Today COFCO, a leading producer and supplier of processed agricultural products, Sinopec, the world’s third largest oil refinery and Novozymes, the leader in biofuel enzyme development and production, have signed a Memorandum of Understanding to take the next steps towards commercial production of cellulosic biofuels in China. As an element of the partnership, COFCO and Sinopec will build a cellulosic demonstration plant and Novozymes will produce the enzymes needed for production.

It is anticipated that the plant will be online in the 3rd Quarter of 2011 and is expected to produce three million gallons of bioethanol made from corn stover per year. One of the key elements that will make this cellulosic ethanol commercially competitive is the Cellic CTec2 enzyme developed and launched by Novozymes this past February. Once the plant is completed, it will be the largest demonstration facility converting ag waste into biofuel in China. Estimates show that China has more than 700 million metric tons of agricultural residue available per year and a recent study by Novozymes and McKinsey shows that the conversion of ag waste to biofuel has the ability to reduce China’s gasoline consumption by 31 million tons in 2020.

“In 2009, we forged this partnership in China to develop biofuel from agricultural waste; today, we are one step closer to producing commercial quantities,” said Michael Christiansen, President, Novozymes China. “With gasoline prices hovering around $4 per gallon in China, companies across the country are reaffirming their commitment to investing in development of clean, alternative fuel sources.”

The number of cars in China is expected to exceed 200 million by 2020 an increase from 130 million on the road today. To meet the demand, China launched an aggressive bioenergy plan of which cellulosic biofuel production is one component. In addition to lowering China’s gasoline needs, this portion of the plan will also reduce CO2 emissions by 90 million tons and provide 6 million new jobs.