Shengquan Group, a Shandong-based company specializing in furan resin and polymers, will be among the first group of Chinese companies to have commercial cellulosic ethanol production in July.

By cooperating with Novozymes, a producer of industrial enzymes and micro-organisms, Shengquan will start its commercial-scale production of cellulosic ethanol for solvents with a production capacity of 20,000 tons annually in July, the company said on April 25.

It said the facilities and factories are under construction.

Using Novozymes' enzymes, Shengquan will convert corncob residues into fermentable sugars and then into ethanol for solvents and other purposes.

The commercial production of cellulosic ethanol has been considered costly for a long time, but the company said its cost model shows that the current production cost is competitive with conventional ethanol as the feedstock is a byproduct of their current production.

"Shengquan is a global first mover in this industry, which is on the verge of materializing right now," says Poul Ruben Andersen, vice-president for bioenergy at Novozymes.

"Novozymes is proud to join Shengquan in nurturing a green and circular bio-economy which lessens the dependence on fossil fuel resources."

A recent study by Bloomberg New Energy Finance shows that China, using less than 20 percent of the available agricultural residues, could produce more than 89 billion liters of biofuel, replacing 37 percent of its gasoline consumption by 2030.

This would create 2.9 million jobs and reduce carbon emissions from gasoline-based transportation by 29 percent. The figures would be even higher if biomass from forestry residues, household waste and energy crops were included.