Policy options for non-grain bioethanol in China: Insights from an economy-energy-environment CGE model

The Chinese government has been issuing numerous incentive policies to promote non-grain bioethanol development to address the problem of excessive energy consumption and environmental pollution. In this study, we divide the incentive policies into five categories: subsidies on bioethanol production, non-grain feedstocks planting, marginal land reclamation and utilization, bioethanol consumption in more cities, and consumption tax on gasoline use. The objective of the paper is to evaluate and compare the economic, energy, and environmental effects of the incentive policies to help the government choose the optimal policies to promote bioethanol in China. The results show that subsidies on bioethanol production and consumption can boost GDP, and simultaneously, decrease crude oil and gasoline consumption, and reduce CO2 emissions. However, the increase in bioethanol consumption is combined with the rise in coal and electricity consumption. Subsidies on bioethanol production can promote GDP and reduce energy consumption and CO2 emission but have less effect on bioethanol development than that under the scenario of subsides on bioethanol consumption. On the contrary, although subsidies on non-grain feedstocks planting and marginal land reclamation and utilization can improve macro-economy but have a negative effect on energy saving and CO2 emission reduction. Therefore, appropriate subsidies on bioethanol production and consumption can promote bioethanol consumption with economic, energy and environmental benefits. The Chinese government should further pay more attention to the coordination of different policy options by policy tools and intensities.