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Feedback and recommendations
Development of positive policy and investment frameworks to introduce clean coal technology in Hebei and Shandong Provinces

Feedback and recommendations arising from the project’s outcomes to date (Apr 2015)

1 Introduction
China is the world’s second largest economy, while also being the biggest energy-using nation in the world. It is also a major emitter both of greenhouse gases such as CO2 and of SO2, NOx and fine particulates. Even with the Government’s ambitious plans to move to a less carbon intensive economy, coal will continue to dominate the energy mix and will continue to drive economic growth for the foreseeable future. These significant and continuing increases in coal use have caused severe air pollution problems, especially in urban areas. There are acid rain problems across large regions of Southern China, while in cities throughout the country the air pollution levels are high, with 90% of those assessed failing to meet WHO health-based standards. The annual combined health and non-health cost of outdoor air and water pollution for China's economy has been estimated by the World Bank and the Ministry of Environmental Protection to be some US$100 billion per year. 

Much of the problem is caused by coal use in non-power sectors such as coking, cement production, coal to chemicals, and industrial boilers for the production of process steam and heat, all of which can show poor energy and environmental performance. There is also a major concern about the high carbon intensity arising from burning large quantities of coal in power plants, with the high level of anthropogenic CO2 emissions contributing to climate change. Given the environmental issues arising, the Chinese government has taken some very significant steps to address these and related energy issues by introducing lower carbon and zero carbon options into the energy mix. 

In 2009, the Chinese government pledged to reduce CO2 emissions per unit of gross domestic product (GDP) by 40-45% from 2005 levels and to achieve a share of non-fossil energy of 15%, both by 2020. By 2013, the carbon emission intensity had decreased by over 28.9% and the share of non-fossil fuels in primary energy consumption accounted for 9.8%. 

In June 2014, the NDRC issued two policy documents, the ‘Action Plan of Energy Development Strategy (2014-2020)’ and the ‘Action Plan of Upgrade and Renovation of Coal Power for Energy Conservation and Emission Reduction (2014-2020)’, the latter being jointly issued with the MEP and the NEA. These policies focus on the near term optimization of the energy structure, to include:
Reduce the share of coal consumption from 65.7% in 2013 to 62% by 2020 and to increase the share of coal used for high efficiency power generation
Increase the share of natural gas consumption to over 10%
Safely develop nuclear power
Rapidly develop renewable energy, with a 2030 target of achieving a share of 20% non-fossil energy in the total primary energy supply subsequently set in November 2014.

In the context of this project, a key requirement is the intention to increase the impact of high efficiency low emissions coal power generation, since this offers a major opportunity to limit the disproportionate pollution caused by ineffective coal use within some of the non-power sectors. This will include a drive to introduce supercritical steam parameters for combined heat and power plants of > 300MWe capacity. By 2020´╝îaverage specific coal consumption for existing coal power plants must be lower than 310gce/kWh after retrofit, in which average specific coal consumption for 600MWe units and above must be lower than 300gce/kWh. For the new coal power projects, unit capacity must be at least 600MWe USC and mostly 1000MWe USC, with net coal consumption lower than 285gce/kWh and 282gce/kWh respectively. In the developed eastern part of China, the emissions of new coal power projects must meet the emission limits for natural gas fired combined cycle gas turbine of 10, 35 and 50 mg/Nm3 for dust, SO2 and NOx, respectively, which can be achieved using the latest Chinese technology.

That said, in order to satisfy electricity demand growth until 2030, total power generation capacity will have to increase to about 2,300 GW, which means that even with a very strong growth in non-fossil energy, there will be increases in coal and, to some extent, natural gas use. While in percentage terms coal power capacity will decrease, this will be within a still rapidly growing power generation sector, with coal-fired power plant capacity projected to rise from about 880 GW at end 2014 to 1,200 GW. Most of this additional capacity will be built in the next 5 to 10 years. Consequently, in absolute terms, coal use for power generation will increase through to about 2030. However, the further extensive deployment of high efficiency low emissions (HELE) coal power plant, while also closing significant numbers of smaller lower efficiency units, will result in a significant reduction in carbon intensity while also providing a precursor to the addition of CCS technology as a means to make clean coal based technology a low carbon option. With regard to the need to address air quality, the application of the most modern pollutant control systems will mean that the tightening emissions standards can be achieved in the power sector.

