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Has government intervention effectively encouraged the use of waste cooking oil as an energy source? Comparison of two Chinese biofuel companies

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  • Zhang, Huiming
  • Zheng, Yu
  • Cao, Jie
  • Qiu, Yueming

Abstract

There is a significant difference in the performance of waste cooking oil-to-energy companies in China. Most biofuel companies face a loss while a few others have high recovery rates and strong profitability. To shed light on this phenomenon and to aide in formulating policy, this paper constructs a framework from the two dimensions of X-Y and investigates the impact of government intervention on biofuel companies' performance by taking two companies located in the kitchen waste-to-resource pilot cities of Changzhou and Suzhou. Results indicate that: (1) the basic policy instruments of information disclosed and fee and penalty mechanisms in Changzhou are inferior to those of Suzhou. On the other hand, capital investment and cooperation between stakeholders are better in Changzhou. As for the value chain dimension, the policies are similar in both cities. This means that companies involved in the recycling of waste cooking oil and biofuel production equally neglect research and development, preferential loan and product sales by government. (2) In terms of effectiveness, recycling rates and company profits for Changzhou Yueda Kate New Energy Co. Ltd. are far below those of Suzhou Clean Environmental Technology Co. Ltd. Whether the biofuel companies are authorized by government or not, fee and penalty mechanisms and information disclosure are the key determinants affecting performance of biofuel companies. (3) There is still some room to improve the performance of Suzhou Clean Environmental Technology Co. Ltd. Policies can focus on the following: strengthening R & D, which improves the technological supply and diffusion capability of biofuel companies; building the demand-typed policy frame and adjusting policy structure; improving the market structure of biofuel companies.

Suggested Citation

  • Zhang, Huiming & Zheng, Yu & Cao, Jie & Qiu, Yueming, 2017. "Has government intervention effectively encouraged the use of waste cooking oil as an energy source? Comparison of two Chinese biofuel companies," Energy, Elsevier, vol. 140(P1), pages 708-715.
    • Handle: RePEc:eee:energy:v:140:y:2017:i:p1:p:708-715
    DOI: 10.1016/j.energy.2017.08.107
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