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By Sun Xiaohua (China Daily)
Updated: 2007-07-17 08:44

Considering the rising prices of corn and the threat to food security, the State Council, or the country's cabinet, ordered the bio-fuel industry to shift from food to non-food material in mid-June.

Xiong, however, stressed that irrespective of the raw material used, the country will continue its shift from fossil fuel to ethanol to save energy and fight climate change.

Related readings:  Food vs fuel wars just beginning  Ban on use of corn for ethanol lauded  China to raise corn output to 150m tons  Industrial demand for corn increasing

Gas and diesel sold in nine provinces is already mixed with 10 percent ethanol. Which means the country's dependence on fossil fuel dropped by 1.3 million tons last year.

But the nationwide demand for fuel is more than 50 million tons a year. So a lot more ethanol has to be made if ethanol is to be mixed with fuel throughout the country.

"The country will gradually replace petroleum with ethanol as the main fuel for its chemical industry," Xiong said.

The government is considering offering a 5 percent tax rebate to ethanol producers, and some financial subsidies both to the producers and suppliers. For producers, the subsidy is estimated to be more than 1,000 yuan ($130) for every ton of their product.

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