Five questions for Changhua Wu of the Climate Group on CCS and its prospects in China

For some time now almost every climate change discussion anywhere in the world has made reference to the fact that China’s demand for energy has grown and continues to grow at a phenomenal rate, while its economy expands and delivers economic prosperity to more of China’s citizens. While China’s per capita emissions remain low relative to Europe, the US or Australia, it is heavily reliant on coal and in absolute terms greenhouse emissions are very significant, and rising.

China’s 12th Five Year Plan (FYP) released recently recognises this and will bend the nation’s carbon emissions growth curve in the next five years.

So what are the prospects for CCS to help China meet its objectives to reduce its impact on greenhouse gas emissions and continue to advance its economy?

Changhua Wu is the Greater China Director of The Climate Group. A China specialist for nearly 20 years and an environment and development policy analyst, she leads the organisation’s strategic development in the region and manages its Greater China operations.

I have asked Changhua a few questions about the role of CCS in China.

Q1: Does China have a policy on CCS? What is it and how does it differ from that other countries are pursuing?

The Chinese Government has been using public funds to support CCS RD&D through its national science and technology programs. Early in 2005, CCS RD&D was included in the ‘Abstract of National Mid-Long Term Plan for Science & Technology Development (2006-2020).’ In 2007, China’s Special Science & Technology Initiative to Mitigate Climate Change - launched jointly by 14 ministries - set goals to promote CCS RD&D and to develop a CCS technology roadmap. Recently, the Ministry of Industry and Information Technology announced that development of a manufacturing industry for capture and storage equipment for power plants will be encouraged by the government.

China’s climate change policies, such as emissions reduction targets for the 12th FYP and for 2020, support the development of CCS in China. The Chinese Government has been concentrating on CCS RD&D to prepare for potential technological competition and seize commercial opportunities.

Q2: Amongst other demonstration efforts globally, would you rate China as fairly active and advanced on CCS? If so, on what basis?

China is undertaking intense RD&D projects specifically designed to test the technology and financial viability of CCS. There are four facilities with annual capture capacity of a million tonnes in plan, and one geological storage project in operation. The CCS demonstration projects are all newly built and the number exceeds those of other developing countries. Leading state-owned companies such as Huaneng Group, Shenhua Group and national oil and gas companies are all actively involved in CCS demonstration.

It is hard to say China’s CCS demonstration is advanced or not for the lack of adequate and accurate reference data from home and abroad.

Q3: There have been reports that China plans to launch pilot emissions trading schemes in six provinces before 2013 and set up a nationwide trading platform by 2015. What are your views on this and how do you think those goals fit with broader CCS policy?

Regional emissions trading schemes already exist in China. Among 19 professional environment exchanges, four (Beijing, Shanghai, Tianjin and Shenzhen) provide a carbon emissions exchange service. Some local governments are also building regional carbon emissions exchange platforms. Considerable work still needs to be done on the methodology, standards and regulations to build a nationwide trading platform.

There is still uncertainty about how a national scheme might develop as the National Development and Reform Commission, who will regulate the carbon market, and the State-owned Assets Supervision and Administration Commission, who administrates major state-owned companies, may have different attitudes towards how a scheme may operate.

In near term emissions trading will be demonstrated in specific regions and/or in specific sectors. It is difficult to estimate the timetable of implementing a nationwide emissions trading scheme.

Emissions trading in and/or across sectors may benefit CCS more than regional emissions trading by its influence on the major emitters. The emissions trading scheme provides emitters with one more option to reduce emissions. It could help to decrease the cost of CCS provided that CO₂ avoided through CCS is valid for trading in the scheme.

Q4: What are the main drivers for CCS in China?

China is rich in coal and coal will remain the primary energy source here for the long term. CCS will play a critical role in China’s clean coal strategy, which aims to ensure its energy security and also contribute to mitigate climate change.

CCS RD&D activities are expected to promote basic research in geology, geophysics, and geochemistry and thus bring technological breakthroughs that have benefits beyond CCS.

Another driver of developing CCS in China is to prepare for potential market competition and to seize future commercial opportunities. If CCS is successfully rolled out on large scale then its application in China is likely. Developing advanced key technology along with its IP will not only be important for controlling the cost of CO₂ avoidance and competing with international peers but also for seizing commercial opportunities such as exporting CCS technology.

Q5: We know there are some projects in China that focus on CO₂ reuse, including GreenGen, but do you see the use of CO₂ extending beyond enhanced oil recovery?

Reuse (utilisation) is highly emphasized by the Chinese Government. Wan Gang, Minister of Ministry of Science and Technology, has stressed the importance of CO₂reuse during the current phase of CCS development in China.

The captured CO₂ from current demonstration projects in China is mainly used in the food industry. Some companies, such as the Jiangsu Zhongke Jinlong, are trying to develop CO₂-based degradable plastics and fireproof materials. CO₂ may also be used in various industrial process and agriculture.

In general, CO₂ reuse will be the favored disposal form for captured CO₂ during the current phase. The main issue that needs to be addressed is to assess the size of China’s CO₂ reuse market.