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Asian Petroleum Review : Jan-March 2011
China's plans for its massive coal sector in the next 10 years include shutting down inefficient plants, capping output and introducing new "clean coal" technologies. China aims to build 13 "coal production bases" that will include chemical factories, highly- efficient "coal by wire" power plants connected to a beefed-up grid, as well as plants that con- vert waste products into fuel or bricks. Provinces are expected to continue closing small mines and allowing state-owned firms to swallow up private operators. And with cutting pollution a priority, China is looking into tech- nologies aimed at burning coal more cleanly. COAL TO LIQUIDS Coal-to-liquids was once regarded as one of the most exciting technologies. Dozens of projects were launched as Beijing looked for alternatives to crude oil imports. China went cold on CTL in 2008, suspending most of the projects on con- cerns the technology was expensive and wasted too much water, especially in poor, arid regions. Experts regard CTL as an emergency measure, and it is no coincidence the liquefaction tech- nologies were developed by fuel-hungry Ger- many during the Second World War and em- bargo-hit South Africa during the apartheid era. A CTL plant built by the state-owned coal giant Shenhua Group is expected to produce 11 mil- lion tonnes of oil products a year by 2020, up from less than 1 million tonnes this year, said the company's general manager for science and technology, Gu Dazhao. Work was also allowed to continue on a project in arid Ningxia province, designed with South African energy giant Sasol, but it still has not been given the final go-ahead. Other smaller projects are being built, and China is expected to have a total CTL capacity of 30 million tonnes by 2020, said Cao Liren, chief engineer of the China Synfuels Corp at a recent conference. Apart from its excessive use of water, CTL also does nothing by itself to address a more press- ing global concern - - carbon dioxide emissions. But CTL shows signs of making a comeback, especially if it can be combined with other tech- nologies like carbon capture and storage. CARBON CAPTURE The International Energy Agency says carbon capture and storage could provide as much as 18 percent of China's required CO2 reductions in the coming decades, but progress on the tech- nology has so far been slow. It allows CO2 to be separated from the coal combustion process and stored in underground sites such as saline aqui- fers or depleted oil wells. China's advantage is that it can drive the devel- opment of new technologies by forcing state- owned firms such as to build expensive demon- stration projects, which Shenhua and Huaneng are doing. Shenhua is building a carbon capture and stor- age facility alongside its CTL plant in Inner Mon- golia, and will begin storing CO2 early in 2011. Officials have complained openly that both fa- cilities are prohibitively expensive. Representatives from Huaneng, China's biggest power generator, have also said CCS is very ex- pensive, though it is going ahead with two pilot projects in Beijing and Shanghai. Not only does CCS significantly increase costs, it also reduces the efficiency of a power plant, and for that reason, would require subsidies, or at the very least, a price on carbon. CCS has received little tangible state backing so far as the government waits for possible support from rich nations under a global climate change protocol. INTEGRATED GASIFICATION COMBINED CYCLE The "Greengen" project in the northern munici- pality of Tianjin is one of China's flagship pilot clean coal projects. It relies on a self-designed integrated gas combined cycle technology. Its first phase, which consists of a 250 megawatt power plant, is expected to begin generating electricity by the end of 2011. The project, which will eventually include a large laboratory looking specifically at issues like CCS, is being led by state power giant Huaneng and counts Peabody among its investors, Qi Chunsong, vice-president of the project, said IGCC was "an inevitable choice" for China but he conceded the economics were not attractive. China's search for "clean coal" BEIJING