Will biodiesel be the next风口 (trend/boom) in new energy?

II. Market Drivers As global energy demand continues to rise and fossil fuel resources become increasingly scarce, biodiesel—a renewable alternative energy source—is expected to see further expansion in market demand. Stricter environmental regulations worldwide are also driving adoption: to combat climate change and reduce tailpipe emissions, governments have introduced increasingly stringent environmental policies, under which biodiesel’s eco-friendly attributes make it especially attractive. Moreover, technological advancement remains a core driver of biodiesel development—continuous improvements in biodiesel production technology have lowered manufacturing costs and increased output capacity, thereby enhancing biodiesel’s competitiveness in the marketplace. EU Biodiesel Policy Overview: The EU required Member States to transpose the renewable energy targets set out in the Renewable Energy Directive II (RED II) into national legislation by 30 June 2021. Some Member States have already begun phasing out palm oil for biodiesel production. Assessment of Impact on Palm Oil Demand: From a regulatory perspective, Europe’s gradual phase-out of palm oil as a feedstock for biofuels is certain—the only uncertainties lie in timing and extent. A full phase-out would eliminate roughly 2.5 million tonnes; if we include palm-oil-based biofuels imported into the EU, the reduction would be even greater. Meanwhile, removing approximately 3.6 million tonnes of feedstock—including palm oil and soybean oil—raises the question of whether alternative feedstocks can fill the gap. The EU naturally favors rapeseed oil: first, because the EU is a major producer; second, because rapeseed methyl ester (RME) offers superior cold-weather stability compared with other feedstocks; and third, non-food alternatives such as used cooking oil (UCO) and plant fibers hold exceptional promise for future development. In fact, biodiesel is highly adaptable: it can be produced from any plant oils or animal fats. Traditional biodiesel production consumes large quantities of corn, meat, or even leads to deforestation—making its raw material sourcing no more environmentally friendly than fossil fuels. Used cooking oil from hotpot restaurants, for instance, can be converted into biodiesel suitable for direct use in conventional engines. Compared with battery-powered electric propulsion, biodiesel—a clean energy source—can effectively alleviate range anxiety during long-haul aviation flights, offering an excellent decarbonization solution for the aviation industry, which has long struggled with emissions reduction. Capital has already recognized this opportunity and begun investing across the biofuel value chain. III. China’s Biodiesel Development Status and Opportunities In recent years, China has continuously promoted biodiesel development, and supportive policies have further accelerated industry growth—providing momentum toward achieving carbon peak and carbon neutrality goals. In July 2023, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Commerce jointly issued the “Work Plan for Stabilizing Growth in the Light Industry (2023–2024),” which calls for increasing the proportion and efficiency of combined heat and power generation, expanding biomass energy applications, implementing a series of energy-saving and carbon-reduction technology upgrade projects, and demonstrating energy-efficient, low-carbon technologies to improve sector-wide energy efficiency and emissions performance. Effective implementation of this policy will help broaden biodiesel’s application scope, further drive industry development, reduce dependence on petroleum resources, and—given its green and environmentally friendly nature—expand usage to effectively lower carbon emissions and other hazardous waste discharges, thus mitigating air pollution.

The EU’s ‘Internal Combustion Engine Ban’: A Compromise—Banned! But Not Quite!

Without a market, you cannot sustain a production line selling one million vehicles annually—or support the countless workers employed directly on that line and across upstream and downstream supply chains. For traditional automakers, this is today’s Sword of Damocles hanging over their necks. That is why Germany—fully aware that synthetic fuels remain prohibitively expensive and commercially unviable today—nonetheless insisted on securing from the EU an official authorization allowing registration and sale of such vehicles. It isn’t that Germany believes strongly in synthetic fuels; rather, the priority is preserving the internal combustion engine itself. “The livelihoods of hundreds of thousands of canal transport workers depend on this”—this saying is no joke, and the force of inertia is both immense and astonishing. The EU fully understands this reality: to advance new energy, it cannot wait for traditional automakers to act voluntarily—it must compel action through legislation and administrative incentives. Accordingly, the EU inevitably positions itself in opposition to major legacy automakers—and even to entire automotive manufacturing nations. 03. The Ban on Internal Combustion Engines: Is It the Beginning of Transformation—or a Harbinger of Division? As taught in middle-school history classes, post-WWII European countries chose integration to collectively build sufficient strength to contend with the two superpowers—the United States and the Soviet Union. Based on reconciliation between Germany and France, and shared historical traditions and cultural habits, Western Europe’s major economies gradually deepened cooperation, sought consensus, and expanded integration—eventually forming today’s European Union. What once held this entity together was aligned economic interests—exemplified by the European Space Agency and Airbus Group. Today, what sustains the EU is a series of political consensuses: solidarity with LGBTQ+ communities, support for Ukraine against Russia, and commitment to environmental protection—all serve as pillars of unity. If LGBTQ+ rights symbolize “freedom,” and support for Ukraine embodies “democracy,” then unwavering environmental leadership signifies “shaping the future.” A clean, sustainable human future—and the EU intends to lead it. As widely known, only pioneers have the authority to set standards—and all benefits flow within the framework of those standards. Indeed, the EU has made substantial contributions to global environmental efforts. Yet it is undeniable that the EU’s persistent pursuit of environmental goals is also driven by self-interest. Now, however, environmental policy is generating divergent interests within the EU: Should Europe sacrifice its current internal combustion engine industry for the sake of tomorrow’s new-energy future—or delay new-energy adoption to protect today’s gasoline-powered vehicle sector? This question plays out differently across individual member states: Germany declares itself a powerhouse of automotive manufacturing, with hundreds of billions of euros in auto-sector output and hundreds of thousands of jobs at stake; Denmark argues the 2035 ICE ban comes too late—its own target is full phase-out by 2030; Even among countries opposing the ban—Germany and Italy—their stances and outcomes differ markedly. Germany successfully negotiated EU approval to permit registration and sale of vehicles powered by synthetic fuels; the EU conceded. Italy, meanwhile, requested inclusion of “biofuels” (fuels derived from biomass, edible oils, or animal fats) under the same exemption—but the EU rejected this request, provoking strong Italian dissatisfaction. Italy contends the EU holds an “overly narrow definition of synthetic fuels” and vows not to abandon its fight to secure regulatory approval for biofuels. Yet who can say whether Italy perceives the EU as applying double standards—favoring Germany while ignoring Italy’s concerns? Even within individual countries, a deep and seemingly unbridgeable rift has emerged between conservative parties supporting traditional industries and green parties championing environmental causes.

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