BEIJING, PEOPLE’S REPUBLIC OF CHINA (6 June 2017) — The Asian Development Bank (ADB) today signed a memorandum of understanding with the National Development and Reform Commission (NDRC) of the People’s Republic of China (PRC), Yanchang Petroleum Group, and Northwest University for a technical assistance grant of $5.5 million to develop a large-scale carbon capture and storage (CCS) demonstration project.

“Large-scale demonstration of CCS in a carbon intensive economy such as the PRC could be game changing in the country’s management of emissions,” said Ashok Bhargava, Director of ADB’s Energy Division in its East Asia Regional Department, who signed on behalf of ADB. Also signing were NDRC Department of Climate Change Deputy Director General Zhen Sun, Yanchang Petroleum Group Deputy General Manager Xiangzeng Wang, and Northwest University Vice President Yunxiang Zhang.

Carbon-based fuel accounts for more than 85% of primary energy supply in the PRC with coal contributing about 70%. As the world’s largest carbon dioxide (CO2) emitter, the Government of the PRC is committed to delink its economic growth from carbon-based fuels consumption. While significant progress is being made driven by energy efficiency measures and rapid deployment of renewable energy, the country can significantly accelerate decoupling its economic growth and carbon emissions with the concurrent adoption of affordable mitigation options, such as CCS, from carbon-based fuels consumption.

CCS is the only available near commercial technology that could abate up to 90% of CO2 emissions from carbon-based fuels consumption in industrial and power plants. However, in its initial stage of demonstration, investment costs for CCS projects are expectedly high. Larger demonstration and early deployment will help promote the technology’s cost competitiveness.

The government has encouraged all its provinces, cities, and enterprises to promote CCS in key sectors. Arising out of their long-term partnership, NDRC requested ADB to support the formulation of a Roadmap for CCS Demonstration and Deployment. As part of the exercise, potential early demonstration projects, mainly from the coal-chemical industry, were identified and ranked, with the Yanchang CCS project the closest to ready.

Based on a pilot study that started in 2012, Shaanxi provincial government is considering for Yanchang a commercial scale demonstration project abating annually 1 million tons of CO2, which is equivalent to abating annual CO2 emissions from nearly 220,000 cars. This would be the first such CCS demonstration project in the PRC.

ADB’s technical assistance project will address key barriers to large-scale CCS demonstration in the PRC by supporting the front-end engineering design of the Yanchang CCS project, including a feasibility study, environmental and social impact assessments, and monitoring. The technical assistance will also support a team of experts at the Joint Engineering Research Center at Northwest University in designing a comprehensive strategy for the PRC to promote CCS.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.

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