Energy Efficiency

In November, the International Energy Agency projected that China will become the world's largest source of carbon dioxide emissions in 2009, overtaking the United States nearly a decade earlier than previously anticipated. Coal is expected to be responsible for three-quarters of that carbon dioxide.

And the problem will get worse. Between now and 2020, China's energy consumption will more than double, according to expert estimates. Ratcheting up energy efficiency, tapping renewable resources with hydro dams and wind turbines, and building nuclear plants can help, but--at least in the coming two decades--only marginally. Since China has very little in the way of oil and gas reserves, its future depends on coal. With 13 percent of the world's proven reserves, China has enough coal to sustain its economic growth for a century or more. The good news is that ¬China's leaders saw the coal rush coming in the 1990s and began exploring a range of advanced technologies. Chief among them is coal gasification. "It's the key for clean coal in China," says chemical engineer Li ¬Wenhua, who directed advanced coal development for Beijing's national high-tech R&D program (better known in China as the "863" program) from 2001 through 2005.

Gasification transforms coal's complex mix of hydrocarbons into a hydrogen-rich gas known as synthesis gas, or "syngas." Power plants can burn syngas as cleanly as they can natural gas. In addition, with the right catalysts and under the right conditions, the basic chemical building blocks in syngas combine to form the hydrocarbon ingredients of gasoline and diesel fuel. As a result, coal gasification has the potential both to squelch power plants' emission of soot and smog and to decrease China's growing dependence on imported oil. It could even help control emissions of carbon dioxide, which is more easily captured from syngas plants than from conventional coal-fired plants.

Despite China's early anticipation of the need for coal gasification, however, its implementation of the technology in power plants has lagged. The country's electricity producers lack the economic and political incentives to break from their traditional practices.

In contrast, large-scale efforts to produce liquid transportation fuels using coal gasification are well under way. China's largest coal firm, Shenhua Group, plans to start up the country's first coal-to-fuels plant in 2007 or early 2008, in the world's most ambitious application of coal liquefaction since World War II. Shenhua plans to operate eight liquefaction plants by 2020, producing, in total, more than 30 million tons of synthetic oil annually--enough to displace more than 10 percent of China's projected oil imports.

If the new plant works, Shenhua stands to earn a substantial profit. The company predicts that its synthetic oil will turn a profit at roughly $30 a barrel, though many analysts say $45 is more realistic. (The U.S. Department of Energy's most recent price forecast predicts that crude oil will dip to $47 a barrel in 2014, then climb steadily to $57 a barrel in 2030.)

Beyond the risks inherent in the large-scale deployment of unproven technology, the gasification building boom also is an environmental gamble. Indeed, what may ultimately check China's coal-to-oil ambitions is water. China's Coal Research Institute estimates that Shenhua's plant will consume 10 tons of water for every ton of synthetic oil produced (360 gallons of water per barrel of oil), and the ratio is even worse for Fischer-Tropsch plants. Last summer, China's National Development and Reform Commission, the powerful body charged with regulating China's economy and approving large capital projects, issued a warning about the environmental consequences of the "runaway development" of synthetic-oil and chemical plants, which it said will consume tens of millions of cubic meters of water annually.
That prediction sounds particularly ominous in northern China, where water is scarce. Erdos is a mix of scrub and desert whose meager water supplies are already overtaxed by population growth and existing power plants. Zhou Ji Sheng, who as vice manager of ZMMF, one of Shenhua's Erdos-based competitors, is seeking financing for a gasification project, acknowledges that water scarcity could put an end to coal gasification in the area. "Even though we have so much coal, if we have no water, we will just have to use the traditional way--to dig it out and transport it," he says. "Water is the key factor for us to develop this new industry." Zhou says his firm plans to supplement its water supply by building a 120-kilometer pipeline to the Yellow River. But evaporation from hydroelectric reservoirs, the increased demand of growing cities and industries, and the effects of climate change mean that in the summer, the Yellow River barely reaches the sea.

Source: http://www.technologyreview.com
/Energy/17963/page2/