From gutter oil to gas stations, a B5 biodiesel invoice "runs" out of a breakthrough path

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The significance of connecting the entire B5 full chain in Dezhou, Shandong, goes far beyond the automotive sector. Because B5 and B24 share the same origin, with B5 used for road vehicles and B24 reserved exclusively for international shipping, Dezhou’s experience has laid the technical foundation for the localized allocation and deployment of B24. If these policies are truly implemented, 10 million tons of B24 would be enough for China to replace South Korea and Singapore’s share of the global market.

This invoice not only reflects technological innovation, but also underscores institutional innovation. B5 can improve engine lubrication and can be used directly without modifying existing equipment, solving the “last mile” problem in promoting green energy.

On the morning of March 20, at a gas station in Dezhou, Shandong, an invoice for retail sales of B5 biodiesel (hereinafter referred to as “B5”) was handed to a fueling customer. Although the amount was only 42.86 liters, the significance of this invoice goes far beyond the number itself.

Just four days earlier, on March 16, the same company had already issued Shandong’s first B5 biodiesel wholesale invoice, and the first such case in the entire country within city and county-level administrative regions. With the issuance of these two invoices, Dezhou became the first among 22 biodiesel promotion pilot zones nationwide to open up the full-chain channel covering “raw material collection—production and processing—intelligent blending—promotion and application.” Ji Xing, deputy director of the National Key Laboratory for Non-Grain Biomass Energy Technology and a visiting researcher at the Qingdao Institute of Bioenergy and Bioprocess Technology, Chinese Academy of Sciences, said that through systematic institutional innovation, Dezhou provides a local sample that can be replicated for large-scale industrial development.

When a complete industrial chain moves from paper into reality, can the biodiesel industry break the long-standing dilemma of “getting praise but not getting customers”?

The Dezhou “Sample” of Connecting the Full Chain

B5 is scientifically formulated by mixing 95% petrochemical diesel and 5% BD100 biodiesel (hereinafter referred to as “BD100”). It can be used directly without modifying existing equipment, and after combustion it can reduce particulate matter emissions by more than 10%. This fuel is not something new. The reason this breakthrough has attracted widespread attention is that the entire chain—from gutter oil to gas stations—has been fully “run through” in Dezhou.

Within this process, how many hurdles are there?

In most cities, these links are separated from one another. Waste oil collectors have no stable ties with production enterprises; production enterprises lack bridging channels to connect with gas stations; and the finished petroleum sales system forms its own closed loop with traditional petrochemical networks. Ji Xing frankly said that Dezhou’s success can be attributed to “system integration,” not “reinventing the wheel.”

“Actually, there are already existing policies across various sectors—finance, taxation, environmental protection, emergency response, and so on—and the technical standards are already in place. The key is how to integrate these scattered elements into one system as a whole, so that they can work together effectively,” Ji Xing said. Dezhou’s approach is precisely to “snap these links together” step by step.

The raw material end is the starting point of the entire chain, and also the most fragile link.

A set of data provided by Li Rongguang, chairman of Rongguang Biotechnology, shows that by participating in national pilot programs for resource utilization of kitchen waste, the company has established a waste oil collection network covering multiple provinces and cities including Beijing-Tianjin-Hebei and Shandong. Its annual collection capacity is 1.2 million tons, which can be converted to 1.0 million tons of biodiesel, with a conversion rate as high as 92%. He said that the biggest problem in the early stages of starting the business was raw material assurance and market recognition. The company had faced multiple shutdowns due to unstable raw material supply. Now, by using the protease method to replace the traditional acid-alkali method, almost no waste is produced from raw material to finished products. Even the remaining food residues are turned into organic fertilizer.

In response, Ji Xing said that it is precisely this sustained deep cultivation at the raw material end that makes Rongguang Biotechnology the most solid link in the entire chain.

After solving the raw material issue, there is still the need to solve the connection between production and the market. Dezhou’s plan is for a state-owned platform company to invest and raise funds to build a “bridge.”

