China Clean Energy Chairman Tai Ming Ou talks to Amy Cheung of The China Perspective about prospects for a green future in China.

TCP: Demand for your company's products is rapidly accelerating due to China's growing fuel needs, escalating energy prices, and increasing environmental concerns.--Can you explain how these  factors are advantageous to China Clean Energy?
Tai Ming Ou: At present, 26% of China Clean Energy’s  revenues are generated from biodiesel products and 74% from specialty chemicals. As the world’s second largest energy importer, China’s economy, transportation and power generation demand energy. Biodiesel is 100% replaceable for petrodiesel but of low emissions and pollutants level. Biodiesel can also be used by vehicles and power generators. Our specialty chemicals products, such as polymer acid, can be used for producing ink and other specialty chemical products, catering for customers both at home and aboard.

In 2005, our company grew 50% year-on-year, including an 8 to 10% year-on-year increase in specialty chemical products. We expect growth in biodiesel products to be even stronger in the future. In 2007, we predict our biodiesel products will enjoy a more than 100% year-on-year growth. We haven’t been spending much on advertising but our biodiesel products have attracted many gas station owners in the mainland.

TCP: What are CCE's major product lines that target China's growing need for energy alternatives?
TMO: CCE is currently in the process of applying for our own patent for biodiesel products and technology. Basic approval is already secured. We started our own research and development efforts with our own professional team in 2003, focusing on biodiesel technology and we have been in production since December 2005. Biodiesel has gained increased recognition as an environmentally friendly energy alternative because it does not have any sulphur content and waste emission is only 10% that of petrochemical.

TCP: It is estimated that oil prices in 2007 will remain at a relatively low level compared to previous years. What effect will this have on demand for your vegetable oil-based chemicals?
TMO: China’s wholesale prices for oil and gasoline are regulated by the government. This means that oil wholesale prices are below international prices. While we are selling biodiesel in China without government incentives, we also need to compete with petroleum so we priced our biodiesel at 50 yuan per ton. At the same time, raw materials needed for biodiesel follow crude oil prices. This helps balance our profit margin against adverse effects of oil price changes.

TCP: Apart from China, what other markets is CCE in?
TMO: Regarding our specialty chemicals, one third of sales revenues are generated from international sales in the US, India, Singapore, Saudi Arabia ad Hong Kong. China generated the remaining two thirds of this segment’s sales revenues. Sales of biodiesel are done locally and we don’t have any plans yet to sell biodiesel products abroad because of the following reasons. Firstly, CCE meets significant local demand and this is continuing to grow. We can basically sell as much as we can make. Therefore, we focus on satisfying mainland customers and expanding our client base first. Secondly, overseas markets have higher entry thresholds. Moreover, we have to consider the shipping, logistic and transportation costs that come with exporting our products.

TCP: The Chinese government is constructively promoting the use of green energy. Are you collaborating with the government in this regard?
TMO: The Chinese government has detailed the development and promotion of green energy as a major goal for its 11th Five Year Plan. CCE has received research grants and other forms of recognition. However, we received no sales incentives such as tax reduction and reimbursement. We hope the government will execute an incentive plan modeled upon that of Europe so our biodiesel products can compete better with petroleum-based energy.

TCP: What is CCE's next business move?
TMO: In December 2006, CCE acquired usage rights of a piece of land in Fujian province with a total area of 2000 square feet. In the next two years, we will use this location to install our second biodiesel refinery, which will have an annual production capacity of 100,000 tons. This entity is favorable for CCE’s business expansion because it is near to the port, making land and water transportation easily accessible. We intend to import palm oil waste from Indonesia and Malaysia for biodiesel production.