Oil Report

FACTBOX-How coal may fit with China's new energy plan

BEIJING, Aug 18 (Reuters) - Clean coal technologies are expected to figure prominently as China develops a new energy plan to reduce carbon dioxide emissions and broaden the use of nuclear, solar, wind and natural gas in its generation mix.

China is the top producer and user of coal, which has fuelled its rapid economic growth over the past three decades and also turned the country into the world’s biggest CO2 emitter.

Power produced by thermal-coal fired plants has left major industrial cities choking on sulphur dioxide and underground water tables depleted or contaminated.

Although Beijing is keen to develop alternative sources of energy, coal will remain the dominant source of fuel. The government is seeking to cap output at 3.6 billion-3.8 billion tonnes by 2015, a rise of more than a quarter compared to last year. [ID:nTOE67B00F]

Here are some of the options available as China looks for cleaner and more efficient ways to use its copious coal reserves:


China ordered all power plants to install desulphurizing “scrubbers” four years ago which led to a significant decline in air pollution in most major cities. Beijing is drawing up plans to improve enforcement and monitoring.


By pushing forward coal to liquids (CTL) projects five years ago, Beijing hoped to make better use of its coal reserves and ease its dependence on foreign oil. But it went cold on CTL in 2008, suspending dozens of projects on concerns the technology was expensive and wasted too much water in already arid regions like Ningxia and Inner Mongolia.

Only two projects survived the ban, including a 1 million tonne per year plant completed by state-owned coal giant Shenhua Group 601088.SS in Inner Mongolia at the end of last year.

Work was allowed to continue on a project in Ningxia, designed with South African energy giant Sasol SOLJ.J, but it still has not been given the final go-ahead. [ID:nTOE65K09M]

As China’s focus shifted to handling climate change, CTL - which does nothing to reduce CO2 emissions -- has been further downgraded and is not expected to play a big role in China’s future plans.


The International Energy Agency has identified carbon capture and sequestration as the key technology in China’s efforts to reduce CO2, and estimated that it could contribute 18 percent of China’s required emission cuts by 2050. But Beijing is not yet entirely convinced. [ID:nPEK18950]

Capture technology is ready to be deployed but costs remain high, and China is beginning with a series of demonstration projects -- including in collaboration with overseas governments.

Shenhua has built a carbon capture facility at its CTL plant in Inner Mongolia, but company officials have said it is prohibitively expensive at around $70 per tonne of CO2 and incurs a substantial “energy penalty”.

Safely transporting and storing captured CO2 is an even bigger challenge, and China is currently examining sites like saline aquifers, disused coal seams and depleted oil wells.


The 250-megawatt Greengen project built by the Huaneng Group 600011.SS in northern China's Tianjin is due to go into operation next year, one of many planned IGCC plants aimed at using coal more efficiently.

In IGCC plants, pollutants like sulphur dioxide are removed from gasified coal before it is burnt as fuel, and surplus heat from the combustion process is also recycled. IGCC plants can also handle CO2 emissions much easier than conventional power plants and could eventually be combined with CCS technology.

China is leading the way on IGCC, and its homegrown technology at Greengen has already been licensed in the United States to revive a defunct power plant in Pennsylvania. More backing for IGCC is expected in the next five-year plan.


Harvesting the methane that builds up in China’s notoriously gas-heavy coal mines has also become a key industry strategy.

Collecting and utilising CBM will reduce the risk of mine explosions, create a new and cleaner energy source and prevent a potent greenhouse gas from entering the atmosphere.

China currently has over 200 billion cubic metres of certified CBM reserves and expects to produce 2 bcm this year. Volumes are likely to rise steadily in the next decade. [ID:nTOE63F03H]


Technologies aimed at gasifying coal before it is mined have been in development for half a century, and China has already launched 16 demonstration projects, including one in collaboration with U.S. utility Duke Energy.

By eliminating the need to bring coal to the surface, UCG could improve safety and help boost China’s coal recovery rates, experts say, but developers continue to find it difficult to commercialise the technology. (Reporting by David Stanway, Editing by Ed Lane)