The Long Road Ahead for Reducing Greenhouse Gas Emissions in China
CGI of China's GreenGen facility.
CATF believes that partnerships between companies in China and the West are crucial to accelerating the commercialization of low-carbon, coal-based energy generation. To that end, we are working in China and elsewhere in Asia to facilitate the development of joint business ventures between innovative energy companies and research institutions. The countries' shared reliance on coal creates many challenges—along with some critically important opportunities. Energy companies in North America, Asia, Europe, and Australia have enormous experience and expertise working with coal, and are similarly motivated to develop technologies and techniques that will preserve a role for coal in a carbon-constrained world economy.
Business-to-business collaborations hold the potential to:
- Mitigate the cost of developing highly advanced clean energy technologies;
- Shorten the deployment time of clean energy systems, including CCS;
- Decrease the world's CO2 emissions.
The environmental and economic benefits of transitioning to clean energy will be smaller and slower to materialize if western and Asian companies do not work together. Investments by one country reduce the cost of that technology worldwide, increasing the likelihood that low-carbon technologies such as carbon capture, utilization, and storage (CCUS) will be widely deployed in time to help avert the worst consequences of climate change.
The importance of CCUS in the developing world can't be overstressed' Demand for energy in China and India is rising quickly and is expected to account for most of the new releases of CO2 into the atmosphere. China is the world's largest electricity producer. For China alone, coal-related emissions are expected to grow by an average of 2.6% annually from 2007-2035, from 5.2 billion metric tons in 2007 to 10.6 billion metric tons a year.1
By 2035, projections show the developing world will account for the majority of releases of CO2 in the world. So the West must cut its CO2 deeply, but shifting fossil fuel growth in the developing world to CCS is also a top global priority. Therefore, we see that, in climate change solutions, the US and China are natural partners, not rivals.
Together, the US and China account for about 40% of the world's CO2 releases. The two countries are both heavily reliant on fossil fuels. The challenges they face are the same -- how to cut CO2 emissions without harming economic growth and national security.
CATF in China
Shidongkou PCC plant, outside of Shanghai, China. The plant uses post-combustion using an amine mix, capturing 0.1/Mt/yr of CO2
In China, CATF is represented by Ming Sung, our Beijing-based Chief Representative for Asia-Pacific. Our efforts in China focus on developing partnerships and knowledge-sharing that build on the country's current leadership in low-carbon coal technologies essential to addressing climate change and energy security. Some highlights of our partnerships for CCS include:
- Stage 1 of the first commercial-scale IGCC power plant with CCS, called GreenGen, is now fully operational in Tianjin and features technology developed by the Clean Energy Research Institute (CERI) of China Huaneng Group, the largest power company in China. Stage 2 is underway, and in stage 3 a 400 MW IGCC plant with carbon capture will be constructed.
- Use of CERI technology to retrofit the Shidongkou power plant outside Shanghai with one of the world's largest post-combustion capture systems.
- An underground coal gasification (UCG) pilot and commercial project (coal to methanol) built by ENN Group in Inner Mongolia is helping demonstrate UCG's ability to significantly lower the cost of coal-to-power with CCUS.
- Shenhua Coal is operating a large-scale geologic carbon sequestration project (currently at pilot scale) at a new large coal-to-liquids plant in Yulin, China, in the Ordos Basin in the Inner Mongolia Autonomous Region, that is sending 50,000 tpa to EOR fields via pipeline.
- The East China University of Science & Technology has successfully licensed its 2,500t-petroleum coke gasification technology to western project developers, including the U.S.-based refiner Valero Energy Corp (as has CERI).
CATF staff tour a gasification manufacturing facility in Shanghai, China.
CATF sponsors and facilitates meetings, conferences, and briefings in the U.S. and China to familiarize key companies and institutions in the West with these kinds of projects and, more broadly, with the technological and industrial prowess found in the Chinese energy sector. CATF's efforts provide western technology developers—especially those looking for opportunities to commercialize advanced gasification systems—with a platform for engaging potential Asian partners.
Perhaps even more significantly, CATF has facilitated a growing number of partnerships that feature state-of-the-art and highly innovative low-carbon fossil technologies developed by Chinese companies and institutions; these technologies are being licensed to project developers in the West. This has taken the broader U.S.-China clean energy cooperation to the next level and has profoundly positive implications for climate change mitigation efforts worldwide.
To coordinate these efforts, CATF founded the Asia Clean Energy Innovation Initiative (ACEII) in 2009. Building strategic cross-border partnerships that can reduce low-carbon coal technology costs and accelerate CCUS deployment both in China and the U.S. is core to the mission of CATF's China Project. With substantial engagement with Chinese energy leaders, our work has helped lead to a number of promising recent ventures between North American and Chinese energy companies, including:
- With CATF's facilitation, the Texas Clean Energy Project (TCEP), a pioneering, 400MW-IGCC facility with 90% carbon capture located in Odessa, TX received a major boost in September 2012, as the project developer Summit Power Group signed an MOU with Sinopec Engineering from China, which allows the Chinese company to conduct Engineering, Procurement, and Construction (EPC) work at TCEP; this agreement also brings in over $1 billion in debt from the Export-Import Bank of China. The CO2 captured at TCEP will be sold for enhanced oil recovery (EOR), while the plant will also produce electricity, sulfuric acid, and urea fertilizer for additional revenue.
