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How Can China Win Its ‘War on Pollution’ and Meet Its Growing Energy Needs? Carbon Capture Technology May Be Key

 August 24, 2018

China’s domestic energy consumption, considered one of the most reliable indicators of the country’s economic performance, rose by 9.4 per cent in the first half of 2018. Amid a heatwave, China also imported over 29 million tonnes of coal in July – the most in any month since January 2014.

Energy analysts already knew a coal resurgence was under way. In the first five months of 2018, 870 million tonnes of thermal coal was burned for electricity, up 12 per cent from 2017. Coal imports were up – 8.2 per cent, to 121 million tonnes – over the same period, as was domestic output (3.9 per cent) in the first half of the year.

China, the world’s largest energy consumer and producer, once again faces a dilemma its officials have yet to resolve: how to balance energy sufficiency and clean energy? Coal, as always, is at the heart of the matter.

On the one hand, soaring costs of imported petroleum and China’s proposed tariffs on liquefied natural gas will slow government plans to vary the country’s energy mix and reduce the still-dominant reliance on coal. Already, shock therapy – ordering households and industrial plants to switch from coal to gas – resulted in a heating crisis last winter, when natural gas was in short supply. Attempts to forcibly break the coal habit without providing dependable capacity have caused power shortages.

On the other hand, the government announced its much-anticipated three-year environmental action plan last month, expanding the scope of the “war on pollution”. It increases the number of pollution control regions to 82 cities, prescribes national emission reduction goals, and sets specific coal consumption targets for different regions.

Even as coal use surges, the government has not become any less ambitious in setting targets. By 2020, heavily polluted cities are expected to deliver 18 per cent reductions in PM 2.5 concentrations and 15 per cent cuts in sulphur dioxide and nitrogen oxide emissions; mid-sized and larger cities should enjoy “good air” days 80 per cent of the time.

On some level, Beijing has acknowledged that its vision of cleaner energy doesn’t translate as coal-free. Eight hundred million tonnes of coal capacity a year are to be retired by 2020, but only to be replaced with cleaner, more efficient capacity. According to the International Energy Agency’s predictions, installed coal capacity in China will remain above 1050 gigawatts annually through to 2040.

What with domestic economic growth and a commodity boom, technological innovations to reduce the carbon footprint of fossil fuels are needed now more than ever. If emissions are going to be contained, these innovations must include the development and application of carbon capture and storage on a mass scale.

For over a decade, research and development into this technology appears to have been at the centre of Beijing's climate commitments, alongside plans for wind, solar, hydro and nuclear capacity. A middle-of-the-road alternative to renewable sources, carbon capture, in theory, involves pulling and storing up to 90 per cent of carbon dioxide emissions from electricity generation and industrial processes.

In 2013, the National Development and Reform Commission issued guidelines for local governments on promoting the development of integrated carbon capture and storage projects and reducing carbon emissions. By 2014, there were at least a dozen pilot projects. These projects featured capture rates varying from 3,500 to 120,000 tonnes of carbon dioxide a year and applications including oil recovery and reuse in the beverage industry.

In 2017, Beijing announced the building of a large-scale carbon capture plant near Xian and the upgrading of a Yanchang project from a capture rate of 50,000 to 400,000 tonnes a year. On paper, these moves have made China a new global leader in carbon capture and storage endeavours.

In reality, the technology has not taken pride of place in Beijing’s clean energy calculations and is far from taking off. There are two major reasons for this. First, the end of the last commodity boom and Beijing’s regulatory freeze on coal output removed economic incentives. A main application of carbon capture is rejuvenation of ageing oilfields, which makes no financial sense unless crude oil prices surpass US$50 a barrel.

Second, carbon capture has faced scientific feasibility issues. According to an International Energy Agency report on energy technology, operational carbon capture plants can only sequester about 7.5 per cent of the emissions that need to be eliminated every year by 2025 to stay below 2 degrees Celsius of global warming.

Technical concerns have been raised over carbon dioxide escaping after it is injected into deep saline aquifers, oil and gas fields, and deep coal seams. However, in a hopeful, recent development, a team led by a Peking University scientist has found that carbon dioxide can be successfully buried in deep-sea sediment.

Carbon sequestration can also happen above ground. A five-year research project found that, from 2011 to 2015, environmental resources such as forests, crops and shrubs in China sequestered about 201.1 million tonnes of carbon a year, or 14.1 per cent of the country’s annual carbon emissions.

Is the stage now set for China to improve its carbon capture efforts? Rising crude oil prices have reached the break-even point for the use of carbon capture in oil recovery. After years of structural reforms, China’s coal sector is also in better shape to embrace market discipline and environmental requirements. Beijing’s top-down economic governance could be a strong driver of the expansion of carbon capture, and a coordinated push would keep costs down.

The central government will have to provide incentives, and local governments will have to continue to oversee coal plants, of course. But this could be a golden opportunity to pursue carbon capture on a mass scale, and take more meaningful action on climate change. (South China Morning Post)

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