In the chemical industrial park in Pingyuan County, Dezhou, a biodiesel intelligent blending center with a total investment of 315 million yuan has come into being. The “raw material” BD100 used by the blending center comes entirely from Rongguang Biotechnology. Two production lines connect seamlessly, meaning turning waste into treasure is no longer an isolated factory-level act, but is embedded in a complete production-and-sales ecosystem.

Zhang Yonghao, an oil products analyst at Jinlianchuang, said that by joining forces of the government and state-owned enterprises, integrating the existing policy framework and technical accumulation into an operational organic system, “putting efforts in the same direction” is the key to Dezhou’s success.

“Only when technology and institutions are tightly bound together can we control this wooden board,” Ji Xing said.

The final link is to make the product truly enter the market. Guorong Assets has laid out 4 retail gas stations in Wucheng, Pingyuan, and Xiajin, while also supplying in bulk to industries such as logistics, municipal services, and engineering construction. On the day the first invoice was issued, orders for 200 tons were received; within nearly 4 days, retail sales exceeded 5,800 liters. According to feedback from the first batch of users, the vehicle’s power and performance are basically the same as when using petro-diesel, and when fully loaded, the power is even stronger.

It can be said that the collaboration across the full chain gives this 42.86-liter invoice a weight that goes beyond the transaction itself.

From “Fragrance Outside the Wall” to “Opening Inside the Wall”

The awkward situation faced by China’s biodiesel industry for a long time lies precisely in the fact that even with a complete industrial chain, it has remained difficult to put into practice domestically.

“Driven by EU demand and the price gap between domestic and international markets, China’s biodiesel companies have long been ‘flourishing outside the wall but not inside,’ with large quantities of products used for export,” Ji Xing pointed out directly. “As international trade barriers intensify, opening up the domestic biodiesel market has shifted from a ‘preferred option’ to a ‘must-answer question.’”

Data released by the General Administration of Customs show that in 2025, China’s biodiesel exports were 9.165 million tons, down 17.57% year-on-year. In the first half of 2025, exports were only 3.81 million tons; affected by anti-dumping duties, exports declined by 42.4% year-on-year. Before that, Europe had been China’s main market for biodiesel, with exports to the European Union accounting for about 90% of the total export volume.

However, in February 2025, the European Commission issued a final anti-dumping ruling on China’s biodiesel products and decided to impose anti-dumping duties of 10%—35.6%, with an implementation period of 5 years. S&P Global reported that this measure significantly squeezed profit margins, leading to about 1/4 of producers—among more than 40 nationwide—having already shut down.

After the tariff stick came down, the industry’s response was faster than expected. S&P Global reported that China’s biofuel industry is rapidly shifting from biodiesel exports to sustainable aviation fuel exports. Zhang Yonghao believes that China’s direct exports to Europe will trend toward zero in the future, while exports to the Asia-Pacific region will become the mainstream, flowing mainly into marine biofuel blending.

The biodiesel industry has long faced the dilemma of “getting praise but not getting customers.” The core cause lies in the lack of system-wide coordination and “matching” across multiple supporting policy measures.

“Dezhou’s significance in connecting the entire B5 full chain is not limited to the automotive sector. Because B5 and B24 share the same origin—B5 is for road vehicles and B24 is dedicated to international shipping—Dezhou’s experience has laid the technical foundation for the localized allocation and blending of B24,” Ji Xing analyzed. “If these policies truly take root, 10 million tons of B24 would be enough for China to replace South Korea and Singapore’s share in the global market.” He specifically mentioned that previously, the B24 supplied in Zhoushan was 80 U.S. dollars cheaper per ton than in Singapore. With a 5,000-ton ship, that would make it about 400,000 U.S. dollars cheaper, equivalent to more than 3 million yuan RMB.

At the same time that export channels were obstructed, demand in the domestic market also failed to ignite for a long time. This situation of “blockage on the outside, no response on the inside” put the industry in a dilemma.

