China, People's Republic of: Carbon Dioxide Capture and Storage Demonstration-Strategic Analysis and Capacity Strengthening

Sovereign Project | 43006-012

Summary

The PRC is the world's second largest energy consumer after the United States and has the fastest growing energy sector in the world. The electricity generation in 2007 was 3,256 TWhr, of which almost 83% was from coal-burning, 15% from hydropower, 2% from nuclear, wind and other alternative sources. In 2007, the total coal production was more than 2.53 billion tons, an increase of about 8% over 2006. Electricity generation consumed about 55% of the total coal produced in 2007. Diversification of energy mix with more renewable, nuclear and other alternative sources is a priority for the Government of the PRC. However, coal will remain the dominant source of electricity production in the foreseeable future. New and advanced coal-based electricity generation has already led to a large number of super critical and ultra-super critical plants in the country's new generation stock. The detailed feasibility of IGCC power plants is under active consideration and these plants are likely to be operational by 2010.

Latest Project Documents


Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Project Name Carbon Dioxide Capture and Storage Demonstration-Strategic Analysis and Capacity Strengthening
Project Number 43006-012
Country China, People's Republic of
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7286-PRC: Carbon Dioxide Capture and Storage Demonstration-Strategic Analysis and Capacity Strengthening
Technical Assistance Special Fund US$ 250,000.00
Carbon Capture and Storage Fund US$ 1.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector Energy - Energy sector development and institutional reform
Gender Equity and Mainstreaming No gender elements
Description
Project Rationale and Linkage to Country/Regional Strategy

The PRC is the world's second largest energy consumer after the United States and has the fastest growing energy sector in the world. The electricity generation in 2007 was 3,256 TWhr, of which almost 83% was from coal-burning, 15% from hydropower, 2% from nuclear, wind and other alternative sources. In 2007, the total coal production was more than 2.53 billion tons, an increase of about 8% over 2006. Electricity generation consumed about 55% of the total coal produced in 2007. Diversification of energy mix with more renewable, nuclear and other alternative sources is a priority for the Government of the PRC. However, coal will remain the dominant source of electricity production in the foreseeable future. New and advanced coal-based electricity generation has already led to a large number of super critical and ultra-super critical plants in the country's new generation stock. The detailed feasibility of IGCC power plants is under active consideration and these plants are likely to be operational by 2010. The CCS) technologies are widely recognized as the most promising technology to almost eliminate CO2 emissions from coal-based power plants. Thus, allowing utilization of coal-based power generation in a sustainable manner and enhancing the energy security in the PRC.

At the moment, there is no coal-based industrial-scale power plant with CCS. However, CCS has been in operation in oil and gas industry for a long time. The international efforts are aggressively targeting CCS demonstration in coal-based power plants. The recently concluded G8 Summit has further provided the momentum for CCS demonstration by endorsing 20 CCS demonstration projects to be committed by 2010 with a view to make CCS widely available by 2020. The International Energy Agency projects that by 2020 at least 35 coal-based power plants with 500 megawatts capacity each will be with CCS. The European Union (EU) is committed to launch about 10 to 12 large-scale CCS projects under its zero-emission platform; it is actively considering an EU directive which will lay the legal and regulatory framework for CCS demonstration in EU. Australia and Japan are working together on a coal-based CCS power plant under the Asia Pacific Partnership. The United States is restructuring its FutureGen program to do multiple IGCC-CCS demonstration; it is also supporting extensive research on all available capture technologies. It is increasingly recognized that concessional funding and transfer of technology to developing countries should be embedded in the CCS demonstration phase itself. The G8 summit in July 2008 and EU and others are actively seeking demonstration projects in key developing countries. There is a growing international consensus that CCS is the key CO2 mitigation technology that can reconcile coal usage with CO2 emissions.

