(Xinhua)
Updated: 2007-12-07 14:56

China's Ministry of Finance (MOF) has drawn up policies to promote the production of non-food sources for biofuels, a senior MOF official told a Beijing energy conference.

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The ministry will use subsidies and other forms of financial support to reduce the risks of producing these sources, said Zeng Xiao'an, deputy director of the MOF's Department of Economic Development, at a synthetic fuel forum held in Beijing Thursday.

"We have worked out a complete set of policies to support non-food biofuels, as they are clean energy sources with a limited negative impact on the environment," Zeng said.

Flexible subsidies will be offered to biofuel producers who lose money on crops when crude oil prices are low, he said, and the government would encourage enterprises to reserve funds to offset such risks.

Farmers will receive a 3,000-yuan (US$405) subsidy for each hectare of forest products for biofuels, such as ethanol and bio-diesel, and 2,700 yuan for each hectare of crops for biofuels, Zeng said.

The ministry would also subsidize demonstration projects producing ethanol from cellulose, sweet sorghum and cassava or making bio-diesel from forest products, so as to make it easier to get bank loans for construction, according to Zeng.

Projects that are up to industrial standards would receive rewards ranging from 20 percent to 40 percent of the total investment, he said.

"Government subsidies are a small proportion of the total investment of a bio-diesel project; however, we are confident of the long-term prospects for bio-diesel production," said Liu Jianbo.

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