For the non-power sectors, which produce a disproportionate amount of pollutants, this gives China some major challenges, which need to be addressed in a pragmatic manner since it cannot simply cease to use coal in some of these sectors immediately. The Chinese polices will dictate a drive to using more coal for power generation and less in the other sectors. However, the ability to make such a change will vary with each province, depending on local conditions. 

The UK Government shares many such goals, particularly in promoting low carbon transition and moving towards greater deployment of sustainable energy. There is extensive collaboration in these fields, with joint China-UK projects bringing together experts, officials and companies to share their thinking and expertise. This work not only helps China and the UK achieve their domestic objectives for low carbon development, but also helps the global development of low carbon policy, technology and expertise. 

2 The UK-China clean coal capacity building initiative
As part of the UK Government’s collaborative energy and environment activities with the Chinese Government, via the UK Foreign and Commonwealth Office (FCO) Strategic Programme Fund for China, it has supported the IEA Clean Coal Centre and Chinese partners, Tsinghua University and the Electric Power Planning and Engineering Institute (EPPEI), to assist both Hebei Province and Shandong Province in their actions to improve air quality. The IEA Clean Coal Centre is an international organisation based in the UK, which is supported by a range of national governments and corporate industrial sponsors, with most of the latter group being from developing countries.  It has a very strong international reputation for comprehensive, impartial advice on all technical, policy, techno-economic and social related clean coal technology issues, and has good links to major coal based stakeholders in China. EPPEI is a major Chinese company with a strong reputation for establishing new coal power plants and for the upgrading of existing units. The Thermal Engineering Department of Tsinghua University is internationally renowned and has enormous experience of developing clean coal solutions for both power and non-power coal based applications. In addition, the Centre incorporated representatives from the China Energy Research Society and the Beijing University of Technology, to create a powerful consortium of clean coal experts.  

2.1 Aims and objectives
The aim is to assist the provincial governments of both provinces to develop positive frameworks for introducing clean coal technology with higher efficiencies and lower environmental impact. This should help to improve the efficiency of coal utilisation and so lower carbon and energy intensities, as part of an overall transition towards a diverse energy mix that will include natural gas and renewables, in line with national policies as set out by the National Energy Administration. 

2.2 Work undertaken
This consortium has provided credible, impartial, expert advice at the policy, technical and financial levels regarding the cost effectiveness of introducing clean coal technology. This has been achieved by working with the Foreign Affairs Offices of the two provinces to provide workshops for industrial stakeholders and government officials. In each workshop, the clean coal experts provided a series of interactive clean coal presentations on technology options that might assist the two Provinces to make an effective transition towards cleaner coal use in various sectors. This was supported by subsequent interactive discussions with government and industrial stakeholders, including determining possible mechanisms for facilitating the introduction of cost effective clean coal technology in the major coal using sectors, either through new units or through retrofitting and upgrading of existing units. In addition, EPPEI and Tsinghua University are holding further collaborative discussions with stakeholders regarding specific technology introductions 

The workshops have been complemented with various information dissemination initiatives. In particular, the IEA Clean Coal Centre has established a Mandarin based section on its website that initially contained 24 IEACCC clean coal study profiles, covering power, cement, coking and chemicals. Further information in Mandarin has been added including all the presentations given at the workshops. Access is freely available to anyone in China via the web links: www.iea-coal.org and www.iea-coal.cn. 

2.3 Achievements to date
The workshops were very well received in both provinces, with considerable dialogue arising from the presentations, both in the break periods after the sessions and in the specific discussion forum that concluded each event.  

Since then, the FAO contacts in each province have advised that the provincial governments were very satisfied with the events and believe that the dialogue is of great value as they attempt to meet the new emissions performance standards within the coal using sectors.

These points have been reinforced by the access to the IEACCC Projects in China Mandarin part of the website. On a month by month basis, the number of hits was:
Oct 2014:  4690
Nov 2014: 3280
Dec 2014: 2568
Jan 2015: 6868
Feb 2015: 2274

These are encouraging figures but they also indicate the value of additional Chinese publicity to draw in more site visitors, as shown by the spike in January when the workshops in China took place. This is assumed to be a result of the wide ranging media interviews undertaken by Dr Minchener and various FCO senior staff as well as FCO press releases made within China. The down-loads of the CCC Profiles (executive summaries) in Mandarin typically show over 100 in each case for each month.  This suggests that if the pages were promoted more on Chinese social media, there would be a greater response still. The IEACCC will investigate this further.
It is also interesting to note that unless the IEACCC had initiated this project, the likelihood of our partners and other team members having the discussions would have been very small, due in part to the disconnect between organisations that are working within the State Government framework and their provincial counterparts

In that regard, the following key points need consideration.
 