Recognizing the central role of coal in its energy security and to address the CO2 emissions, the Government of the PRC launched the Greengen Program in September 2005. The Greengen program is with the support of the National Development and Reform Commission (NDRC) and the Ministry of Science and Technology (MOST). The Greengen Company Ltd. (Greengen) was established in December 2005 with a mandate to lead the research, development and demonstration (RD&D) of clean coal technology and develop a near-zero emission coal-based power plant in the PRC by 2015. China Huaneng Group is the managing partner of Greengen. It is a collaborative company with participation from seven major energy enterprises in PRC (i) China Datang Group, (ii) China Huadian Corporation, (iii) China Guodian Corporation, (iv) China Power Investment Company, (v) Shenhua Group, (vi) State Development and Investment Co., and (vii) China Coal Group. In 2007, Peabody Energy, USA, the largest private sector coal producer in the world also became an equity partner in the Greengen. Xian Thermal Power Research Institute is providing the core technical expertise. The Greengen intends to draw experts from all over the country in this major RD&D venture. The Greengen has identified a three step technological development process to achieve this strategic objective. The first phase (2006-2010) is currently being implemented under which a 250 megawatts IGCC plant is being designed and constructed at Tianjin utilizing local resources. This IGCC plant is included as one of the major projects with the MOST support. In parallel with the first IGCC plant, the Greengen intends to launch more intensified effort to undertake analysis of various issues surrounding the CCS demonstration. The likely implementation of IGCC plant and widely used ultra-supercritical plants are the enabling power plant technologies to allow cost competitive pre-combustion and post-combustion CCS options, respectively.

Technologically, the Greengen program is in sync with the CCS development in other developed countries. However, the CCS demonstration in the PRC faces the challenge of higher costs and associated risks, which can be mitigated by transfer of funds and technologies from developed countries. Some key steps in this direction have already taken place with the development of multi-donor Clean Technology Fund and Strategic Climate Fund but the relevance of these funds and their likely impact on CCS demonstration require closer scrutiny. Moreover, being a very complex implementation structure, CCS demonstration will face pre-implementation work of unprecedented scale and serious legal and regulatory issues and challenges. There is an urgent need to comprehensively analyze these issues with a demonstration outlook, identify gaps, provide capacity building and in all aspects of CCS and develop a clear road map. With the assistance from the Department for Environment, Food and Rural Affairs (DEFRA, UK) and the European Commission, some enabling groundwork is being prepared. However, moving from RD&D and knowledge sharing to demonstration will pose many unique challenges. Greengen with its mandate and strong interest to demonstrate a near-zero emission coal-based power plant by 2015 would like to analyze these issues in greater details.

The Department of Climate Change in the NDRC recognize the potential of long-term strategic importance of CCS in the nation's climate change agenda and supports the Greengen request for a grant-financed CDTA from ADB. This CDTA will complement the ongoing and planned efforts of other donors and will assist in analyzing key issues-institutional, legal, regulatory, policy, concessional finances that will assist the decision and policy makers to consider a strategic approach to CCS. The TA)is expected to (i) take stock of all relevant international efforts and their relevance to the PRC; (ii) identify strategic choices and their cost/benefit comparisons-capture technologies (pre-combustion/post-combustion) CO2 chain utilization and storage; (iii) analyze and recommend a potential road map for CCS demonstration and identify key barriers; (iv) evaluate existing international legal and regulatory frameworks (EU directives and others) and their relevance to the PRC; (v) identify capacity gaps and recommend a capacity strengthening plan with a focus on targeting policy and decision making institutions and government agencies; (vi) identify potential priority technologies and sites for demonstration projects and, undertake further research and preliminary pre-feasibility assessment; (vii) identify cost gaps and examine availability of concessional funding and their relevance; (viii) critically examine the socio-economic impacts including impacts on electricity pricing from CCS technologies; (ix) identify policy measures and innovative financing that may enhance the economic impacts of CCS at an affordable cost, and (x) widely disseminate technical expertise on CCS technologies in conjunction with relevant research institutions in PRC and key stakeholders.

Impact The impact will be a draft strategy for CCS deployment in the PRC is formulated.
Project Outcome
Description of Outcome The TA outcome will be enhanced capacity in planning and management of CCS demonstration project.
Progress Toward Outcome

A CCS roadmap has been developed which can serve the basis for undertaking pilots and demonstration projects. A priority pilot CCS project has been identified on the ongoing 250 MW Tianjin IGCC power plant financed by ADB, which will be considered for further support. Similarly, some other activities and policy framework as well as capacity issues were identified which would need attention before launch of first generation of fully integrated CCS demonstration project(s).

