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Advanced Coal Technologies in a Sustainable Energy System Preparing and Preserving the Appropriate Technological Options in China

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Advanced Coal Technologies in a Sustainable Energy System Preparing and Preserving the Appropriate Technological Options in China Advanced Coal Technologies in a Sustainable Energy System Preparing and Preserving the Appropriate Technological Options in China A Workshop Report Guodong Sun Report on a workshop jointly organized by the Energy Technology Innovation Project of the Belfer Center for Science and International Affairs, Kennedy School of Government, Harvard University, the Expert Committee on Clean‐Coal Technologies of the 863 High‐tech Research and Development Program of the Ministry of Science and Technology, China, and the China Coal Research Institute. This workshop was held at Harvard University in Cambridge, Massachusetts on September 19‐20, 2005. Introduction and motivation China’s energy infrastructure is expanding at an unprecedented speed. About 127 gigawatts (GW) of new power generation capacity—including 50.6 GW in 2004—were added from 2000 to 2004, which is more than the total installed capacity of India (~120 GW in 2002) or of Germany (~115 GW in 2002). China plans to build an additional 400- 450 GW of new power generation capacity by 2020, a large fraction of which will consist of coal-fueled plants. China has also been actively pursuing coal-liquefaction technologies and capacities because of the soaring demand for liquid fuel in the face of flat domestic oil production. New infrastructure, where choice of energy technology will be shaped largely by current regulatory regimes, will be in use for many decades especially because such investments will be too expensive to replace prematurely. Future changes in market conditions (such as the deregulation of electricity industry and a more integrated energy infrastructure), more strict requirements for local and regional environmental protection, and, perhaps most important, the need to reduce carbon dioxide emissions because of concerns over global climate change, have not been fully considered or addressed due to a combination of institutional, capability, and resource constraints. The consequence could be that China locks into a coal-based energy system where future reductions in emissions of carbon dioxide (CO2) and other environmental pollutants would lead to significant cost and efficiency penalties. Given this background, the workshop discussions were framed by the following overarching question: “What near-term measures should be taken to prevent China from locking into situations in which carbon dioxide from coal-based energy systems can only be captured and sequestered at very high costs?” Accordingly, the primary objectives of this workshop were to (1) identify and analyze the key technological, policy, and institutional issues related to the innovation and use of coal-based poly-generation system in China; (2) develop an understanding of China’s CO2-storage capacities; (3) discuss the possible roles of coal in a hydrogen economy. The United States and other industrialized countries are facing similar issues, and part of the aim of the workshop was to discuss, and learn from, these international experiences. This workshop was organized in three main sessions: (a) improvement and deployment of poly-generation technologies in China, (b) carbon capture and storage, and (c) hydrogen economy and role of coal-based hydrogen. The Chinese delegation was led by Dr. Yong Shang, Vice Minister of the Ministry of Science and Technology. Other members included China’s leading experts on clean-coal technologies and senior representatives from academia, business, and government. Key members of the Expert Committee on Clean-Coal Technology (CCT) of China’s 863 High-tech Research and Development Program and the chief engineers of China’s major CCT projects took part in the workshop. 1 Twenty experts from U.S. and European universities, firms, and governmental agencies also shared their experience and knowledge—encompassing advanced-coal technologies, innovation management, and energy and environmental policies—with the Chinese delegation. The Energy Technology Innovation Project in the Belfer Center for Science and International Affairs in the Kennedy School of Government of Harvard University hosted this workshop. A list of participants, complete with biographies, is attached. Synthesis of discussions The workshop discussions resulted in a number of insights and suggestions on what steps China and the international community should take in the near-term to prevent China from locking into a coal-based energy system where the costs of capturing and sequestering CO2 at some future point would be prohibitively high. Major challenges • Coal provides over half of China’s primary energy needs, but Chinese coal also produces about one-seventh of the total CO2 emissions from world fossil fuels. China will continue to rely on coal, the most carbon-intensive fossil-fuel, to meet much of its energy-demand increase, including for liquid fuels. While it is not clear yet when and at what level China will cap its CO2 emissions, it is inevitable that China eventually will make a serious commitment to GHG-emission restraints in the context of a global approach to the problem. This will likely happen in the post-Kyoto phase of global climate negotiations—i.e., post-2012 – but probably not later than 2015 to 2020. That means that coal-burning plants that go into operation in China in the next 10 to 15 years will be under intense pressure, early in their life expectancies, to be retrofitted to capture carbon or to be retired prematurely. • Coupled with carbon capture and storage technologies, coal-based poly-generation has the potential to reconcile increasing coal use with reducing carbon emissions. It is therefore an appropriate long-term choice for China’s coal-based energy system in a carbon-constrained world and for deregulated energy markets. 1 The challenge is to accelerate the deployment of poly-generation technology, even before China embraces mandatory carbon restraints, in order to avoid the lock-in of high emissions from and/or premature retirement of conventional coal-burning power plants between now and then. • China is among world’s leaders in the demonstration and use of coal-gasification technologies and coal-based poly-generation technologies. China’s first industrial- scale poly-generation system (the Yanzhou Coal project) was put into operation in 1 Innovative combustion technologies—such as oxyfuel and chemical looping—are at the early stage of development but may find future application in power generation under a CO2-capture requirement. But they do not have the product-flexibility that poly-generation technology provides. Such flexibility is an advantage in future deregulated energy markets (liquid fuels, electricity, etc) that are subject to price uncertainties. 2 2005, and several others are in various stages of development. A number of technological challenges, however, need to be addressed to lower the capital costs and to improve the reliability of coal gasification/polygeneration (for example, raising the single-train availability to 90% or higher for utility application and 97% or higher for refineries and chemical complexes). These challenges include improving system integration, reducing excessive downtime from key components of the gasifier, developing new gasification technologies for low-rank coals and smaller-scale applications, developing deep-cleaning technologies to meet more stringent environmental regulations at competitive costs, and developing high-efficiency but low-cost air-separation technologies. • While China has acquired manufacturing capabilities related to the manufacture of equipment for poly-generation systems, key technologies (especially gasification technologies) used in current projects were licensed from foreign technology providers. A major challenge facing China’s business and government is to develop new—and improve existing—indigenous gasification-technologies that are less expensive and better suited to Chinese coals. • The wide deployment of coal-based poly-generation systems in China—especially into the power generation sector—requires a higher degree of integration of traditionally separated energy infrastructures (electricity, liquid fuel, heat, etc), markets, and regulatory systems. A successful integration requires that a number of conditions be satisfied, including the appropriate pricing mechanism and that there be no significant barrier for market entry. Current efforts and issues • Tremendous efforts have been made in China in the innovation and use of clean-coal technologies (CCTs). Since 2001, the central government has invested, through the “863” Program, about 320 million yuans 2 in the research, development, and demonstration (RD&D) of clean-coal technologies. This program also leveraged about 1 billion yuans of investment from industry and other governmental funds. • Significant progress has been achieved in a number of areas that were supported by the “863” program. These include coal-gasification technologies (e.g., development and demonstration of a coal-slurry, entrained-flow gasifier and early development of a two-stage dry feed gasifier); coal-liquefaction technologies (e.g., field-tests of two Fischer-Tropsch units with respective capacities of 5000 tons/year and 750 tons/year, construction of a 6 tons/day direct-coal-liquefaction process development unit, and development of a direct-coal-liquefaction catalyst); coal-based poly-generation technology (e.g., supported the demonstration of advanced technologies in a poly- generation plant); ultra-supercritical power generation technology (e.g., supported the demonstration
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