The senior provincial government officials with whom discussions were held recognise that the NDRC and MEP are serious about reducing pollutant emissions to improve air quality while limiting carbon intensity. They also realise that the NDRC will override provincial objections and will close down coal-using companies that fail to meet the new emissions standards and/or maintain economic growth. In contrast, most industrial companies are failing to recognise that these steps are being taken because of the national environmental problems that are arising and, consequently, no individual company will be able to override these targets.

The IEA CCC and its fellow team members stressed the importance of thinking innovatively since meeting the emissions standards and maintaining economic growth targets in several sectors will not be achieved by just adding a further pollutant control device to a coal-fired unit.  Equally, the team stressed that innovation needs to be wide-ranging, covering specific technologies but also considering new industrial options since current infrastructure is based on older, larger technologies, which indicates that the industrial strategy must be to use a more modern approach. 

3 Scope for further activities in the two target provinces
There is a primary need to consider how best to develop further activities in the two target provinces, namely Hebei and Shandong. While most of this could be established and implemented directly at the provincial level, some aspects, such as fundamental infrastructure changes, would require State level interaction. 

3.1 Overall policy and financial framework for actions
In both target provinces, there are broad State policies in place to improve air quality and to introduce clean coal technologies. There are several possible technology routes that have been identified, which can be grouped into a series of topics, as set out in Section 3.3 below. However, what appears to be missing is some form of objective analysis as how best to proceed, taking into account the State Government directives and the local issues. 

Thus, the environmental bureaux are setting timescales when major companies have to meet overall lower emissions levels but there is no expert advice from such organisations on how best to proceed. Across all the coal power and non-power sectors in these two provinces, there does not appear to be a comprehensive, management approach for possible activities that might contribute to meeting the overall requirements set by the NDRC and MEP. 

There is a need for robust, comprehensive energy efficiency and environmental standards together with the definition of a quantifiable roadmap in order to assess and prioritise the required activities. In particular, there do not appear to be any defined techno-economic criteria that might provide a framework for all sectors to ascertain those technologies that might meet such performance standards in an economically acceptable manner. This is critical if these provinces are to make significant progress, not least because of the need for innovation in determining how best to proceed. This framework is something that the provincial stakeholders need to take the lead in producing, but it would be very helpful to them if members of the IEACCC team could assist them, drawing on previous UK and Chinese experience of setting up such assessment activities.

3.2 Strategic issues requiring State Government input
There is a potential strategic conflict that will need to be addressed. Much of the air quality problem is caused by the inefficient burning of often poor quality coal in industrial appliances with inadequate pollutant control systems. In some cases the introduction of alternative appliances and much better control of coal quality might be sufficient to achieve the necessary significant improvement. 

However, the alternative and proven approach, as practiced in most OECD countries has been to increase coal use for power generation with associated Combined Heat and Power (CHP) applications, providing power, process steam and heat to industry, thereby either reducing or eliminating direct coal use in non-power systems. China has a proven track record in establishing large scale power plants and high quality CHP schemes. For example, the team based at Waigaoqiao No.3 power plant has a very good track record in applying innovative improvements, both to achieve higher efficiency and to ensure lower pollutant emissions, which in the case of NOx is lower than can be achieved by gas fired combined cycle power plants. The specific coal consumption at this plant has already been reduced to 276gce/kWh, way below the new standards. That team is already beginning to engage with other power plant operators to replicate such improvements either through retrofit or new power plant applications. In principle, this can include units in the two target provinces.

However, the overall urgency to deal with the air quality problems may mean that in the near term the increased application of HELE coal power/CHP plants will not be the better way forward. While the coal power/CHP option is likely to be the more effective overall approach, it would require additional power/CHP units to be built and so most likely would be more expensive than other options. It would also require a longer schedule for implementation that will be inconsistent with the timescales being set by the environmental bureaux.  

As such, recognising that the overall energy mix for the various industrial sectors needs to be changed quite quickly, it would appear that the selection of alternative non-power technologies that will meet national energy efficiency and environmental standards, and which are economically attractive, may have to be chosen. It is likely that many of these technologies will be innovative and not tested at industrial scale. Consequently, there is a need to establish a financial framework that will enable the demonstration of such technologies. It is also essential to consider how best to then set up a robust deployment programme. This suggests an urgent need to develop a pragmatic roadmap to select the more cost effective clean coal options for the non-coal power sectors, which can be trialled and subsequently rolled out to establish rapid deployment within each province. These are issues where dialogue at State level input would be expected since such a change would represent a fundamental modification to the current energy infrastructure.

