China’s Coal Conversion Projects Spark Climate Concerns

An analysis by Michael Lelyveld
china-coal-march2014.jpg A laborer working at a coal mining facility in Huaibei in northern China's Anhui province, March 5, 2014.

China is moving to slow the growth of projects that convert coal into natural gas as international criticism mounts over the environmental effects.

On July 21, the National Energy Administration (NEA) directed local authorities to "curb blind investment" in coal conversion projects, the official Xinhua news agency reported.

Some regions "have been enthusiastic about building new plants" for coal-to-oil and coal-to-gas operations, "regardless of realities in environment, water resources, as well as technological and economic capabilities," the NEA said.

The agency said it would ban smaller projects and require regulatory approval by the State Council, or cabinet, for larger ones, according to Xinhua.

The government statement came days before the international environmental group Greenpeace publicized research findings by its China affiliate, highlighting the climate change consequences of some 50 planned coal-to-gas projects that have already been announced.

Greenpeace found that the projects would generate more than 1 billion tons of carbon dioxide (CO2) per year. The volume is equal to one-eighth of China's total CO2 output in 2011 and 66 percent more than the savings in emissions from coal control measures that may be implemented by 2020.

China's push to turn coal into gas may have the benefit of easing emissions of fine particulates in smoggy cities like Beijing. The capital plans to replace all coal-fired power plants with gas-fueled generation by 2017 and ban all coal consumption in its six main districts by the end of 2020.

Several drawbacks

But the coal-to-gas process in China has multiple drawbacks, since it heats coal under pressure, creating CO2 and releasing more of the main global warming gas, critics say.

The synthetic natural gas (SNG) plants also use large quantities of water, a problem in coal-producing regions where water is already scarce.

Production of each cubic meter (35.3 cubic feet) of SNG requires six to 10 liters (1.58 to 2.6 gallons) of water, the World Resources Institute said in a report last year.

While the projects may be driven by incentives to find more uses for cheap coal, they have the effect of shifting pollution to coal-producing regions without reducing it in the country as a whole.

In fact, using SNG for power production actually consumes more coal than direct coal-fired generation, Greenpeace said.

The findings mirror a U.S. study by Duke University's Center on Global Change, published last October in the journal Nature Climate Change.

That report, co-authored by professor Robert Jackson and research scientist Chi-Jen Yang, cited more than 40 planned SNG projects with capacity to produce 200 billion cubic meters (7 trillion cubic feet) of gas per year.

The study estimated that the projects would emit seven times more greenhouse gas over a 40-year lifetime than using conventional natural gas.

Greenpeace said that two coal-to-gas projects in Inner Mongolia and Xinjiang have started operations so far, but 48 more are planned with 16 already approved.

"Even if only the plants that are operational, under construction and have been given the green light to go ahead ... become operational, Greenpeace projects CO2 emissions of around 0.402 billion tons per year," the group said.

That amount would be more than the CO2 savings that the United States has targeted by 2020, according to Greenpeace.

Only a Band-Aid

But despite growing criticism of its development plans, the NEA seems to be considering only token cuts.

"Limiting construction of only the smaller plants is a Band-Aid when what's really needed is surgery," said Jackson, who is now a professor of environment and energy at Stanford University in California. "China needs to cut back its build-out of synthetic natural gas plants," he said.

Under the new NEA policy, the agency would bar coal-to-gas plants with annual output of no more than 2 billion cubic meters (70.6 billion cubic feet) and coal-to-oil projects with output of 1 million tons (7.3 million barrels) or less, it said.

Larger operations would require State Council approval, but there was no indication that any of the 21 coal-to-gas projects cited by Greenpeace as already in progress would be stopped.

Last year, Jackson's study cited at least eight projects approved by the national government that would each produce 4 billion cubic meters (141.2 billion cubic feet) of gas or more.

Last October, Xinjiang officials announced a mammoth coal-to-gas project in the Zhundong area of Changji Hui Autonomous Prefecture to produce 30 billion cubic meters (1 trillion cubic feet) per year, using 90 million tons of coal.

Other major projects have been approved for Inner Mongolia, Shanxi and Liaoning provinces.

The projected capacity of the 50 projects counted by Greenpeace is now more than four times the NEA's target for SNG production in 2020, the group said. Emissions of CO2 would also be over four times greater, it said.

Little effect

So far, it appears that the NEA's new controls may do little to slow the rush of investment by coal and power producers into SNG development.

"I can't tell what the new guidelines really mean," said Jackson in an email message. "If China's still building 50 or so large SNG plants, then the new rules won't help much."

The controversy comes at a time when many of China's coal companies are struggling to stay afloat and find new uses for the country's main fuel as output declines and inventories rise.

More than 70 percent of coal producers are operating at a loss and over half have cut pay or defaulted on workers' wages, the China National Coal Association said, according to Xinhua.

Coal production of 1.85 billion tons in the first half of the year fell 1.8 percent from a year earlier, the National Bureau of Statistics said.

Coal sector profits fell 43.9 percent in the first five months, an official at the Ministry of Industry and Information Technology said in a report cited by Reuters.

In a separate setback for China's plans to switch more of its energy mix from coal to cleaner-burning fuel, the NEA has sharply cut its forecast for gas production from shale formations, Reuters reported on Aug. 7.

NEA director Wu Xinxiong now expects shale gas output of 30 billion cubic meters in 2020 compared with the previous goal of 60-80 billion cubic meters (2.1-2.8 trillion cubic feet), the industry website said.

In March 2012, a senior NEA official said China could be expected to produce as much as 100 billion cubic meters (3.5 trillion cubic feet) of shale gas in 2020, Xinhua reported at the time.

Despite the earlier ambitious targets, China has so far tapped only one major shale gas resource -- Sinopec's Fuling gas field in southwest Chongqing Municipality, Bloomberg Businessweek reported.

State-owned Sinopec has said Fuling will produce 5 billion cubic meters of gas (176 billion cubic feet) by next year and 10 billion cubic meters (353 billion cubic feet) in 2017. But beyond that, the shale gas outlook seems uncertain, even for the revised target.

"With no other comparable sites yet identified, it's not clear where the other 20 billion cubic meters (706 billion cubic feet) may come from," Bloomberg said.

Add comment

Add your comment by filling out the form below in plain text. Comments are approved by a moderator and can be edited in accordance with RFAs Terms of Use. Comments will not appear in real time. RFA is not responsible for the content of the postings. Please, be respectful of others' point of view and stick to the facts.

View Full Site