Cleaner Conventional Energy
China’s energy and environmental problems cannot be solved without Cleaner Conventional Energy. The government has implemented a range of policies within the last 18 months to encourage the development of greentech solutions.
Cleaner Conventional Energy—energy derived from non-renewable fossil fuels in ways that minimize their negative impact on the natural environment—continues to be a focal point for government and industry. The government established the National Energy Commission (NEC) in 2010 to overcome competing interests and ensure the development of a cohesive energy policy, and also has pushed for the consolidation of the coal industry to improve efficiency, safety and enforcement of regulations. On emissions, China is set to adopt policies that would bring the country’s coal plants in line with other countries. Pricing reforms have fallen behind expectations, but are expected to move forward again during the 12th Five-Year Plan period (2011-2015).
The China Greentech Initiative developed three in-depth Opportunity Assessments for the Cleaner Conventional Energy sector in 2010:
- Potential for Wide-Scale Adoption of IGCC and CCS Technologies
Integrated gasification combined cycle (IGCC) and carbon capture and sequestration (CCS) have the potential to revolutionize power generation in China, but their potential remains largely unfulfilled.
IGCC and CCS technologies are well-suited to China’s environmental imperatives, geology, and large coal plant market; both technologies can play a role in reducing the long-term impact of China’s power plant construction boom of the last decade. That said, the country faces a paradox: high initial costs and technology gaps mire IGCC and CCS in the demonstration project phase; however, China is the ideal place for development given its low cost and rapid infrastructure expansion. For example, IGCC costs in China could be more than 60% less than in developed countries. China will likely expand slowly from demonstration projects in the next decade, favoring incremental gains over large-scale technology adoption.
- Strong Future for De-SOx and De-NOx, but Fly Ash Recycling and Utilization Lags
After the rollout of post-combustion desulfurization (De-SOx) over the last five years, China will promote new regulations and investments during the 12th Five-Year Plan period for denitrification (De-NOx) as well as fly ash recycling and utilization.
In China’s push to improve air quality over the last five years, coal power plant De-SOx regulations have been relatively successful, with Chinese equipment suppliers capturing the market. China is now encouraging De-NOx technologies with a 10% emissions reduction target and a potential tariff. Lessons learned from the De-SOx experience will likely help improve enforcement. Fly ash recycling continues to lag, but extraction of valuable minerals increases financial incentives.
- Potential for Carbon Pricing in China
Pricing carbon continues to attract hot policy debate in China.
As its galloping economy brings skyrocketing energy use and greenhouse gas (GHG) emissions to the fore, China recognizes the need to address growing energy and environmental hazards. One carbon pricing option—a carbon tax—is being carefully considered, but despite indications that China could adopt a tax, perhaps as soon as 2012, many challenges remain. Such a tax could take years to put into place, and fundamental implementation questions are unresolved, such as tax neutrality, revenue management, and incentives for greentech solutions.