up biomass energy development, to support power generation through crop straws and rubbish incineration and rubbish burial, to construct a batch of crop straw and wood dust incineration power plants, and to expand production capacity of biomass fuels, ethanol gasoline and biomass diesel.

2, Promoting industrial development with economic measures and fiscal suppose policies

Since 2002, the central government has also provided financial support to the experiment and use of ethanol gasoline for vehicles. Main support measures include Treasury bond investment, preferential taxation policies and optimized fiscal subsidies. A total of 480 million yuan from Treasury bonds was invested into ethanol enterprise construction in Henan, Anhui and Jilin province; The 5% consumption tax on fuel ethanol was exempted for Heilongjiang Huarun Ethanol Co Ltd, Jilin Fuel Ethanol Co Ltd, Henan Tianguan Fuel Ethanol Co and Anhui Fengyuan Biochemical Co Ltd, and value-added tax for ethanol production was levied and would be refunded later; And in the beginning of the experiment, subsidies would be provided to ensure that they did not lose money and could make profits, and in the expansion stage, in order to guide the enterprises to reduce production costs, the amount of subsidies would be gradually reduced.

In order to further promote the development of biomass energy, the Ministry of Finance, the National Development and Reform Commission, the Ministry of Agriculture, the State Administration of Taxation and the State Forestry Administration jointly issued the implementation rules of fiscal and taxation support policies for developing biomass energy and biochemical industry in September 2006. The implementation rules specified fiscal and taxation support policies for biomass energy and biochemical industry, including risk reduction and compensation, subsidies for raw materials bases, experimental subsidies and tax exemption and reduction. In addition, after the implementation of the Renewable Energy Law on January 1, 2006, various regulations and rules to support the law have been issued gradually. On October 4, 2006, the Ministry of Finance issued the provisional measures for the management of special funds for the development of biomass energy. The temporary measures contain specific rules on key areas to support, project application and approval, financial management, evaluation and supervision for the use of the special funds. The measures also stated that the special development funds were established with the finance ministry, the methods of use of the fund include grants and discounted loans, and the funds would be arranged through the central fiscal budget.

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