It could be valuable for IEA CCC and the FCO to explore this with NEA officials, should an opportunity for such a meeting be arranged.

3.3 Specific projects that need to be considered
If the route forward is to be based at least in part on innovative direct coal use for the non-power sectors, the following options need to be considered:  

Assistance to introduce a change in philosophy towards a transparent and sustainable coal based system
The need to introduce specialist experts that could speak to imbue sustainability as a vital part of all approaches to increasing production while limiting environmental impact when using coal. Their task would be to foster sustainability as an essential, integral part of governing ethos within companies.
Definition and implementation of water saving and enhanced water treatment technologies for industrial applications, which could best be integrated within overall urban schemes. 
Monitoring and verification for all new applications
The introduction of experts on market mechanisms such that sustainable modernisation can be shown to make sense financially to the local industrial plant owners.

Reduction in carbon intensity and conventional pollutants for large scale applications
Use of sustainable biomass to part replace coal in power station boilers and, possibly, in other large scale industrial appliances. This would include waste wood and agricultural wastes. The issue here is one of ensuring the appropriate subsidies for using biomass and having a robust system of monitoring and verification. This is a topic where the UK is a world leader on technical, regulatory and policy related issues.
Combination of coal fired processes with some form of renewable energy. This is at an early stage but would help to introduce innovation into some industrial processes. This is something that IEA CCC has been analysing for its members.
Introduction of additional pollutant control systems, including monitoring and verification devices, which is a topic where the UK has expertise.

Introduction of alternative and as yet unproven technologies for industrial boilers and metallurgical applications
Establish demonstration then deployment of a new-build gasification-based clean coal industrial boiler technology. There is a Chinese design proposed, which shows significant promise, with potential scope for UK contracting companies to address the overall engineering design, procurement and construction requirements. 
Finalisation and demonstration of a chemical looping based process for metallurgical applications, again which would offer some possibilities for UK engineering companies. 
The introduction of innovative, modern decentralised energy systems for the provision of district heating within new CHP schemes in order to halt the use of individual heating appliances using briquetted wood or coal, together with the means to encourage a move from these fuels for cooking to electricity or gas. This could include the possible introduction of waste combustion or gasification technologies, preferably including some form of power and heat system to maximise energy recovery.
Facilitate interaction between manufacturers from abroad and China of small-medium sized air pollution equipment and bring them to meetings/workshops to talk to owners of these boilers.
Introduce experts from the gas processing industry to investigate excessive tars blocking of sulphur scrubbers at coke manufacturing plants. They might look into matters such as whether the operation of the coke ovens is optimal, or if the gas coolers for tar condensation are of adequate capacity and in good condition, or whether suitable exhauster fans and precipitators used after the coolers.

Addressing the fall-out from fundamental changes in the provincial energy structure
Recognise that for smaller industrial units, it will almost certainly not be technically and economically viable to retrofit environmental controls. It may also be sensible to stop trying to exploit local low quality coal sources as these may not be suitable for many of the systems that can best achieve high environmental standards. This will almost certainly lead to job losses in some sectors. Consequently it would be appropriate to bring in experts on social change, re-training and job placement to facilitate closures and moving to employment in other, cleaner industries. The UK has significant national experience of this from the time of the major coal mine closures. 

4 Further initiatives within China
The overall outputs can be relevant to other coal dominated provinces that are without ready access to natural gas and with as yet limited renewables implementation, and dissemination needs to be taken forward through various channels. There would be benefit in associated media activities to publicise that the information is available.
 
5 Final thoughts
This FCO supported project has enabled valuable dialogue on clean coal technology transfer to be achieved in Hebei and Shandong Provinces. This note identifies a wide range of possible policy, techno-economic and activities that need to be pushed forward if these provinces are to make meaningful progress in addressing these critical energy and environmental issues.  The IEACCC and its Chinese partners are well placed to address the overall strategic issues through detailed discussions with provincial government officials raised and to facilitate the identification of specific projects, subject to FCO further support.


Dr Andrew Minchener OBE
General Manager
IEA Clean Coal Centre

14 April 2015

 
Other Pages of Interest
IEA CCC Quicklinks
Executive Summaries
Chinese Workshops
External Pages
IEA CCC Chinese website
Executive Summaries translated
 
 
 
 

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