Oil Report

INTERVIEW-China aims for first zero emission power by 2015

BEIJING, April 23 (Reuters) - China plans to build a major emissions-free coal burning power station by 2015, the project chief said on Wednesday, putting it at the front of a tight global race to build the first commercial scale plant.

GreenGen president Su Wenbin said he has escaped the funding and planning problems that have delayed similar ventures in the U.S. and Europe because tackling climate change is a top priority for Beijing.

“In China our system is different. When we decide to do something we can just push on with it...we know we will get government support,” he told Reuters in an interview.

But Su says GreenGen, controlled by state-owned power firm Huaneng Group, is not trying to compete with similar carbon capture and storage projects in Germany and the United States.

If the 400 megawatt (MW) plant is built on time and at a reasonable cost, it could bring sweeping change to China’s power industry and its international image, and potentially billions of dollars for Huaneng, which owns 52 percent of GreenGen Co Ltd.

China has plentiful reserves of coal which supplies some 80 percent of its electricity. But the plants that burn it shroud swathes of the country in smog and attract international criticism for heavy emissions of greenhouse gas carbon dioxide.

Beijing is keen for a solution and is pushing its big firms -- mostly members of GreenGen -- to clean up their act, which may speed the spread of any successful zero-emissions blueprint.

Datang Group, Huadian Corporation, Guodian Corporation and China Power Investment Corporation, and top coal miners Shenhua Group and China Coal Group hold 6 percent stakes. Peabody Energy Corp BTU.N, the only foreign partner, has another 6 percent.

“With previous (pioneering) projects, the development from the first to the second plant has been very fast. We just have to make sure we have fully mastered the technology,” said Su, who also helped develop high efficiency coal plants for Huaneng.

Carbon capture and storage at fossil fuel fired power plants could curb global carbon emissions by about a third, analysts say. It can cut some 90 percent of carbon from plant emissions, which in turn account for about 40 percent of global output.


Su admitted that the price-tag for GreenGen’s clean power will be quite high, with first stage gasification and power plants alone costing around 2.5 billion yuan ($358.2 million).

With raw material costs rising rapidly amid a commodity boom, and demand for qualified workers high, Su said he could not yet give a budget for the second and third stages which will develop the technology to separate and store carbon dioxide.

Huaneng, which has a tradition of environmental innovation in the Chinese power sector, is taking the leap because of social and environmental concerns, Su said. But its leadership also gives it a chance to become a world leader in a lucrative and cutting edge technology.

GreenGen has opted for a plant design where the carbon dioxide is removed after coal is gasified, leaving hydrogen gas that can directly fire a generator or be put in fuel cells.

“We are a developing country, building a lot of new power plants, so this model is suitable for us,” Su said.

The main alternative at present is stripping carbon dioxide from waste gases after combustion -- the model Britain is focused on, which could reach markets sooner and is expected to be cheaper than the IGCC model.

The power will be sold straight into the grid, but Beijing is still debating how much Huaneng should get for it, Su said, adding that he expects some kind of subsidy.

“We haven’t yet got the final permit, because once they do that they will have to set the power price, and they are still researching it,” Su said, adding that he is ready to start building the first phase as soon as they get the go-ahead.

The plant will be built in the coastal city of Tianjin.

In 2010 phase two will begin, with construction of a small, 20 megawatt CCS plant -- similar to several under construction around the world -- that will use a small portion of the synthetic gas and allow Huaneng to iron out technical problems.

That should be running smoothly by the end of 2012 and in 2013 work will start on the commercial scale demonstration plant.

It is located near an oilfield, so some carbon dioxide will be used to enhance recovery of crude, while emptied gas and oil deposits could also be suitable places to bury the gas.

Another tiny carbon capture project in Beijing, also run by Huaneng, but not connected to GreenGen has an even more novel use for the gas it siphons out of power plant emissions.

The 3,000 tonnes extracted each year, starting this July, will be used to carbonate fizzy drinks, the company said.

Huaneng Group is the parent of listed Huaneng Power International Inc 0902.HK600011.SSHNP.N. (Reporting by Emma Graham-Harrison; editing by James Jukwey)