A comprehensive assessment of CCS activities worldwide and in PRC was undertaken, key barriers identified and recommendations were established and discussed with stakeholders.

Capacity building exercises were undertaken by Tianjin and Greengen staff, through international study tours and training, to widen their knowledge of the CCS technology, and lessons learned from these institutions may aid in bringing innovations to their organization.

Several workshops were held in March and April 2011 covering discussions on considering aligning CCS roadmap developed from this study with the 12th Five-Year Plan, CCS technological innovations and development, preparations for the commissioning and operation of the pilot CCS project, analysis on the development direction for CCS and its impact in the future development of energy and economy in PRC, and refining the strategy and policy of CCS in PRC.

Implementation Progress
Description of Project Outputs

Developed a road map for CCS demonstration

Enabling policies, legal, and regulatory frameworks recommended and discussed with stakeholders

Priority demonstration projects identified and financing needs established

Capacity assessed and strengthened in critical areas of CCS demonstation

Status of Implementation Progress (Outputs, Activities, and Issues)

The inception, interim, mid-term, draft final, and final reports reports have been completed and discussed with the stakeholders. The draft final report was submitted in November 2010 and the final workshop was successfully concluded on 24 November 2010. The consultant's service completion date was extended until 31 May 2011. The TA completion date was extended until 30 June 2012.

Final report was received by ADB on 28 June 2011, recommendations include undertaking several integrated CCS projects to master the technology taking into account the capacity of carbon dioxide capture and storge demonstration; first demonstration project must be a national program with support from the government and participation from a consortium of complementary partners which has pioneering background in this technology like Greengen; immediate identification of storage sites because of the work and time involved in undertaking such; formulation of a national policy to address technical, institutional, legal, regulatory and financial gaps, and promote demonstration projects with a standardized approach that provides replicable cases for future projects.

The TA was successfully completed on 30 June 2012 and financially closed on 18 October 2012. The TA Completion report was approved on 18 February 2013.

Geographical Location PRC
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design The TA concept was extensively discussed with CC-NDRC and Greengen during a reconnaissance mission fielded in November 2008. CC-NDRC is also participating in other donors' activities in this area thus can ensure that the overlaps are avoided. Further discussions with key stakeholders including donors will be conducted during the fact-finding mission. The formulation of the TA concept is also guided by the knowledge gained as part of ADB participation in the Carbon Sequestration Leadership Forum and the similar pre-demonstration activities carried out in other developed countries.
During Project Implementation
Business Opportunities
Consulting Services The ADB will engage international and national consultants, according to its Guidelines on the Use of Consultants by Asian Development Bank and its Borrowers. Considering the emerging nature of the technology and broad scope of the TA covering the whole CCS chain, the TA will engage individual international and national experts so that the right expertise can be ensured on all tasks of the TA. In selection of individual international consultants, ADB will seek assistance from major international institutions and knowledge centers such as-Carbon Sequestration Leadership Forum (CSLF); Global CCS Institute, Australia; IEA, etc. Similarly, in selection of national consultants, due consideration will be given to experts from research institutes and knowledge centers who are participating in CCS research and development activities in PRC and are fully familiar with national policies and CCS agenda. An estimated total of 75 person-months of consulting services will be required: 10 person-months for international consultants and 65 person-months for national consultants.
Responsible ADB Officer Annika Seiler
Responsible ADB Department East Asia Department
Responsible ADB Division Energy Division, EARD
Executing Agencies
National Development and Reform CommissionLi Gao, Director, Department of Climate Changeligao@ndrc.gov.cnDepartment of Climate Change in NDRC (CC National Development Reform Commission 38 S. Yuetan Street, Beijing 100824, PRC
Timetable
Concept Clearance 20 Jan 2009
Fact Finding 15 Jan 2009 to 20 Jan 2009
MRM -
Approval 22 May 2009
Last Review Mission -
PDS Creation Date 21 Jan 2009
Last PDS Update 22 Mar 2013

TA 7286-PRC

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
22 May 2009 16 Jul 2009 16 Jul 2009 30 Apr 2010 30 Jun 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
250,000.00 1,000,000.00 300,000.00 0.00 0.00 0.00 1,550,000.00 22 May 2009 1,121,638.33

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.