Shi Lishan, vice president of the China Council for the Promotion of Industrial Development, had pointed out that the development of China’s biodiesel industry is highly dependent on international markets, which is not healthy for the industry. China should gradually initiate the domestic biodiesel market.

“So, this invoice not only reflects technological innovation, but also highlights institutional innovation,” Ji Xing said. “B5 can improve engine lubrication, and it can be used directly without modifying existing equipment, solving the ‘last mile’ problem in promoting green energy.”

Cracking Threefold “Ledgers” for Development

From the success of a pilot city to large-scale applications nationwide, there are far more issues in between than just the technical side. Dezhou answered the question of “can it be done.” Next, the industry must face the question of “can it be rolled out at scale.”

On the policy level, the biggest institutional obstacle is that mandatory blending is missing. In May 2024, the National Energy Administration officially released 22 units as the first batch of biodiesel promotion and application pilot units nationwide. “Overall, the use of B5 in China mainly depends on voluntary pilots and has not yet established a nationwide mandatory blending proportion, unlike the EU’s RED II directive or Indonesia’s B40 plan,” Ji Xing said.

Ji Xing believes that after Shanghai promoted B5 in 2013, there has been no new progress for more than ten years. Combined with Shanghai’s relatively developed economy, this has led everyone into a misconception that using B5 requires subsidies. “Dezhou managed to do it in a prefecture-level city and county-level cities this time, which precisely breaks that kind of cognitive trap.”

“The breakthrough doesn’t necessarily require additional new policy measures. The important thing is how to make good use of existing scattered policies,” Ji Xing said. For example, in ESG reports, listed companies are required to meet requirements related to transportation that call for the use of low-carbon fuels. The State-owned Assets Supervision and Administration Commission issued documents requiring state-owned enterprises to procure green and low-carbon products. The Ministry of Commerce’s opinions on expanding green trade chains also clearly state that in comprehensive bonded zones, domestically produced biodiesel and ship-fuel blending can be used to produce B24 marine biofuel for fueling international vessels, among other measures. “Making good use of these policies is enough.”

If policy is a “visible hand,” then raw materials are the “invisible lifeline.”

The waste oil collection network is highly fragmented and lacks efficient large-scale recycling channels. As a result, many large factories often face idle production capacity because they cannot “eat enough.” Although the state has canceled the UCO export tax rebate to safeguard domestic supply, as the capacity for second-generation biodiesel and sustainable aviation fuel grows, demand for high-quality raw materials is expected to surge, making resource competition increasingly intense.

The difficulty on the economic level is the most core and the hardest-to-solve component among these three obstacles. Without mandatory blending requirements, end users lack the motivation to choose B5 actively. Production enterprises also find it difficult to form stable expectations for profitability, weakening the industry chain’s ability to sustain itself through internal circulation.

Beyond these three “ledgers,” there is also an invisible barrier between the public and B5 diesel. At present, some consumers have an inherent resistance to “fuel made from gutter oil,” worrying that it may damage engines. Turning technical feasibility into something users are willing to choose remains a real challenge for large-scale promotion.

Interviewees said that confidence in industry development remains necessary. The “14th Five-Year Plan” outline proposes “promoting low-carbon substitution of transport power, accelerating electrification in freight and the public sector, and applying green fuel to vehicles, ships, and other modes.” This year’s government work report also clearly calls for cultivating “green fuels,” which together point toward the direction of promoting B5.

In the future, from 22 national pilot sites to a mature market, more “Dezhous” will be needed to emerge. This requires a standard system to move from promotion to mandatory implementation; a carbon trading mechanism to extend from industrial sectors to the transportation sector; and waste oil collection networks to move from being scattered to becoming standardized. It also requires society as a whole to shift its understanding of green fuels from “something new” to “something everyday.”

Written by | Our Reporter, Qu Peiran

Published by | China Energy News (cnenergy)

Edited by | Li Huiying