- In February 2012, Massachusetts-based GreatPoint Energy and Shanghai-based China Wanxiang Group signed a partnership worth $1.25 billion. This pact will enable GreatPoint, a technology developer, to build the first-of-its-kind large-scale coal-to-gas facility with a process called hydromethanation by 2015. The new facility has an expected production capacity of 30 billion cubic feet (BCF) and will capture carbon to be sold for other industrial purposes. Wanxiang will fund a portion of the project in addition to being a co-developer and co-operator. The project is located in the coal-rich Xinjiang Uighur Autonomous Region.
- EmberClear Corporation is the exclusive North American licensee of Huaneng CERI's multi-stage, dry-feed, waterwall coal gasification system, which has also been installed at the GreenGen IGCC project in Tianjin. EmberClear planned to install the technology at its Good Spring IGCC project in Pennsylvania, which was expected to deliver 270 megawatts of electricity while capturing over 50 percent of the CO2 output initially and nearly 100 percent by 2020. The companies have also signed an agreement to share technical data from the Good Spring plant and the GreenGen facility. In February 2012, the two companies signed a new technology licensing agreement that allowed EmberClear to produce low-emissions liquid fuel from coal in the United States with CERI's CTL process.
- Duke Energy and China Huaneng Group signed a technology-sharing Memorandum of Understanding (MOU) in August 2009, the potential focus areas of which include "(1) clean coal power generation with the focus on IGCC and ultra-supercritical power generation; (2) CO2 capture and sequestration including pre-combustion capture, post-combustion capture, enhanced oil recovery (EOR) and geologic sequestration, etc.; (3) Efficiency-improvement and emission reduction in coal-fired power plants; (4) renewable energy power generation including wind, biomass, solar and other energy sources." According to a Duke official, "we both have the scale and mass to push the global industry forward in the development of clean technologies." In February 2012 the two corporations expanded their cooperation by signing a new, three-year agreement which enabled them to conduct joint engineering study to determine the potential feasibility of deploying Huaneng's carbon capture process at Duke's Gibson Station located in Indiana.
- In January 2011, American Electric Power (AEP), one of the largest utility companies in the U.S., signed an agreement with China Huaneng Group to collaborate on a range of low-carbon energy and energy efficiency technologies, including knowledge-sharing on post-combustion carbon capture (PCC) technologies. Huaneng operates a large-sized PCC system at a commercial-scale coal power plant in Shanghai, while AEP is working to develop a similar facility in the United States. The agreement between the companies was signed during Chinese President Hu Jintao's state visit to the United States and was lauded in materials released by the White House, evidence of the growing importance of low-carbon energy in the commercial relationship between the two largest economies in the world.
- In January 2011, AEP signed a cooperation agreement with State Grid Corporation of China, the country's largest electricity distributor and one of the world's largest companies in terms of revenue, through which the two companies would jointly evaluate and potentially advance six transmission and distribution technologies, including ultra-high-voltage transmission equipment, advanced energy storage technologies, smart-meter technologies, and distributed generation technologies. Experts from each company would work together to research different technologies and share data about their performance. If the technologies prove feasible, the companies will explore potential fabrication and manufacturing in the United States. This agreement was also announced during President Hu's state visit to the White House.
- An initial September 2009 agreement between the U.S.-based utility Duke Energy and ENN Group of China promotes joint technology development of a variety of technologies, from CCS-relevant systems including UCG to solar energy, biofuels, and energy efficiency. In a follow-on agreement signed in May 2011, ENN Group agreed to make capital investments in commercial solar projects operated by Duke Energy Generation Services.
- Atlanta-based Southern Company deployed the KBR-developed Transport Integrated Gasification Technology (TRIG) at a commercial-scale coal gasification plant operated by Dongguan Tianming Electric Power in China. The terms of this agreement include technology licensing, engineering, and equipment to use TRIG technology at a new 120MW power plant. Operation began in 2011.
- Zero Emission Energy Plants, Ltd. (ZEEP) and ENN Group reached an agreement in September 2009 to design and construct a commercial-scale power plant in Shandong Province featuring Connecticut-based Pratt & Whitney's Rocketdyne gasification system.
- Canada's HTC Purenergy, a leading technology developer, is collaborating with Suntracing from China to demonstrate modular technology developed by HTC that uses CO2 captured from power applications to produce a fire-suppressing foam; the foam is then used to put out coal seam fires, which are common in China and a significant contributor to global CO2 emissions.
Facilitating a CCUS dialogue in China
In order to spur on the development of CCUS in China, CATF has embarked on an effort to educate Chinese petroleum engineers and management staff on CO2 enhanced oil recovery techniques including the development of residual oil zones (ROZs). CATF began a dialogue with a short course and several workshops in 2013 and 2014.
