CHINA ENERGY CHIEFS HOLDING OFF ON CCS

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18 august 2010

China awaits proof to back carbon capture -officials

* Carbon capture not yet mature enough

* Technology must prove feasibility


By Rujun Shen and David Stanway, Wed, Aug 18 2010

SHANGHAI, Aug 18 (Reuters) - China's plans for energy are unlikely to offer direct support for carbon capture technologies as Beijing remains wary about their cost and feasibility, industry officials said on Wednesday.

Xu Shisen, chief engineer at the science and technology centre of state-owned China Huaneng Group, the country's biggest utility, said policy makers were likely to wait until carbon capture and storage (CCS) had been tested on a commercial scale before offering any substantial policy support.

"In the near term, a large-scale demonstration project has to be set up, whether in China or elsewhere," he told reporters on the sidelines of a conference.

CCS covers various technologies aimed at stripping climate-warming carbon dioxide (CO2) from burning fossil fuels and burying it. The International Energy Agency has identified the approach as one of the crucial components in the global fight against climate change, particularly in China.

Overseas utilities like Duke Energy and American Electric Power, facing possible CO2 abatement bills at home, are counting on Beijing to lead the global effort to develop CCS, but Xu said it was still too early to tell whether or not the technology was commercially viable.

"It's meaningless right now to talk about commercialisation, no matter what country you are in. Once demonstration projects are up and running after 2015, the U.S. and Chinese governments can make policies and decide on subsidies," he said.

"The government needs proof -- is the technology really mature?"

Huaneng, China's largest power provider, has already launched two pilot carbon capture and utilisation projects at power plants in Beijing and Shanghai, selling off small volumes of sequestered CO2 to local beverage makers.

Its CCS project at the Gaobeidian power plant in Beijing captures just 3,000 tonnes of CO2 a year, a negligible fraction of the plant's total emissions.

Although its Shanghai facility is designed to catch 120,000 tonnes a year, a capacity of at least 1 million tonnes was essential if the technology was to move forward, Xu said.

Sceptical voices in industry and government have complained that CCS incurs a substantial "energy penalty", and as much as a fifth of a plant's power output could be spent on capturing CO2.


FOREIGN HOPES

Despite the caution, industry officials and researchers from other countries say Beijing is well placed to lead the world's CCS drive.

"They have the ability to move more quickly here. That's very important. They don't have the same bureaucracy as in some countries. They have a huge amount of technological ability. If they move quickly, we could see some frog-leaping going on," said Nick Otter, chief executive of the Global CCS Institute.

Duke Energy has already signed deals with Huaneng to work on post-combustion CCS and underground coal gasification (UCG), and American Electric Power is hoping to do the same, said Nicholas Akins, executive vice president of generation at American Electric Power.

"China is growing quickly and there are a lot of projects to be put in place we can learn from," he said.

Direct state support was unnecessary at this stage, but China was likely to emerge as the front runner once large-scale demonstration projects are launched, probably in five years time, said Jiang Kejun, director of energy system analysis at the National Development and Reform Commission's Energy Research Institute.

"China has the largest market. In 2050, China is likely to consume 2.5 billion tonnes of coal, and CCS will be a necessity. Without it, it is impossible to achieve the 2050 target for emission cuts." (Editing by Anthony Barker)


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