In a CATF-organized workshop, EOR expert consultants Steve Melzer and Ron Wackowski present ROZ technology to a group of Chinese oil companies at PetroChina's RIPED facility in Beijing.
- In October 2013, CATF conducted a short course on enhanced oil recovery techniques to promote CO2 utilization and storage in China. The course was held in Beijing with participants from PetroChina, Sinopec, CNOOC, Yanchang Petroleum, Huaneng Electric and others.
- In January 2014, CATF staff met with PetroChina to set up an EOR-ROZ workshop that was held in February 2014 at the Research Institute of Petroleum Exploration and Production (RIPED) in Beijing. In February 2014, CATF also spoke at and arranged for the Deputy Assistant Secretary of Fossil Energy-Coal to keynote at a CCUS conference in Beijing.
- CATF has established a relationship with the Chinese Academy of Sciences Institute of Rock and Soil Mechanics in Wuhan, China, that is researching carbon capture sources and geologic sink potential in China.
- In May 2014, CATF is meeting with Sinopec to organize a second EOR ROZ workshop to promote CO2 utilization ad storage.
Promoting Advanced Environmental Practices in Shale Development in China
CATF's November 2013 EOR School
As China has the potential to develop large amount of shale gas over the coming years, CATF began efforts in 2013 to promote advanced practices in shale gas development in China that aim to minimize methane emissions as well as impacts to water resources,. The government is strongly committed to rapid development of its shale gas resources, setting a goal to produce 6.5 billion cubic meters (BCM) of shale gas by 2015, and 80 BCM by 2020. Already, Sinopec and PetroChina have announced successful well tests with commercial-level flows in the Fuling block in the Sichuan basin of southern China.
CATF is currently engaged with Chinese companies and the government to influence the push for shale gas development utilizing best practices that conserve and protect water resources and minimize release of harmful air pollution and methane gas. Our goal is to avoid a decade of lost time and significant amounts of methane and other air emissions by accelerating the adoption of advanced practices that have been developed and commercially implemented in the US. With natural gas prices at $12-18 MBtu in Asian markets (compared to $3.50 in US), there will be a large economic incentive to get as much of the gas to market as possible, while minimizing methane emissions.
China's thirst for cleaner energy and the targets established in its 12th 5-year plan are pressuring the major companies operating in China to ramp up their efforts to explore for natural gas in shales and rapidly scale up production. But haste may risk environmental degradation and adverse human health impacts as reported in the press (e.g. New York Times article "China takes on big risks in its push for shale gas" April 12, 2014).
CATF's vision is that by learning from the experiences of modern shale developers, China can leapfrog to advanced practices proven in the U.S.
Shale gas exploratory well in Hunan province.
(Courtesy of: File photo/Xinhua)
CATF has begun to investigate potential partnerships in China, as well as actively participating in conferences in 2013 and 2014, to develop key relationships with the shale gas community in China:
- CATF helped organize a USTDA-GTI . NEA (China) workshop series in China in 2013 and 2014. CATF staff spoke on best practices efforts in the U.S. at workshops in October 2013 in Xi'an and May 2014 in Beijing.;
- CATF chaired a session and spoke on U.S. advanced practices at the U.S.-China Global Unconventional Gas Conference in Beijing in October 2013;
- In January 2014, CATF spoke at a Columbia University-Peking University Law School conference on shale gas in the U.S. and China;
- In January 2014, CATF staff met with upper level PetroChina RIPED staff to begin a dialogue on shale best practices. As a follow-up, CATF introduced PetroChina to Southwestern Petroleum (SWN), a leading shale gas producer and leader in best practices in Texas.
Moving forward on solar and nuclear energy
Taking the "all of the above" approach to clean energy, CATF has also worked on helping China industry develop nuclear and solar capabilities as well. For example:
- As part of U.S.-China collaboration on nuclear energy development, CATF is helping Chinese nuclear operators receive training in U.S. facilities run by Duke Energy and Southern Companies. Trainees shadow U.S. nuclear operators for a 3-6 months program;
- Working with Duke Energy, Huaneng Group and others, CATF is evaluating and validating the technical and economic feasibility of advanced small modular nuclear reactors for the global market, including China.
- CATF recently held a solar thermal technical conference in China for potential Chinese market development, and facilitated a meeting between Huaneng Group and a major solar thermal plant operator in Nevada.
Through facilitating these high-profile, high-impact low-carbon energy partnerships, CATF has identified new paths to further catalyze the wide-scale deployment of technologies that are beneficial both to the climate mitigation goals and a more vibrant global energy economy. U.S. companies have decades of experience pipelining CO2 and injecting it deep underground for enhanced oil recovery, which offers a stable revenue stream, and the country's capacity for entrepreneurship and innovation has produced a range of companies developing advanced CCS technologies. Companies in China are unparalleled in their ability to scale-up technologies quickly and inexpensively. China has more experience with coal gasification (a key CCS technology) than any other country, and it is rapidly commercializing gasification for electricity generation. It is CATF's profound belief that the solution to global climate change only will be found through partnerships between the world's two largest economies, and sources of climate-altering greenhouse gas emissions.